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For every half-broke family who were advised to “buy as much house as you can get financing for” during the sub-prime lending craze, there was a mortgage broker, and a realtor, an Attorney for buyer and seller, a title insurance company, and countless others who dip their lips into the home-buying money stream.
Now, these profiteers will be paying the piper, as it were, to those families victimized by their actions: President Obama has ordered that Realtors who earned a commission on a sub-prime funded home that was subsequently foreclosed upon give the commission directly to the owner of the foreclosed property.
“Ten years ago, property values rose at unprecedented rates,” said President Obama. “And mortgage lenders and real estate agents led homebuyers to overextend themselves to buy in a seller’s market. Now, they’ll make it right.”
For those real estate professionals who experienced the era firsthand, making money in the market was easy.
Here’s how it worked:
1.) Sub-prime Lending Made Homeownership Possible for any a–hole with a job.
“All of a sudden, mortgage companies were trying to reignite a stagnant market by lowering underwriting requirements,” said someone who may or may not be Brad Morrice, former CEO of Option One Mortgage, the sub-prime lending subsidiary of perennial tax-return f–kups H&R Block. “Next thing you know, buyers who were netting $310 a week wiping old-lady asses in a nursing home were qualifying for $300,000 loans.”
The rise in “qualified” borrowers drove the prices of real-estate skyward, as demand far exceeded supply.
Option One was to be sold to Cerebus for $800 million dollars? Yeah, until they took a look at the quality of the mortgages from which they profited.
H&R Block CEO Mark Ernst tried to hide the sh-ttiness by selling Option One mortgages to H&R Block Bank, until he was caught and fired.
Cerebus ran for the hills, H&R Band H&R Block essentially dismantled the company, never receiving a dime from it’s sale.
2.) People Who Already Owned Property were Suddenly Equity-rich, and Sought to Leverage it.
“People who were living in sh-t-shacks in the middle of nowhere suddenly saw their property value double,” explained Morrice. “And as soon as they were rich on paper, they went out and took home equity loans against it. All of a sudden, Clem Klump could drive out of a Mercedes dealer, farting into the leather seats of a new C-Series.”
3.) High Home Prices and Easier Mortgage-getting created a Perfect Storm for Realtors.
“Realtors were slinging houses, and buyers were getting offers of 125% to 200% over fair market value,” continued Morrice. “A chimp with a real estate license could make mid-six-figures while peeling bananas with their feet. And every parasitic leech involved in real estate transactions were dipping their ladles in the cash stream. It was vulgar.”
Then, suddenly, it all went sideways.
First, the sub-prime boom led to a very foreseeable condition: No one could pay their f–king mortgage. Those initial foreclosures led to a glut of property available, and prices tumbled. Suddenly, Joe and Mary Trailerpark were paying $2,000 a month on a mortage whose balance was $50,000 more than their home was worth. Why the hell not walk away from it?
Fast forward eighteen months after the subprime boom; families were facing homelessness and financial ruin; no one could buy a house, no one wanted to sell one, and Realtors were still sleeping on mattresses stuffed with pre-crash commission cash.
Well, not anymore.
“Families who were given advice to buy overvalued homes are financially ruined, potentially homeless, and definitely f–ked,” said President Obama. “But the Realtors who exploited them are richer for it. That’s some bullsh-t.”
For more of this story, go here…