I'm POed the stock market is taking a major dump. Why?
Subprime lenders are going under because their "clients" are defaulting on their mortgages in a rapidly escalating flood.
Subprime lender typically give loans for homes to people with lousy credit and people with questionable credit.
Some of these lenders probably have employed predatory lending practices, enticing people with poor credit with low interest "teaser" loans or, in many cases, interest-only loans. The result: interest rates edge up a little, and the "loan approved-home owners" simply default on their loans and walk away from their finacial obligations, period.
So the loan doesn't get repaid and the bank forecloses and the next set of bottom feeders take their turn at getting an anticipated deal on a home that nobody(ie the banks/mortgage lenders) wants. The homes accumulate on the market, a real estate glut occurs and home prices fall appreciably. Florida, for example, is reportedly down around 45%.
So people who have good credit and invest in, say, mutual funds, have to take it on the chin because of a bunch of deadbeats who should have never been allowed to qualify for a loan in the first place default on their financial obligations. AARGH!!!
Subprime lenders are going under because their "clients" are defaulting on their mortgages in a rapidly escalating flood.
Subprime lender typically give loans for homes to people with lousy credit and people with questionable credit.
Some of these lenders probably have employed predatory lending practices, enticing people with poor credit with low interest "teaser" loans or, in many cases, interest-only loans. The result: interest rates edge up a little, and the "loan approved-home owners" simply default on their loans and walk away from their finacial obligations, period.
So the loan doesn't get repaid and the bank forecloses and the next set of bottom feeders take their turn at getting an anticipated deal on a home that nobody(ie the banks/mortgage lenders) wants. The homes accumulate on the market, a real estate glut occurs and home prices fall appreciably. Florida, for example, is reportedly down around 45%.
So people who have good credit and invest in, say, mutual funds, have to take it on the chin because of a bunch of deadbeats who should have never been allowed to qualify for a loan in the first place default on their financial obligations. AARGH!!!
