From a sub prime crisis to a National Disaster

The reality is, what began to be called a sub prime crisis is turning into a National Disaster. Yet very few if any, and certainly main stream media is reporting on it. Just read these headlines from an internet publication, CCR Newsline, the full stories on each can be viewed by clicking below.

HEADLINES, January 15, 2008
• Cards, Consumer Loans Rack Up Charge-offs for Citi

• U.S. Bancorp’s Q4 Credit Card Charge-offs Rose 14.3%
• Fair Isaac Says Revenues Will Come In Below Expectations
• Citi Reports Q4 Loss of $9.8 Billion
• AmEx: 2008 Could Spell Further Credit Deterioration
• California Initiative Raises $4.6 Million to Support Mortgage Counselors
• M&T Takes Impairment Charge, Cites Alt-A Loan Losses

Astonishing to say the least. There is more. This from the National Mortgage News

¨ JPM’s 4Q B&C/CDO Hit Totals $1.3B
¨ IndyMac Slashing Staff Size
¨ CA Default Notices Seen Rising
¨ Fitch Puts 188 CMBS Tranches on Watch
¨ MortgageIT MBS Classes Downgraded
¨ GE Cap CMBS Classes Downgraded

I don’t want to be an alarmist but I do want to be a realist. Things are not good. Liquidity and equity are eroding quickly. The number of homeowners in foreclosure or about to be put into foreclosure is increasing. Unemployment is growing and the numbers of unemployed in real estate, mortgage and any ancillary business that was dependant on real estate, i.e. Construction, is ever increasing creating a new wave of financially strapped or insolvent people.

Everyone is looking for our government to bail us out or come up with some magical formula to end this rapid decline. Our government itself is “broke”. How can it come up with anything fiscally responsible when it cannot even manage its’ own finances.

Our entire economy as well as our government is based on debt. Debt which financed our debt, debt which finances our government and debt which financed the debt. No real money anywhere.

Now our regulators and our large financial institutions are busy pointing fingers at loan officers, mortgage brokers and realtors instead of admitting to their errors. I am a mortgage broker; does this mean that my actions created the headlines above? We offered financing programs that was given to us by Wall Street, Fannie Mae and Freddie Mac (the latter two being, you guessed it, government sponsored entities).

To point out the truth and reality of the situation will put us all on a corrective course of action. Until we identify what is broken and “where”, we cannot begin to fix the problem.

There are some very good comments to an article that appears in National Mortgage News written by Paul Muolo (one of the few that reports reality and truth). Click on the link to take you to his post, but most important are the comments from his readership. Please read them.

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