Get it? Got It? Good.

Mr. Jonathan Jarvis, great job! Excellent work!

I just wished you would have come on the scene and delivered this dumbed-down, 6th-grade-reading-comprehension-leveled, ILM-esque, eye-candied, explanation to the horrifically inept American public 7 years ago. Well, now that I think about it, even then you probably would have never saved 90% of us from ourselves - or from Connie de Groot, or from rockstar and SoulGlo connoisseur Tom Adkins, or from "What-artifical-lending-standards-are-you-talking-about?" Mike Norman.

Awesome explanation. Detailed. And disturbing on so many levels.

My only critique: You forgot to include the vital role played by Realtors(R). They provided a sense of false security and false legitimacy to the run up in home values. This cannot be overstated.

Mr. Jarvis, take us to school:


The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo

The very idea that American tax payers dollars - money that should otherwise be used to build schools, improve national infrastructure, educate our next generation of taxpayers, and regulate corporate malfeasance - is being used to bail out these greed-driven Gordon Geckos and commission-paid sales people is a travesty. This is a national disgrace.

There have always been market charlatans. Carpetbaggers. Salespersons of magical elixirs, and today realtors. The greatest irony may very be that millions of Joe Sixpack American homedebtors played out their role in the disgusting performance perfectly.

I will close to say only this: We cannot fathom what these developments are going to mean to this country. You are probably hoping that this will all blow over in 6 to 12 months. But I think it wise to consider the alternative and prepare accordingly. The United States of America is no longer a nation of law and order, nor of justice.

Until you start to witness indictments and arrests on all major networks, we should all be afraid.

I hope realtors, mortgage lenders and brokers are satisfied and proud that they played such a prominent role in the destruction of our country as we knew it.

The Rancid Truth - Mortgage Lenders Make More Commissions By Screwing The Borrower

From California's North County Times:

California mortgage brokers, most of whom are licensed by the state Department of Real Estate, are legally obligated to act in the best interest of the borrower.
"However, there is no enforcement mechanism in place to ensure that they (do so)," said Paul Leonard, director for the California office of the Center for Responsible Lending. Leonard told a state banking commission earlier this year that mortgage brokers "have strong incentives to make abusive loans that harm consumers, and no one is stopping them."

A mortgage broker's incentive "is to close the loan while charging the highest combination of fees and mortgage interest rates the market will bear," a 2004 study prepared by Harvard University's Joint Center of Housing Studies concluded.

Brokers can earn higher commissions -- up to 3 percent instead of the typical 1 percent -- by having customers buy loans with interest rates that are higher than market rates, with prepayment penalties charged if the loan is paid off before a certain date, and with little or no verification of the borrower's income, known as "stated income" loans. That's the difference between a $12,000 and a $4,000 commission on a $400,000 loan.

But why will the home finance market bear high fees AND high mortgage interest rates? How can structuring loans that promote perpetual financial serfdom be acceptable to the borrower? How can reckless underwriting practices as well as tried and true "bait and switch" tactics be acceptable to loan consumers?

The answer is the 21st century financial retardation of the American consumer. Sure, one can certainly blame mortgage lenders and realtors for all of the hell breaking lose in real estate. It's almost too easy to do so - much in the same way one might blame ants for showing up at a picnic.

Compensation schemes like the ones described above might make one's blood boil, but the truth is that none of these incentives would ever be that attractive or effective, if the American consumers fueling the insanity weren't so incredibly illiterate when it comes to their own money.

We are approaching the middle of 2007 and millions of American home borrowers (not homeowners) are now paying the price with personal bankruptcy and home foreclosure - harsh lessons to learn that will likely affect their financial lives for years to come.