Life In Paradise: 21st Century Style Poem by Nancy Chambers

2000-2001
The “dot com” bubble bursts
Recession
9/11/2001
America attacked!
Our way of life is threatened
Fear sets in
Financial institutions vulnerable!
Economy in a nose dive
What to do?
Everybody fly the flag from your home.
Save housing - Save the economy!
First, everybody needs a home.
The madness begins.
2002-2003
Create laws to increase minority homeownership
California gives birth to the ARMs* and NINJA** loans
Accounting irregularities at Fannie Mae (FNMA) & Freddie Mac (FDMAC) ***
Doors open for Wall Street to invest in Main Street
Without those pesky government regulations
Homeownership increases

...“After all ever since the Great Depression, home values have ALWAYS gone up
And everybody pays their mortgage ”…

WARNING! WARNING! DANGER! DANGER!

AREN”T HOME PRICES INCREASING FASTER THAN INCOME?

…...“No problem; it only takes a little creative mortgage financing and Wall St loves those high yielding mortgages…..
HIGHER RISK - HIGHER YIELD!
Pension funds love high yield.
Buy more and more....
…...“After all ever since the Great Depression, home values have ALWAYS gone up
And everybody pays their mortgage ”…..

WARNING! WARNING! DANGER! DANGER!

AREN”T PENSION FUNDS ONLY ALLOWED TO BUY AAA RATED INVESTMENTS?

...“Problem solved...banks pay the salaries at the Rating Agencies and Ratings Agencies in turn lower the standards to obtain a AAA rating”...

WARNING! WARNING! DANGER! DANGER!

WHO’S WATCHING THE “HEN HOUSE” WHO’S MINDING THE STORE?

...“Who cares?
Everyone is happy
Millions of new jobs created
Millions of new homeowners
Millions of dollars for bankers
Millions of dollars for Wall St
And everyone owns a home on Main St
Money is flowing
Everyone wins! ”…

WARNING! WARNING! DANGER! DANGER!

AREN”T HOMES BECOMING LESS AFFORDABLE?

2004 -2005
...“Pressure Government to create more creative loans and even lower down payments with even higher yields and make more bucks”…

A new mortgage is born, Euphemism: THE PAY OPTION NEGATIVE AM ARM Loan

...Easy to sell… You chose your own payment! You chose your interest rate! ...

WILL WALL ST BUY THESE LOANS?

….“You bet! Wall St loves these high yield mortgages. They package these loans as CDOs***** and sell them to Pension Funds, Municipalities, Foreign Governments etc
Spread the risk - Harvest the yield! …

Now Fannie Mae & Freddie Mac want back in on the action

...“After all ever since the Great Depression, home values have ALWAYS gone up
And everybody pays their mortgage ”
Everyone wins! …

The country is now infected with AFLUENZA

...“We need even more mortgages. Pressure Government to lower credit qualifications, raise borrowing limits, allow less equity positions. Let homeowners use their homes as ATMs+++”...

WARNING! WARNING! DANGER! DANGER!

WHERE IS THE SEC? WHERE IS THE FED? *****

...“Banks will police themselves” says the SEC
“Homeownership is up.
The Standard of Living is up
It is good” says the Fed...
...“After all ever since the Great Depression, home values have ALWAYS gone up
And everybody pays their mortgage ”...

CAN THIS LAST? WON”T HOMES PRICES HAVE TO COME DOWN OR INCOMES GO UP? .

2006 – 2007
Prices too high.
Average home unaffordable
Fewer home buyers.
Prices sinking
ARM’s resetting
Sub prime borrowers defaulting
Ninja loans failing.
Banks taking in less
Fewer dollars to lend
Layoffs beginning
Homes over-mortgaged
Appraising for much less
Equity gone
No equity - No sale

The downward spiral begins
Existing incomes static
Mortgage payments climbing
Homes losing value
Appraising lower
Jobs being lost
Unemployment rising
Banks failing
Wall St collapsing
Investment yields disappearing.
No way out!

2008 –2009
Elect a new administration with a RESCUE PLAN!
….“Spend more money Acquire more debt”….

WARNING! WARNING! DANGER! DANGER!

*ARM: Adjustable Rate Mortgage,
** NINJA loan: No Income, No Job or Assets
*** FNMA & FDMAC: Federal National Mortgage Corporation & Federal Home Loan Mortgage Corporation
**** CDO Collateral Debt Obligations
****** SEC: Securities & Exchange Commission & Federal Reserve System
+++ATM: Automated Teller Machine