Senate Subprime Hearings

Nice coverage of the hearings by "Genesis"...best part:

Finally, what may be the most important piece of information out of the hearings:

40-60% (depending on the lender) of all borrowers would not be able to qualify for their mortgage if they were forced to qual on the fully-indexed rate for the product they were offered.

Go back and read this again folks. Then read it again. And again. Let it sink in.Half of the customers of these firms over the last two years could not afford the house they bought because they could not afford the fully indexed rate on a mortgage - whether it be a conventional fixed product or some form of ARM!

Again - approximately one half of all mortgage originations over the last two years should not have happened at all, and if these rules are put in place going forward, one half of all originations will disappear from mortgage broker's offices and mortgage companies.

Now ask yourself - how many of the companies in this space survive if they (1) have to deal with the inevitable regulation, back-charges and lawsuits that will come out of this in the next year or two, and (2) their income stream from new customers is cut by 50% at the same time.

This smells like ENRON and MCI/Worldcom all over again.