This American Life, $1,000 bottles of Mortgage Bubbly

Posted by: Chris Palmeri on May 20, 2008

The public radio show This American Life had a great program on the housing bust on Sunday. It was called the Giant Pool of Money and it detailed how Wall Street’s search for higher yields translated into the foreclosure crisis the country is presently experiencing.

None of this will be new to readers of Hot Property, but the stories told here are amazing. There’s the borrower in Ohio with poor credit and who never made more than $45,000 a year but nonetheless got a mortgage for nearly $500,000. As he described it: “I wouldn’t have loaned me the money. I know criminals who wouldn’t have loaned me the money.”

There’s also the tale of the mortgage salesman at a boiler room type outfit in New York who tells of first class treatment in night clubs, $1,000 bottles of Champagne with sparklers on them, and hobnobbing with celebrities. Not surprisingly both of these people are now fighting foreclosure on their homes.

For folks who really enjoy listening to things online, Congress is holding hearings at 2PM eastern time tommorrow on the impact of foreclosures on local communities.

Reader Comments

Steve Richards

May 25, 2008 3:19 AM

In 2002 I bought a new home in Moreno Valley, California. It's part of the now hard-hit Riverside county. My neighbors were nice, but they were ILLEGAL immigrants (aliens) and they bought a 2,600 sq. ft., 4 bedroom 3 bath home next to me. They had a new Ford pickup truck and a new, HUGE, GM SUV. They had 5 children, three in elementary school and two going to high school.

How did they purchase this property with ZERO money down? Wells Fargo accepted a Matricula card from the Honduran Embassy! The mother would sneak out early in the morning to drop the children off at school (about 2 miles away) and once a week in the evening.. sneak (driving gently) down to the grocery store 2 miles away.

The father would only RETURN to the USA once per month for a weekend. He told me he was an "Insurance salesman." Yeah, right.

By their own admission they had NO insurance on either vehicle and a 3-year interest only ARM (Adjustable Rate Mortgage). While others in the neighborhood were proud of our new homes and put in sprinkler systems, trees, flowers and new grass. Their back yard was bare, dusty, and their 3 dogs barked continually. The builder supplied grass in front turned brown and I don't know what they barbecued when the husband came home, but it smelt like wet, burned hair.

I'm NOT against immigration. I'm NOT against people owning their own home. I AM however, against the BIG BANKS and FINANCIAL houses being able make these types of loans, wrap them up in CDO's and SIV's and sell them all over the world. I AM against illegal immigration, and Congress and the President turning a blind eye to this encroachment. I AM against our Immigration authorities NOT following the law and deporting MILLIONS as they should. The WHOLE mess from top to bottom was a SCAM created by Wall Street who now RUNS America. As proof of this, Ben Bernanke recently gave Jamie Dimon at J.P. Morgan the 86 year old Bear Sterns for 1 billion (secured by crap) and obligated YOU and I as taxpayers to the tune of 29 Billion of the toxic mortgages held by Bear. Bernanke has further used the Treasury to bail out his buddies on Wall Street. Rome got Nero and we'll get one of 3 puppets now running for President. It doesn't matter which one gets seated... they ALL work for Wall Street.

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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