Conspirator or Patsy

Who's to blame?
No this isn't about Lee, I'm talking housing and Sub Prime Lenders.

I've posted about the Sub-Prime Lenders taking heat in the news for making so many bad or questionable loans. I've also posted recently about the closing of doors for some of these companies. It all comes back to them having to buy back, or take the loss, of some or all of the bad loans they've made.

We (the public) have to have someone to pin the upcoming onslaught of defaults on.

These companies can and will suddenly announce they're closing.
In regular business terms they are not running that close to edge.
I can't speak for all of them, but in general they do have retained earnings, they do have cashflow, they are not "cooking the books". So they are doing things in the normal sense of business. This isn't an Enron situation.

But as I've stated before, I believe the problem is that they are running their businesses with normal business operating reserves and standards, yet operating in a high risk environment, in a high risk marketplace. That's the disconnect.

But is it a short sidedness on their part or just a anomaly of the market forces?
Hey, rates and competition hasn't been helping either.

Do we blame them for the housing correction, bubble, or general doom and gloom?
Maybe, maybe not.

Did Oswald act alone, or was he a patsy in a larger conspiracy?

I have two more lenders to add to the list, Popular and Origen:

• OwnIt Mortgage - a relative startup that never really got off the ground
• Mortgage Lenders Network USA - Stopped taking new wholesale business
• SecuredFunding - Would do a HELOC behind a Neg Am Loan, also stopped new biz.
• Preferred Advantage - a small offshoot of my former employer
• Harbourton Mortgage Investment Corporation
• Sebring Capital Partners
• Meritage Mortgage - actually sold to Lime but ceased doing biz
• Popular Financial Holdings Inc.
• Origen Wholesale Lending

Back to my JFK analogy.
Put on your X-Files FBI Badges and get out your decoder rings.
As Oswald may have not acted alone, So to in this there are other shadows in the game.

The previously mentioned Sub-Prime Lenders.

We have the Loan Officers.
(These shady greedy bastards would lie cheat and steal to get a loan closed)
The influx of untrained, unethical, unprofessionals into the industry.
I'll say it again, My profession is filled with lying, stealing bastards.

We have the Products themselves, loans that allow a borrower to get into a house that they really shouldn't have. Payment Option ARMS, Interest Only, Stated Income / Stated Assets, NINA, and so on.
They do have a place for the right person and situation but they've been seriously misused.

We have the Public too!
The public demand for loans that get them into that house fuels the machine.
If there was little or no demand the lenders wouldn't have created these questionable products and underwriting guidelines.

Finally we have the Markets.
If the housing market was still chugging along as it had two years ago, would we be here talking about this?
The market is as free flowing as the oceans themselves right?
Or are they? (in keeping with the conspiracy theme)
Is there some secret unknown "New World Order" that controls the market behind the scenes?
The Priory of Amortization?

How about the Fed's ?
Nah, the government has nothing to do with our personal lives.
They've just raised the Fed Funds Rate what 17 times in a row? All in the name of curbing inflation. Of course the FFR effects the Discount Rate, which effects the Prime Rate and other short term yields, ultimately effecting the COSI, CODI, COFI, LIBOR, MTA, MAT and so on which most all of the questionable loan programs are based off of.
See they had nothing to do with it.

You know I'm just kidding about this whole conspiracy thing right?
It's just an analogy to show there are more at fault than just the newspapers and cover stories would lead you to believe, right?

But just in case, I've documented everything I know and given it to a ship captain who is constantly sailing. That ship will remain at sea unless they hear of my untimely demise. At that time, the ship will port and everything I know will be published in the NY Times.

I have to go.
There's a Candy-Gram at the door...