The Sub-Prime Mortgage Crisis Explained

[hnpcc]

The Sub-Prime Mortgage Crisis Explained By Stick Figures. Possibly the clearest explanation I've read of any of this.

And in other news... Hm, not sure what to think about this. On the one hand, not good, on the other, they still want to sell stuff. So hm.

Comments

[undergroundsea.livejournal.com]

I still don't get how it works, but I liked the Norwegian pension dude.

I understand how dodgy brothers mortgage co. leant money to clients who couldn't pay for their houses. But how did the banks and the investors come into it. How did dodgy mortgage bros. convince the banks to give money to these no-hoper people.

[epideme.livejournal.com]

Well it helps that the lenders also got their Loan Admin, title indemnity fees etc. Greed does funny things. Also while the property was still worth the money leant, the maths still works out. But you are right. The sub prime lender I worked for in the UK had fairly strict criteria (even stricter now), and would ensure they could always get the money back. 70+% LTVs were pretty uncommon. In the US it seems 100+% LTVs were common, simply because everyone made the assumption that house prices would continue to go up. The stick figures explain what was wrong with that assumption very nicely!