The Sub Prime Meltdown, Who's Fault Is It Really?

Not a day seems to go by without some sort of news about the subprime melt down. If it isnt a lender going out of business, its borrowers in foreclosure and everywhere you turn someone is pointing the finger.

This was not always the case. Just over 6 months ago everyone was happy. Everyone loved everybody else. Congress, the senate, the president, were all happy that the housing market was booming and was helping to keep the economy strong. You didnt hear them saying anything about bad mortgages.

Then you had Wall Street. The big investors, brokerage houses and hedge funds were all fighting each other to get more and more of the high yield mortgage backed securities. They werent saying these loans are dangerous and too risky They were falling all over themselves and couldnt get enough.

The lenders were loosening guidelines, to allow more and more borrowers the ability to finance a home. Everyone knew it but no one said a word. The lenders couldnt close fast enough to satisfy Wall Street hunger for their mortgage pools. They never said that they were worried about the loans going into default or that they may have to buy the loans back.

What about the mortgage brokers and the real estate agents? They couldnt sell these loans fast enough. Buyers and borrowers would do anything it took and take any loan they could get regardless of the terms, just to get into the house. If a realtor or mortgage broker said hey you cant afford this they would just go to someone else who would get them a loan anyway.

Then the real estate market started to cool. Houses werent selling so fast, values were dropping and the first wave of mortgages started to default. Finally the house of cards that was the real estate market started to crumble. New Century the second largest subprime lender went out of business and that was the beginning of the end.

Sub prime lenders started closing up shop left and right. Big Wall Street banks started to make lenders buy back loans. Hedge funds started to lose money. It all unraveled quickly and painfully and there is still more to come. Now everyone is pointing the finger.

All the politicians are screaming Where was the oversight? Wall Street is yelling These lenders were out of control loosening up guidelines like that. The lenders are saying Those darn brokers took advantage of us. Brokers are saying to the lenders Youre the ones that loosened the guidelines. Realtors and the buyers/borrowers are pointing at everyone saying How could you all do this to us.

Everyone is trying to point the blame at anyone they can find to push the blame somewhere, anywhere but at themselves. So whos to blame for the subprime meltdown, I think its pretty obvious, everyone is!

Marc Savage is a Nationally Recognized mortgage Expert and Host of Your Home Your Money on AM 540 WLIE Saturday Morning at 10AM. Marc specializes in helping homeowners who have had a bankruptcy or other credit challenge find payment relief, achieve financial security, restore their credit and receive peace of mind. He is also a founding member of the National Association of Responsible mortgage Lenders. Visit his website at http://www.yourhomeyourmoney.org for more information or call him direct at 800-592-5626.

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