Monday, October 01, 2007
Take your mortgage news with a grain of salt
The business of mortgage finance is complicated. It has developed over 30 years of trial and error, and it is hard to define with sweeping generalizations. Beware the stories in your local newspaper or the New York Times that attempt to simplify the sources of the problems, and identify individuals or organizations who are to blame.
Yesterday's New York Times, Can these mortgages be saved? by Gretchen Morgenson is a case in point. Tanta, at the financial blog Calculated Risk, takes Morgenson thoroughly to task for revealing what can only be described as a profound ignorance of how the mortgage business actually works.
If you are interested in understanding some of the confusing news about the housing bubble, mortgage business, and the problems in the credit markets, Calculated Risk should be a daily read (and will be added to the Tigerhawk blog roll if I have any pull around here).
3 Comments:
By 
, at
Mon Oct 01, 11:53:00 AM:
Here is a link, accruedint.blogspot.com, that explains what happens to these mortgages. They are wrapped up in CDOs (collateralized debt obligation) and sold to investors. These CDOs have had massive losses, both because of mortgage losses and declining home values. Citi announced a $3.3 billion write-off today that is partially related to the mortgage markets.
By 
Purple Avenger, at
Mon Oct 01, 04:56:00 PM:
If you buy a joint that is overpriced to begin with thinking you'll find a bigger fool soon, you're the bigger fool. The music stops eventually, and someone is left without a chair.
If you give that fool the mortgage to buy that overpriced house, then you deserve to lose your shirt.
I have no sympathy for either the buyers or lenders.
By TigerHawk, at
Mon Oct 01, 07:37:00 PM:
You do have pull. Calculated Risk is now blogrolled under "specialty blogs."
