The Subprime Mortgage Crisis Explained with Cartoons

If you don't understand a whit about what's happening with the credit crisis and the whole subprime mortgage mess, here's a primer - in cartoon form - at Joey deVilla's Accordion Guy blog: Link

Or, if you're literary and like readin' words, the New York Times has a nice write up.

Raise your hand if you don’t quite understand this whole
financial crisis.

It has been going on for seven months now, and many people probably feel as if they should understand it. But they don’t, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn’t afford, and now they are falling behind on their mortgages.

But the overwhelming majority of homeowners are doing just fine. So how is it that a mess concentrated in one part of the mortgage business — subprime loans — has frozen the credit markets, sent stock
markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?

Link


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I keep going back to when Alan Greenspan lowered the prime rate to 1% or something lower after 9/11. All of this cheap money rushed into the markets.

My old boss use to say to people "good ain't cheap, and cheap ain't good." Well, cheap money proved out to be not good. Should have kept rates higher so people would only buy houses who could afford to pay.
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Lender Police at http://www.lenderpolice.com seems to have taken care of the mortgage lender loan fraud problem for Borrowers, Closing Agents, Mortgage Lenders, and Real Estate Agents.

Always use Lender Police after you apply for a mortgage loan. They’ll tell you if your lender is giving you a good deal or not in one of two ways. You can purchase a good faith estimate review for $99 that will tell you if the interest rate, points, fees, and rebates you’re being charged is appropriate for your situation. The loan document review for $199 verifies that the loan documents that you’re signing are for the same loan that you were quoted and your lender didn’t slip in any extra points, fees, pre-payment penalties, or is receiving a lender rebate for selling you a higher interest rate than you qualify for.

A mortgage loan evaluation from Lender Police is the only way to guarantee you lender isn’t trying to rip you off.
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I've seen these and still don't think they're that educational. There's a lot of background education that's needed to understand the full scope of things. If I don't know what a CPO is or the relationship between mortgage lenders and banks (which is shady enough to be confusing on its own) then I won't know why this can be expanded to cripple a nation's economy (don't we have many other things to deal with besides housing?) or how this is as bad as The Great Depression if thousands of people aren't migrating from factory to factory looking for work. It'd be great if people supplied simple FAQs to be answered by an expert..and a cartoon isn't necessary. Something in between crappy art and a post-grad economics lecture would be wonderful.
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::: To BEAN :::

This affected more than just rich people. There were a lot of people who were first time buyers that this affected. In my office and circle of friends alone, about 60% of them were affected by this. It wasn't just people who bought homes, there were people who refinanced too.

Basically, a lot of people put themselves in debt or ruined their credit.
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