It's the Subprime Fiasco All Over Again

I really thought we had all paid our dues on this subprime mortgage fiasco by the big hit we all took in our investments in banks, securities firms, CMOs and mortgaged back bonds. Just when I thought it was all over I read an article by Tara Servatius in Creative Loafing titled "Mops Away! : Meet you subprime lender". Her article frightens the heck out of me.

In the article she shares how now that the banks and mortgage origination scum aren't taking advantage of the poor folk, our Fed agencies FHA, Fannie Mae (FNM) and Freddie Mac (FRE) have taken up the slack. Most of the home sales in Charlotte have been under $130,00 and take advantage of the $8,000 tax first time home buyer tax credit.

Our federal government is subsidizing these home buyers with over a billion dollars a month in tax incentives. FHA is $40 billion in the hole and taking on new mortgages with FICO scores as low as 560. Freddie Mac has published in September its default rate has hit 7.3% and still they keep doing the same insane lending. Isn't the definition of insanity doing the same mistake over and over but expecting a different result? When will this end.

Now comes the bad part of this news. If these mortgages default, and they will, it's not the banks that take it on the chin, it's the federal government who will make up the difference. Guess where the government gets its money? From you and I. Remember those powers to tax and spend? Somewhere along the line our representatives reversed that to spend and tax.

Before you remember Obama's promise to make sure the rich - not the middle class - pay for any new spending and deficits and you get complacent, you have to see how all these new salary and bonus controls will make sure there won't be any rich people to be taxed anymore. He has made sure we are all middle class now. Since the poor people don't pay taxes (they just receive low income tax credits) that just leaves you, me and all our middle class neighbors and friends.

Robin Hood has left Sherwood Forest and is now robbing the middle class from Washington and giving it to the poor in the forms of housing, food stamps, free lunches, health care and even cash for clunkers.

For you, next year's tax return will be easy - how much money do you have left - attach a check for that amount and send it on in to the IRS.

Disclosure: Thank God I haven't invested in FHA, Freddie Mac or Fannie Mae

Comments

[athena:]

In the long run, we are all made serfs.

Nov 08 10:12 AM

[Michael Clark:]

We are only made serfs if we let them make us serfs (and if we let them become dukes and lords). Why did God puts trees on the earth? To hang the dukes and the lords from.


On Nov 08 10:12 AM athena wrote:

> In the long run, we are all made serfs.

Nov 08 12:07 PM

[yuan sun:]

the government bailout protects asset holders more than wage earners. its probably time to tax assets so to correct the ridiculous assets to wage value ratio.

Nov 08 12:43 PM

[User 510668:]

HUD's defaults that are foreclosed upon and conveyed to the Department are paid for out of an insurance fund that is paid into by everyone that has a HUD loan, that includes single and multifamily loans. NOT the Joe Q tax payer. If the Insurance fund is depleted (and this almost happened back in the 80's) THEN the federal government has at its option to step in and "bail out" the Department. Fannie and Freddie are different animals with different stripes. But the taxpayer has already been paying that bill since the giveaway started. Those loans we'll see about. A lot of the 7.3% that is mentioned in the article still accounts for a large number that still haven't actually been foreclosed upon from the first wave due to judicial foreclosure procedure and the filings of bankruptcies being worked through. It isn't a pretty picture and the second wave WILL occur it just might not be as bad as the first

Nov 08 08:43 PM

[stoch:]

So it's the poor who are the main beneficiaries of deficit spending... not farm subsidy recipients (versus food stamps)... nor upper middle class suburban homeowner mortgage interest deducters... ? Yes, we spend money on the poor, but we give way more to the rich and upper middle class. Visit the tax code. The poor are too easy and unimaginative as a target.

Nov 10 12:05 PM

[Jim Van Mee...:]

User 510668 is correct that the FIRST defaults are paid for out of insurance premium but as with FDIC, Fannie Mae and Freddie Mac whne the fund is depleted it is "refreshed by the taxpayers. How stable do you think the HUD default fund is?

Nov 10 12:10 PM