Comments on: Citi: The mortgage underwriter’s tale http://blogs.reuters.com/felix-salmon/2010/04/07/citi-the-mortgage-underwriters-tale/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: d.erasmus http://blogs.reuters.com/felix-salmon/2010/04/07/citi-the-mortgage-underwriters-tale/comment-page-1/#comment-19874 Wed, 27 Oct 2010 13:38:13 +0000 http://blogs.reuters.com/felix-salmon/?p=3272#comment-19874 Where did this story go? Our politicians were so clever to delay any actions or reports until after the elections! The reason so many people are frustrated is that when a Richard Bowen has the courage to speak out, the media and politicians follow their own agendas to the detriment of all. It is interesting to me that Politico.com has no story about Richard M. Bowen’s account on his warnings to Citibank management. If President Obama, Speaker Nancy Pelosi, and Senator Harry Reid want to know where their credibility went, they need to look no further. As James Madison said, “If men were angels, no government would be necessary . . .”

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By: HBC http://blogs.reuters.com/felix-salmon/2010/04/07/citi-the-mortgage-underwriters-tale/comment-page-1/#comment-13332 Fri, 09 Apr 2010 21:56:29 +0000 http://blogs.reuters.com/felix-salmon/?p=3272#comment-13332 To say that Citi’s underwriting standards “simply fell apart” implies that they were succumbing passively to gravitational pull, whereas the testimony cited states “This was done either personally or by direction to the underwriters.”

That there was a profit motive behind issuing toxic mortgages is therefore implicit. That those who issued them en masse with psychopathic disregard for the magnitude of ensuing impact are directly responsible for the crisis, goes without saying.

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By: DonthelibertDem http://blogs.reuters.com/felix-salmon/2010/04/07/citi-the-mortgage-underwriters-tale/comment-page-1/#comment-13255 Wed, 07 Apr 2010 22:21:28 +0000 http://blogs.reuters.com/felix-salmon/?p=3272#comment-13255 Whatever happened to this paper:

http://www.clevelandfed.org/research/com mentary/2009/0509.cfm

“Ten Myths about Subprime Mortgages Yuliya Demyanyk

“Myth 4: Declines in mortgage underwriting standards
triggered the subprime crisis

An analysis of subprime mortgages shows that within the first year of origination, approximately 10 percent of the mortgages originated between 2001 and 2005 were delinquent or in default, and approximately 20 percent of the mortgages originated in 2006 and 2007 were delinquent or in default. This rapid jump in default rates was among the first signs of the beginning crisis.

If deteriorating underwriting standards explain this phenomenon, we would be able to observe a substantial loosening of the underwriting criteria between 2001–2005 and 2006–2007, periods between which the default rates doubled. The data, however, show no such change in standards.

Actually, the criteria that are associated with larger default rates, such as debt-to-income or loan-to-value ratios, were, on average, worsening a bit every year from 2001 to 2007, but the changes between the 2001–2005 and 2006–2007 periods were not sufficiently high to explain the near 100 percent increase in default rates for loans originated in these years.”

Here was my comment on the “Economist’s View” blog:

Don the libertarian Democrat said…

“If deteriorating underwriting standards explain this phenomenon, we would be able to observe a substantial loosening of the underwriting criteria between 2001–2005 and 2006–2007, periods between which the default rates doubled. The data, however, show no such change in standards. ”

How can they conclude this? Take Countrywide:

http://www.bloomberg.com/apps/news?pid=2 0601087&sid=aEsd2SRYtj7A

Lower Standards

“The company lowered its underwriting standards, pushed loans that required no documentation of income and gave incentives to loan officers and brokers to steer borrowers into riskier loans, California and Illinois claimed in the suits. ”

We don’t even have all the evidence in yet.
Reply Jul 22, 2009 at 06:55 PM

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By: Mr.Do http://blogs.reuters.com/felix-salmon/2010/04/07/citi-the-mortgage-underwriters-tale/comment-page-1/#comment-13246 Wed, 07 Apr 2010 19:30:15 +0000 http://blogs.reuters.com/felix-salmon/?p=3272#comment-13246 I was going to write to you, but couldn’t find an email. So this is off topic a bit…

Did you know that in California only original mortgages are non-recourse loans? If you re-finance, you are on the hook for the whole balance. I wonder if this accounts for less people walking away than you would expect with prices off 30-40%?

My buddy found out because his broker got him a 2nd mortgage with a 6-month teaser rate that ballooned to something ridiculous, with the idea he could re-fi when the rate ended. The loan was designed to be re-fied from the start.

I am sure when the actual re-fi went through, there was proper disclosure that the new loan was full-recourse. I am also certain there was no discussion of this when the original loan was written and that is when the decision to re-fi was made.

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By: Storyburn_com http://blogs.reuters.com/felix-salmon/2010/04/07/citi-the-mortgage-underwriters-tale/comment-page-1/#comment-13242 Wed, 07 Apr 2010 16:17:41 +0000 http://blogs.reuters.com/felix-salmon/?p=3272#comment-13242 1/3 of all foreclosures are strategic

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By: Beer_numbers http://blogs.reuters.com/felix-salmon/2010/04/07/citi-the-mortgage-underwriters-tale/comment-page-1/#comment-13238 Wed, 07 Apr 2010 14:40:02 +0000 http://blogs.reuters.com/felix-salmon/?p=3272#comment-13238 Wow, this is going to keep the lawyers busy for years.

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