"Without previous instance; never before known or experienced; unexampled or unparalleled" - is the official dictionary meaning of the word and I could not think of a better word to describe the current situation of our market place or the economy.
From bank failures to auto company bail outs, ponzi schemes to financial scams, unemployment figures to raising home defaults, we have seen every possible disaster in recent times. I have been trying to gather information that makes sense so my little brain can comprehend the magnitude of the effect and/or the fall out. There is too much going on at the same time and everything is happening so fast that it is becoming extremely confusing to connect all the dots. However, I recently watched a documentary on CNBC called 'House of Cards' which has covered the meltdown of the financial system and how mortgage industry was the center of all that downfall. In this 2 hour show, David Faber (well known CNBC anchor) covers four different levels - The Federal Reserve, Investors, Mortgage Lenders and the Home owners. Every one of these are to be blamed for the mess our economy and the market place is in currently .
The Bottom line -- Greed, and the most astonishing part is how everyone from Investors to Lenders to home owners never accepted the fact that the deals were too good to last forever. A mad rush to make too much quick money drove all the investors on the Wall Street to quickly buy as many loans as possible, spin those loans into a complex asset-backed debt obligations and sell out instantly. Also, the Wall Street firms took all these loans, whipped them into bonds and passed on to investors billions of dollars of what is now toxic debt. All these literally contributed to the wealth destruction of this era.
These collateralized debt obligations are so complex that even the founders themselves can't figure out. On the other hand, craving homeowners started buying properties which were way more than they can afford, lenders kept approving as they were able to turn around and sell these loans to Investors. Everything from the rate of loan closures by predatory lenders to homeowners biting more than what they can chew led to highly inflated unaffordable property values which ultimately came tumbling down.
Now, what is even more interesting is the flip side of all this. Several loan modification companies are sprouting all across the nation claiming to help the troubled home owners. These are illegitimate organizations that are trying to capitalize on the desperate situation of the home owners who are unable to keep-up with their mortgage payments. They are advertising and reaching out to troubled home owners promising a loan modification with the lender, charging exorbitant up-front fees and disappearing. There are many home owners who are caught in this fix. Again, the principles behind some of these loan-mod companies are the same people responsible to bring us into this mess in the first place by the way of predatory lending.
The markets are slowly picking up indicating recovery and media is showcasing growing home sales index. However, I think this market bump is temporary and till the foreclosure numbers are contained this mess will continue to grow which will eventually end up hitting the markets again. Currently the numbers are staggering on home foreclosures with 1.3 M this year and it is expected to go up to 5.7 M by 2013.
As a closing note - I would like to caution any troubled home owners not to fall into the trap of these unsolicited loan modification companies unless endorsed by your Servicer or Bank.
Interesting links to check out:
The Bailout's Biggest Flaw
25 People to blame for the Financial Crisis
From bank failures to auto company bail outs, ponzi schemes to financial scams, unemployment figures to raising home defaults, we have seen every possible disaster in recent times. I have been trying to gather information that makes sense so my little brain can comprehend the magnitude of the effect and/or the fall out. There is too much going on at the same time and everything is happening so fast that it is becoming extremely confusing to connect all the dots. However, I recently watched a documentary on CNBC called 'House of Cards' which has covered the meltdown of the financial system and how mortgage industry was the center of all that downfall. In this 2 hour show, David Faber (well known CNBC anchor) covers four different levels - The Federal Reserve, Investors, Mortgage Lenders and the Home owners. Every one of these are to be blamed for the mess our economy and the market place is in currently .
The Bottom line -- Greed, and the most astonishing part is how everyone from Investors to Lenders to home owners never accepted the fact that the deals were too good to last forever. A mad rush to make too much quick money drove all the investors on the Wall Street to quickly buy as many loans as possible, spin those loans into a complex asset-backed debt obligations and sell out instantly. Also, the Wall Street firms took all these loans, whipped them into bonds and passed on to investors billions of dollars of what is now toxic debt. All these literally contributed to the wealth destruction of this era.
These collateralized debt obligations are so complex that even the founders themselves can't figure out. On the other hand, craving homeowners started buying properties which were way more than they can afford, lenders kept approving as they were able to turn around and sell these loans to Investors. Everything from the rate of loan closures by predatory lenders to homeowners biting more than what they can chew led to highly inflated unaffordable property values which ultimately came tumbling down.
Now, what is even more interesting is the flip side of all this. Several loan modification companies are sprouting all across the nation claiming to help the troubled home owners. These are illegitimate organizations that are trying to capitalize on the desperate situation of the home owners who are unable to keep-up with their mortgage payments. They are advertising and reaching out to troubled home owners promising a loan modification with the lender, charging exorbitant up-front fees and disappearing. There are many home owners who are caught in this fix. Again, the principles behind some of these loan-mod companies are the same people responsible to bring us into this mess in the first place by the way of predatory lending.
The markets are slowly picking up indicating recovery and media is showcasing growing home sales index. However, I think this market bump is temporary and till the foreclosure numbers are contained this mess will continue to grow which will eventually end up hitting the markets again. Currently the numbers are staggering on home foreclosures with 1.3 M this year and it is expected to go up to 5.7 M by 2013.
As a closing note - I would like to caution any troubled home owners not to fall into the trap of these unsolicited loan modification companies unless endorsed by your Servicer or Bank.
Interesting links to check out:
The Bailout's Biggest Flaw
25 People to blame for the Financial Crisis
Comments
Your blog on "Unprecedented Times" is very good. Try to blog on different topics, including spiritual to :)
Regards,
Viswandh