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Goldman paying 3.15 BILLION to settle stinky mortgage claims

The underwriting standards should have been much much better, but that won't stop somebody from buying in a market that has had unsustainable appreciation and it won't stop somebody from using a more exotic adjustable rate or balloon mortgage over a standard fixed rate loan.

Should we have a financial aptitude test before somebody can get something other than a fixed rate loan? Perhaps, but until we do there isn't much of a solution.

People should be free to make the financial decisions they think are in their best interest. Inherent in that is a certain risk and reward.

When they are being lied to and pressured into signing very complex instruments, it's wrong to put all or even most of the blame on the customers who aren't trained in these matters.

There should be thousands of mortgage brokers and bankers in jail. Many made tons of money not caring what would happen to their "clients".

The banks were even worse. It's their fiduciary responsibility to look at every deal. They didn't care.

To absolve banks and crooked mortgage brokers is terribly unfair and short-sighted.
 
Stupid poors believing what educated people in the financial sector told them.
 
So to suggest that people who don't really understand what they are getting into shouldn't get into major financial transactions with 30 year commitments is heartless. Yet, If those transactions blow up in their face, it is somebody else's fault.

As much as you all want to shift the accountability away from the person signing on the dotted line, that isn't the way it works in the real world. It is all their accountability,and your pity won't help them make mortgage payment #1.
 
so in other words, the victim is always guilty when they are defrauded under your belief system.
 
Serious question. What percentage of people who took out mortgages during the bubble were defrauded vs just made bad decisions? I think there is a pretty clear line between the two.
 
The people who were defrauded were the lenders. If you misrepresent something on a mortgage application, you are a party to the fraud. They are the ones who end up holding the bag of crap at the end of the day.
 
I understand that you are ultimately responsible for the information on the application when you sign at closing but I'm pretty positive that plenty of shady brokers altered the info between application and closing to get the loan sellable to the lender and ultimately Freddie or Fannie. Probably a small percentage but it was out there.
 
I understand that you are ultimately responsible for the information on the application when you sign at closing but I'm pretty positive that plenty of shady brokers altered the info between application and closing to get the loan sellable to the lender and ultimately Freddie or Fannie. Probably a small percentage but it was out there.

Now that is fraud against the borrower. Totally agree with that.
 
Serious question. What percentage of people who took out mortgages during the bubble were defrauded vs just made bad decisions? I think there is a pretty clear line between the two.

And what's a bad decision? Some people can afford less now than they could then for unforeseen reasons.
 
we have had this conversation on the boards about 100 times.

It is possible to simultaneously believe the following:

1) Lots of people were irrationally exuberant and greedy and took out way more debt than they could afford. They should have known better.
2) Lots of other people intentionally preyed on the first group's ignorance and greed to make a lot of money for themselves.
3) Group 1 got the shaft, Group 2, for the most part, made $Texas and lived happily ever after.

I am not sure why either Group 1 or Group 2 should be considered wholly innocent. The difference is that Group 1 has taken its medicine with not a lot of assistance from the taxpayer, while Group 2 has gotten off more or less completely free. Worse, the fines that are now being levied, 6 years too late, are not being personally paid by the human beings who acted poorly in Group 2. Rather, they are paid by the stockholders of Bank of American, Goldman, and the rest - which means all of us are paying them since we all own those stocks in the mutual funds in our 401(k)s.

Privatize the profits, socialize the losses. Pretty good deal if you can get it.
 
Serious question. What percentage of people who took out mortgages during the bubble were defrauded vs just made bad decisions? I think there is a pretty clear line between the two.
I see what you're staying , but I'm not sure the line is as clear as you're suggesting it is. Bad decisions were actively encouraged because selling financial products to people who couldn't afford it and/or didn't know what they were doing was good business. Clinton basically created a brand new market of first time homebuyers with very little regulation or enforcement against bad business practice.
 
CL68 is also working with a lot of hindsight bias. A lot of mortgages were a bet that home values would continue to go up and most thought that was a good bet at the time.
 
CL68 is also working with a lot of hindsight bias. A lot of mortgages were a bet that home values would continue to go up and most thought that was a good bet at the time.

OOOOOOOPPPPPPPPSSSSSSSS
 
CL68 is also working with a lot of hindsight bias. A lot of mortgages were a bet that home values would continue to go up and most thought that was a good bet at the time.

Yeah, that's generally the rub with leveraged speculation.
 
The people who were defrauded were the lenders. If you misrepresent something on a mortgage application, you are a party to the fraud. They are the ones who end up holding the bag of crap at the end of the day.

For fuck's sake.
 
The people who were defrauded were the lenders. If you misrepresent something on a mortgage application, you are a party to the fraud. They are the ones who end up holding the bag of crap at the end of the day.

So basically, you don't think fraud should be a crime. The "victims" allow themselves to be victims and fuck 'em if a talented conman lies to them and steals their money.

In essence your position is the anti-tjmd.
 
So basically, you don't think fraud should be a crime. The "victims" allow themselves to be victims and fuck 'em if a talented conman lies to them and steals their money.

In essence your position is the anti-tjmd.

What? I never even said anything close to that. I said that people who were defrauded were primarily the lenders who purchased these mortgages with the assurances that the proper underwriting standards had been met. They were the ones who supplied the money that was stolen, not the borrowers.
 
What? I never even said anything close to that. I said that people who were defrauded were primarily the lenders who purchased these mortgages with the assurances that the proper underwriting standards had been met. They were the ones who supplied the money that was stolen, not the borrowers.

Strange, then, that one of those defrauded lenders just paid $3.15 billion to settle claims that it intentionally misrepresented and sold loans that it knew were likely to default.

Who did that poor victim of fraud sell those mortgages to? Oh, that's right - Freddie and Fannie, AKA the taxpayer.

And all those "victims" who sold those mortgages to the taxpayer in 2006-2008 got ginormous bonuses which they are still using to snort coke off the backs of expensive hookers.

Cry me a river.

You're smarter than this, dude.

Privatize the profits, socialize the losses. It took Wall Street a hundred years to perfect that business model, but it has been humming since 2001.
 
CL, you're forgetting some folks in the middle.
 
Strange, then, that one of those defrauded lenders just paid $3.15 billion to settle claims that it intentionally misrepresented and sold loans that it knew were likely to default.

Who did that poor victim of fraud sell those mortgages to? Oh, that's right - Freddie and Fannie, AKA the taxpayer.

And all those "victims" who sold those mortgages to the taxpayer in 2006-2008 got ginormous bonuses which they are still using to snort coke off the backs of expensive hookers.

Cry me a river.

You're smarter than this, dude.

Privatize the profits, socialize the losses. It took Wall Street a hundred years to perfect that business model, but it has been humming since 2001.

You are correct that the banks, investment banks and other financial institutions packaged these crappy products and sold them to Freddie and Fannie and pensions and so forth with representations that underwriting standards had been maintained which puts them on the same hook as the people who sold the loans to them, but alot of the banks and investment banks were left holding the bag when the game of musical chairs stopped. And there are people who should be in prison who aren't who got off scott free.

http://en.wikipedia.org/wiki/List_of_writedowns_due_to_subprime_crisis
 
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