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Subprime lending

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Card issuers target subprime borrowers
Bankstocks.com  May 8  Comment 
Credit card issuers have been loosening their purse strings and offering credit to customers with
Fed to auction more Maiden Lane III CDOs
Financial Times  May 4  Comment 
The two Triaxx securities are backed by subprime home loan bonds and the sale will further test the market’s unquenchable appetite for lower-rated debt
Bloodletting Doctors and Subprime Bankers - Why We Need to Reinvent Management
Forbes  Apr 27  Comment 
(MBA50.com) If you read a manual of medicine from as recently as the 1920s, you realize that bloodletting was among the most common medical practices to make patients feel better. We now think of these remedies with horror, as more often than not...
H&R Block Subsidiary Agrees To Pay $28.2 Million To Settle SEC Charges Related To Subprime Mortgage Investments
Mondo Visione  Apr 24  Comment 
The Securities and Exchange Commission today charged H&R Block subsidiary Option One Mortgage Corporation with misleading investors in several offerings of subprime residential mortgage-backed securities (RMBS) by failing to disclose that its...
TEXT-S&P: rating actions on 131 U.S. subprime RMBS
Reuters  Apr 23  Comment 
OVERVIEW -- We reviewed 131 U.S. RMBS transactions backed by subprime mortgage loan collateral issued between 1996 and 2007. -- We lowered our ratings on 176 classes from 77 of the...
Subprime Student Debt Slaves: The Lowlife Trap of Higher Education
Gold Stocks Today  Apr 17  Comment 
Shah Gilani,writes: "And the strong to seem to get more While the weak ones slave Empty pockets don't ever make the grade Mama may have, and Papa may have But God bless the child that's got his own That's got his own." We can th...
Subprime Student Slaves: The Lowlife Trap of Higher Education
Money Morning  Apr 17  Comment 
"And the strong to seem to get more While the weak ones slave Empty pockets don't ever make the grade Mama may have, and Papa may have But God bless the child that's got his own That's got his own." We can thank the late,...
Stupid Mortgages in Canada
Canadian Personal Finance Blog  Apr 17  Comment 
The CBC had an interesting article on how Canada is Tiptoeing Towards a Subprime debacle similar to the United States (but not exactly the same). I was skeptical, but I was also unaware that there are so many "alternate lenders" for mortgages...
Mortgage market tiptoes toward subprime
CBC.ca  Apr 16  Comment 
As the big banks get choosier about who they'll lend money to in this hot housing market, people with questionable credit are benefiting from Canada's once-small but now booming subprime mortgage industry.
Bernanke On Why Subprime Turned Out Worse Than The Dot-Com Bubble
Forbes  Apr 13  Comment 
The mortgage market was the lit match, but a vulnerable financial system was the kindling for the crisis.




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What happened blaicasly was because of assuming that a trend was permanent. In the financial world, this is a form of mental disorder. Trends are why anyone could be a day-trader and make money, for a while. Their impermanence is why anyone that didn't get out of that in time lost their shirts. The subprime loans were designed to churn the loans. You had loans that were fixed for usually two years, then would become variable. The whole intent was for the borrower to refinance in two years, again generating all of the bank's new-loan fees. The trend for real estate to appreciate rapidly was counted on to continue to keep this attractive for the borrower. Borrow 100 with 5k in costs to pay off a loan of 95, wait two years, borrow 105k with 5k in costs to pay off a loan of 100, wait two years, borrow 110k with 5k in costs to pay off a loan of 105 but then the trend didn't cooperate by giving a home value of 110k, and the balloon broke. People still had the same house they did, but now a loan for more than they originally paid for it, and they can't get refinancing, and can't sell it for what they owe. Trends are temporary. People that think otherwise will eventually lose money. Now, how do you know when a trend is coming to an end? There's a story about the Crash of '29 about a broker who was getting a shoe shine, and the shoe shiner gave him a hot tip on a stock. He realized that when shoe shine boys were giving stock tips, the market was about to crash and he got out. During the day-trader era, there were stories about bus drivers and janitors making huge money in day-trading, just before that went south. How many times have YOU seen people offering to help people get loans in their answers right here on Yahoo, offers totally unconnected to the question being asked? It was a trend. Now it's not.

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