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The Media's Subprime Soliloquy

You've been hearing a lot of rancor about subprime mortgages, haven't you?

Vote Democrat!!!

It so happens I work in that field. I own a mortgage business. I'm a licensed mortgage broker. I have 26 loan agents working under me. I deal with subprime borrowers and lenders every day of the week. Hell, I teach mortgage finance at real estate school.

I can say with certainty that if you actually *believe* the liberal Democrat media's apocalyptic headlines about subprime mortgages you need to take a step back, take a deep breath, at least postulate taking a Xanax (or two), but most importantly you need a reality check.

As of last quarter 99.5% of all home loans in the country were *not* in the process of going through foreclosure. 95% of home loan borrowers were *not* behind on their payments. 87% of subprime borrowers were not in arrears.

Does this mean I'm contending there are not any problems?

Um, no. Of course there are problems in the subprime markets. Duh.

But the liberal media once again has jumped the shark.

Near the end of that six-year real estate sales and mortgage lending boom overzealous wholesale lenders began handing out subprime loans to people with horrible credit scores, weak incomes, and no savings - in other words, people who shouldn't have been allowed to borrow money for a car, much less to purchase a home. Sure enough, a whole slate of those borrowers have fallen behind or entirely stopped paying back those loans. Shocking, huh? Yep. That should be as *shocking* to everyone as high relative rates of homicide, suicide, poverty, crime, student dropouts, unemployment, and teen pregnancies, along with low student test scores, in big liberal cities controlled for decades by liberal Democrats.

Early this year the investors that make up what's called the "secondary" mortgage market finally grasped the fact that dishing out 100% financing to people with ghastly credit scores is not exactly a brilliant idea. So, ergo, they tightened up their standards. The secondary mortgage market is where home loans are purchased from the primary lenders whose travails are causing media liberal-bots to froth at the mouth. When the secondary market participants tightened up their standards a liquidity problem arose for numerous primary lenders, most particularly the subprime lenders to which references were made above. Several of those companies have ceased lending operations.

So far the most notable failures have been Fremont Investment & Loan and New Century Mortgage. In the greater scheme of things, however, Fremont and New Century imploding is analogous to Lichtenstein declaring war against Luxembourg. Seriously, we're not talking here about Bank of America or Wells Fargo. Not even close.

Here are the bottom lines:

If you have really bad credit, from this point forward you're going to have to (gulp) pay down in cash at least 5% of the purchase price of your next home. (Oh, the humanity.) If you have really bad credit and no savings whatsoever, you're going to have to (gasp) remain a tenant.

If you're planning to sell your home, you're going to be facing a soft market for the next year or two.

If you're one of those people who fecklessly purchased a home that was too expensive for you then hopefully you'll learn your lesson.

In 2-3 years, the media's self-proclaimed and utterly-banal "Mortgage Tsunami" will be such ancient news the malcontents and zombies who make up the "Fourth Estate" won't be able to tell you the difference between New Century Mortgage and the Ramones' "End of the Century."


Listed below are links to weblogs that reference The Media's Subprime Soliloquy:

» Rocket Jones linked with The Mortgage Crisis (Updated and Bumped!)

» Barking Moonbat Early Warning System linked with Sub Primal

Comments (11)

Working a Ramones reference... (Below threshold)

Working a Ramones reference into a post about subprime mortgages. No wonder Kevin brought you on.

Well done!

If you didn't loan money to... (Below threshold)

If you didn't loan money to these poor people (left to fend for themselves by those evil , rich Republicans), the liberal Democrat MSM would crucify you. The local paper would have articles sadly documenting how these deserving people just can't get a loan from that nasty mortgage company. The Senate would hold hearings, requiring bank executives to testify. Oops, Dodds is already doing that.

Great to see you blogging a... (Below threshold)
Mark L:

Great to see you blogging again. Now Wizbang has completed the Polipundit hat trick.

I must have missed somethin... (Below threshold)

I must have missed something.
Most of the hysteria I heard about the subprime mortgage market didn't come from the Democrats, it came from those well known leftists on Wall Street.

I am also in the business..... (Below threshold)

I am also in the business...a real estate agent. 2006 was an absolutely miserable year putting me in horrible debt to keep my business running and my kids in college. How come no one is offering to bail me out(like the spinach growers)or investigate manipulation in the industry(like the congressional committees) or offering the pay my unbelievable health insurance bill(now $1220 per month!). Apparently there are no consequences for making bad choices like buying a house when you can't afford it or loaning money to people who have really really terrible credit.

Nightly Business Report is ... (Below threshold)

Nightly Business Report is a leftist mouthpiece. They have been crying wolf about this for weeks now. Right after their storys about Global Warming and how THAT will wreck the economy, unless you want to invest in carbon Indulgences, in which case they can tell you the company to get them from, and what the trading rate is.

News, even the business news, is all about the hype.

Until a couple of weeks ago... (Below threshold)

Until a couple of weeks ago, I was a subprime underwiter. Lets not forget that there were a good number of Walmart, McDonalds, or 711 employees that purchased a home under these programs in 2004. Most of those people, if they have not tapped their equity, now have a substantial (for them anyway) net worth. Countless people who never would have been able to accumulate wealth have under these programs. We'd better put a stop to that.

Jayson: Hooverville here we... (Below threshold)

Jayson: Hooverville here we come. Good post but you only scratched the surface of the mortgage finance business. When you reach the CDO funds then we will understand how diverse the risk is spread on subprime as well as prime mortgages. The reason New Century had its funds cut off was that the subprime loans were longer eligible for securitized trusts. If you can't sell mortgage backed bonds you can't buy the mortgages. If New Century can't find any buyers then it can't originate any loans. End of story. The subprime problems are a good sign. The upstream investor are being conservative and looking to preserve capital. Just because a couple of small fish at the bottom of the food chain got bit is good for the overall economy since it shows that the big money is being wise with their investments.

Absolutely correct. I work... (Below threshold)

Absolutely correct. I work in this area as an attorney, and it affects such a small sliver of the mortgage pie, it's a non-issue, unless you're a shareholder of one of these cos., or about to close on a loan with them.

They provided an unprecedented amount of credit to a risky market, mainly advantaging the poorer folk. So, capitalism actually overdid it on the poor, in a way, and the MSM won't even understand how that happened.

It's called the free market, and it's the best system in the world for creating solutions to poverty that the liberals can't accomplish.

That said, the regulators need to clean up loan underwriting--loaning $400k to someone with no income, as I saw recently, is a prescription for disaster. The rate was not that bad, by the way.

Your usual great analysis, ... (Below threshold)

Your usual great analysis, JJ. Still love ya!

The Liberal press did it. <... (Below threshold)
Bill G:

The Liberal press did it.

Clinton is responsible.

You keep pushing the same, tired old buttons. But have you noticed? Its not working anymore, except with your most looney wing nuts?

Notice the hits on so-called "conservative" blogs are way down?

Even Fox "News" is dancing differently. They are now trying to avoid liability for the false propaganda they knowingly put out on WMD, etc. That liability could come home soon in interesting ways.

But keep trying. It gives us some comic relief from the real and terrible problems your kind have created for America.






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