Subprime Meltdown: From U.S. Liquidity Crisis To Global Recession
Posted by Stephen Cline on January 16th, 2010
Why are there so many foreclosures? Why would banks, the pillars of fiscal responsibility and risk aversion, lend money to people who couldn’t afford to repay their loans? How did Wall Street manage to hide the risk and sell the subprime mortgages? How did the subprime mortgage business unravel and evolve into a worldwide liquidity crisis? What are the frauds and scams, how do they work and what should you be aware of? What is the forecast for the future and what conclusion… Buy Subprime Meltdown: From U.S. Liquidity Crisis To Global Recession at Amazon
Tags: Crisis, From, Global, Liquidity, Meltdown, Recession, Subprime, U.S.
With the current subprime meltdown taking place within the US Economy, many people are losing their homes and millions more are worried about how they are going to make their mortgage payments. In his book, Subprime Meltdown: From U.S. Crisis to Global Recession, author and real estate expert Charles Brownell addresses how the subprime mortgage was created, how it works, and what factors led to the current subprime mortgage crisis.
In 114 pages, Brownell succeeds in providing a comprehensive understanding of how a number of different sectors contributed to this crisis which has resulted in far more world wide implications. Brownell explains how the Federal Government and Congress instigated the current crisis between 1975 and 1980 when they passed legislation that forced financial institutions into the subprime market stating that it was discriminatory not to give loans to low and moderate income people. He details how the financial institutions could not afford to give loans that were considered high risk so they came up with clever ways to profit. A number of the ways that he describes were very shady and ended up costing mortgage holders much more than they thought. As well, he shows how practices of financial institutions resulted in what is known as predatory lending.
People lacking knowledge on subprime mortgages will find the book very easy to understand. Brownell provides clarity on a very confusing subject. Not only does he explain how mortgage lenders work with financial lenders to ensure the best profit for them, he also provides an account of all those hidden fees that people often don’t know about. As well, he offers solutions on how to reduce the chance of another subprime mortgage crisis from recurring. For those seeking advice on how to make sure they choose a mortgage that they can afford, helpful tips on managing your money and what to look for when choosing a mortgage are provided.
The book is a very educational read for those trying to make sense of the subprime mortgage market. Although it is about a serious situation, it is very optimistic with an important message of the need for consumer education.
Tracy Roberts, Write Field Services
The average man on the street wouldn’t lend money to a hobo with intents on getting their money back, so why did banks do this with subprime borrowers? “Subprime Meltdown: From U.S. Liquidity Crisis to Global Recession” examines this recent crisis and what led banks to do something so irresponsible with people’s money. Tackling the problem issue by issue and revealing the bank’s motivations on these and with tips on how not to be drawn into a loan that can’t be repaid, “Subprime Meltdown” is an economic breakdown that any nonspecialist general reader can understand.
I read this book (and many others) as part of some graduate school research on the subprime crisis. There are some good and bad things about this book, but overall it is not as good as other books on the subject.
The first thing to note is that this book is self-published and contains many typos and potentially misleading or inaccurate statements. Without going into detail, Mr. Brownell is not an economist or academic and a lot of his statements strike me as unresearched prejudices he developed over his career in the mortgage industry. His prose also often makes him sound like Jim Cramer or Donald Trump. For instance, the book basically ends with a hymn to capitalism. Even if capitalism is worthy of a hymn, this kind of writing doesn’t make the author sound objective. Some people may appreciate his rhetoric, but if you’re looking for an unbiased assessment you should look elsewhere.
On the positive side, Brownell does a good job introducing the subject in a quick read for people who may not have read anything about it before. If you want to read a book on this subject but only want to read a quick 100 pages instead of 200-300 denser pages, this is probably your best bet.
I would encourage anyone considering this book to buy another book instead. The best book I read during my research is Financial Shock by Mark Zandi, and I consider it far better than any other book as an introduction to the subprime mortgage crisis. Other good books include Confessions of a Subprime Lender by Richard Bitner and The Subprime Solution by Robert Shiller.
Predatory Lending is a major contributor to the economic turmoil we are currently experiencing.
Here is an example of what I am talking about:
Scott Veerkamp / Predatory Lending (Franklin Township School Board Member.)
Please review this information from U.S. Senator Jeff Merkley regarding deceptive lending practices:
“Steering payments were made to brokers who enticed unsuspecting homeowners into deceptive and expensive mortgages. These secret bonus payments, often called Yield Spread Premiums, turned home mortgages into a SCAM.”
The Center for Responsible Lending says YSP “steals equity from struggling families.”
1. Scott collected nearly $10,000 on two separate mortgages using YSP and junk fees. 2. This is an average of $5,000 per loan. 3. The median value of the properties was $135,000. 4. Clearly, this type of lending represents a major ripoff for consumers.
http://merkley.senate.gov/newsroom/press/release/?id=A09C6A80-537A-4EB1-83C5-31925F046B6F