that they knew the borrowers could not pay the loans once they balooned.  They purposefully allowed borrowers to "qualify" based on the artificially reduced initial interest rates.

Bt it is not quite as simple as the greed of the loan originators.  The banks that managed these mortgage-backed securities that bought up those loans also knew the borrowers could not afford the loans once they balooned.  They bought the loans because of the profit they would make when the loans had to be refinanced - profit that came from the housing bubble, and depended on house prices increasing.  They created those loans to take the house value appreciation away from the homeowners and put it in their own pockets.

They didn't care if the homeowners defaulted and they had to foreclose - the house values were increasing and they would make even MORE money on the foreclosure.

And now we're bailing out those sick F*ckers.  $3,400 in debt for each if us and our kids.  Money our kids will have to pay back to China.  With interest.

by rbruck on 09/19/2008 12:36:47 PM EST

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