Herb Greenberg » Blog Archive » Straight Talk on the Mortgage Mess from an Insider

If you're reading housing/financial blogs, you've probably already seen this one. If not, it's well worth a read. I found two of the reader comments especially interesting:

Herb Greenberg » Blog Archive » Straight Talk on the Mortgage Mess from an Insider: Josh says "As a debtor on a 30 year fixed rate mortgage on a home that my income can support (25% income to payment), I’d like to thank all the mortgage industry participants for the 20%-40% haircut on my home’s value that I will probably realize over the next 2-3 years. The toxic waste that these corporate schills marketed to an uninformed (and at times intentionally misled public) should have been criminalized from the beginning. As the author admitted (having shorted mortgage industry stocks), at least a few people on the lending side understood the consequences of marketing this Ponzi scheme. It is especially thrilling that they are making money not once but twice on the financial destruction of the middle class of this country.

This is only one aspect of the Corporate Socialism running rampant in this country where profits are privatized and losses are socialized, but this one directly effects me (even though I have made relatively sound financial decisions). Thanks to the author for blowing the whistle after the train of sweeping middle class net worth destruction has left the station. As a voter, I would support any politician (regardless of party affiliation) that would pass crushing regulation on these corporate criminals. It is hard to fathom that the author has the audacity to crow about profiting twice in this fiasco and be seen as the readers of this blog (at least based on the comments) as glimmer of light in the darkness."

And Jim David said: "I own a small mortgage company in Wyoming and agree with you 100%. Fortunately, my company does not expect any losses because of our tight lending standards but it has been frustrating to compete with all the teaser rate programs etc. over the last few years, especially Countrywide’s aggressive marketing. Question: I do not believe Mozillo has properly written down his loan portfolio and the bail out plans won’t help in the end. What do you think will happen to Countrywide? What are the chances of bankruptcy? Thanks JIM"

Jim says he did the right thing, but when everyone else is doing the popular thing, it's hard to make an honest buck. David says the guys who did wrong should be punished. Anytime the public and the powers-that-be let the bad guys get away with being bad guys, the good guys have to go along with the bad guys or yield the profits to the bad guys.

A side note on Josh's comment - his house value is not dropping 20-40% from where it should have been, it is dropping that much from where it should not have been, but was. The bubble that is crushing home values today blew them to the stratosphere in recent years, far beyond where they should have been. Dropping home values are the least of our worries.