4 replies to this topic

[selecto]

GE & WaMu mortgages cut by Moody's.

FBI Busts 26 in 200 m sub-prime scam.

Edited by selecto, 10 July 2007 - 07:43 PM.

[selecto]

Sorry, scam story is here.

[ogm]

S&P finally says subprime is mostly junk
Commentary: New methodology is death knell for the troubled industry
By MarketWatch
Last Update: 12:51 PM ET Jul 10, 2007

WASHINGTON (MarketWatch) -- Standard & Poor's just drove a huge harpoon into the heart of the mortgage credit bubble, and it's going to take a long time to clean up the mess once the beast finally dies.
S&P, one of the three main credit-rating agencies that served as enablers of the subprime-mortgage boom, announced Tuesday that it would lower its ratings on 612 bonds, a small portion of the mortgage-backed securities it had given its seal of approval to. See full story.
But the bigger news is that S&P isn't going along with the charade anymore. S&P said it would change its methodology for rating hundreds of billions of dollars in residential-mortgage-backed securities. And it would review its ratings on hundreds of billions of dollars in the more complex collateralized debt obligations based on those subprime loans.
A lot of debt will be downgraded to junk status. A lot of that debt will have to be sold at fire-sale prices. A lot of pension funds and hedge funds that once thrived on the high returns they could get from investing in subprime junk will now lose a lot of money.
S&P's announcement is a death warrant for the subprime industry. No longer will mortgage brokers be able to help buyers lie their way into a home. Fewer stressed homeowners will be able to refinance their mortgage, thus extending and exacerbating the housing bust.
"We do not foresee the poor performance abating," S&P said.
Prices will fall, and foreclosures will rise. More mortgage fraud will be uncovered as the tide goes out.
And hedge funds will have to find another way to beat the market -- if they survive this blow, that is.

http://www.marketwat.....5B08FD9AA07D}

Edited by ogm, 10 July 2007 - 08:53 PM.

[xe2dy]

S&P finally says subprime is mostly junk
Commentary: New methodology is death knell for the troubled industry
By MarketWatch
Last Update: 12:51 PM ET Jul 10, 2007

WASHINGTON (MarketWatch) -- Standard & Poor's just drove a huge harpoon into the heart of the mortgage credit bubble, and it's going to take a long time to clean up the mess once the beast finally dies.
S&P, one of the three main credit-rating agencies that served as enablers of the subprime-mortgage boom, announced Tuesday that it would lower its ratings on 612 bonds, a small portion of the mortgage-backed securities it had given its seal of approval to. See full story.
But the bigger news is that S&P isn't going along with the charade anymore. S&P said it would change its methodology for rating hundreds of billions of dollars in residential-mortgage-backed securities. And it would review its ratings on hundreds of billions of dollars in the more complex collateralized debt obligations based on those subprime loans.
A lot of debt will be downgraded to junk status. A lot of that debt will have to be sold at fire-sale prices. A lot of pension funds and hedge funds that once thrived on the high returns they could get from investing in subprime junk will now lose a lot of money.
S&P's announcement is a death warrant for the subprime industry. No longer will mortgage brokers be able to help buyers lie their way into a home. Fewer stressed homeowners will be able to refinance their mortgage, thus extending and exacerbating the housing bust.
"We do not foresee the poor performance abating," S&P said.
Prices will fall, and foreclosures will rise. More mortgage fraud will be uncovered as the tide goes out.
And hedge funds will have to find another way to beat the market -- if they survive this blow, that is.

http://www.marketwat.....5B08FD9AA07D}

And lets not forget one of the things Bush gave the working class...

http://money.cnn.com..._bill/index.htm

[zedor]

Sorry, scam story is here.

An interesting observation about CNN vs FT and due diligence.


I read your link and it makes sense as to why an indictment was garnered. The FT article mentions the following

US officials charged 26 people with conspiracy and fraud, alleging in a criminal indictment unsealed on Tuesday that they used invented purchasers, stolen identities and inflated appraisals to fraudulently obtain subprime mortgages on more than $200m in property in and around New York City. ........They allegedly conspired to lie to a series of lenders to obtain mortgages between 2004 and 2007.......The conspirators are also alleged to have submitted false financial information about the borrowers, including income, bank statements and credit history, in order to obtain larger loans

But this is all that CNN says about the crime http://money.cnn.com...sion=2007071019

According to Garcia's office, the applications, which were submitted from 2004 through December 2006, induced "the lenders to make loans that otherwise would not have been funded."


Among the properties alleged to have been bought using the loans is a block of ten rent-regulated apartments on Manhattan's Upper West Side Side.


Certain defendants may have garnered millions of dollars in loan proceeds by omitting from their loan applications information such as their income, the fair market value of the apartments, and the fact the apartments were subject to New York's rent regulation laws, the indictment states.

Now not including information should not be a crime and isnt, as the bank should then reject the application or ask for the ommitted information. (giving false information is a crime -- staying silent and leaving a space blank is not. CNN did not review the story not list what actual crimes were committed. I shudder if this is their due diligence on this story what it might be like on others

Edited by zedor, 11 July 2007 - 03:37 AM.