Talk:Subprime mortgage crisis

The Title Of This Article Violate Wikipedia's NPOV Policy.

Whatever is being described in this article is as much caused by various other activities that took place in the US financial industry, as by the underlying subprime mortgages. To label this the Subprime mortgage crisis is incorrect, and shows a POV. Glkanter (talk) 20:18, 18 July 2010 (UTC)

Formerly this article was about the entire recession, but now it is about the real estate and mortgage aspects. Note the link to "2007–2010 financial crisis" in large lettering at the top right. Potatoswatter (talk) 07:11, 19 July 2010 (UTC)

I just looked at the history of this article. Originally it was about a subprime mortgage problem that was affecting homeowners and certain lending institutions. Glkanter (talk) 06:27, 23 September 2010 (UTC)

Yes, thanks for your reply. It is my understanding that many activities on Wall Street were more contributory to the real estate bubble and mortgage crisis than the sub-prime mortgages. Glkanter (talk) 21:25, 19 July 2010 (UTC)

I am unable to edit the article because I am not as articulate as the authors. However, having been a Real Estate Agent during this time period, I do feel it is worth mentioning that the Administration in the 80's and 90's made bold statments to the effect of "It is my goal to see 60% of Americans own a home....". As a result, lending guidelines were VERY relaxed; the Sub-Prime Loans were born. If one cold fog a mirror, they could get a mortgage. Greenspan's famous words "irrational exuberance" were announced, which he has recently regretted. This, of course, festered more in the next Administration, which repealed Depression Era controls on non-banking companies to enter into banking/stock market/insurance functions. How to 'fix it'..... those involed should relent their greed.... just lower the interest rates of the ARM's to a 'workable' Fixed rate and let the Homeowner's stay; pay their property taxes and take the lost value (which the IRS does not recognize) on the chin. Thank you.... Wes Hagerty (talk) 01:05, 21 September 2010 (UTC)

This is a common name for this crisis; you can find articles using this name from about every major media source. Granted, lots of causes beyond subprime but this is what many call it. Folks are taking a broader view now and someday perhaps we can change the name of the article.Farcaster (talk) 01:10, 21 September 2010 (UTC)

Yes, until excessive leverage and excessive risk taking on Wall Street became apparent, loans to unqualified buyers was assigned blame for the so-called 'need' for the TARP bailout. We know better now. The title of this article should be revised to reflect this correction, not perpetuate the misinformation. Glkanter (talk) 20:53, 22 September 2010 (UTC)

The text of the article is accurate — you don't seem to be disputing that. To be sure, there is an ongoing crisis where many people who were given subprime mortgages are getting their homes repossessed by banks other than the original lender. So, the title doesn't suggest any thesis that isn't backed by the text. What title do you propose? Potatoswatter (talk) 21:17, 22 September 2010 (UTC)

No, clearly the text of this article is inaccurate, starting with the title. There is no mention of the fact that other loans failed at a higher rate, no mention of housing bubbles in spain, latvia, etc, WORLD WIDE - and no mention of how any of the "causes" listed that apply only to the united states caused these bubbles in foreign countries. Now that we know more, and realize that "thunder" isn't "god clapping his hands" - maybe this article should be revised as to reflect reality... —Preceding unsigned comment added by 71.60.82.197 (talk) 22:27, 18 November 2010 (UTC)

I looked at the article's table of contents. The article is a survey of many aspects of the many different aspects of the 2008 near collapse of the world wide banking system. To name the article after a subject that is not the primary subject of the article is inaccurate. There really wasn't a Subprime mortgage crisis anyways. It was made to look like there was, in order to gain sympathy for Wall Street institutions, so they could get bailed out. The crisis was a housing bubble. Made possible by derivatives. Some were based on subprime mortgages. Many more $ worth were based on other derivatives.

I posted my concern on the NPOV article title board (or something like that), but it gained no traction. In fact, most editors disagreed with me. Thanks for discussing this with me. Glkanter (talk) 05:55, 23 September 2010 (UTC)

I see that you are a long time contributor to this page Farcaster. I also see that the article originally *did* focus on the then-happening subprime mortgage crisis of 2006/2007 which is different than near-collapse of the entire banking system in 2008. So the title at one time did represent the subject being discussed. But not now. And I see from the charts you prepared, you have quite a broad knowledge of the 2008 near-collapse. Those 2 prominent charts that Farcaster prepared are captioned 'Factors contributing to housing bubble' and 'Domino effect as housing prices declined'. Which is consistent with my argument about the title. The first paragraph (the whole section, really) of the Causes section cites many causes, and subprime mortgages are not the most prominent. It's pretty clear that as the crisis grew from a lender/borrower problem affecting certain involved lending institutions into one affecting the whole global banking system, the article grew in scope. The title just never changed with the article. But it needs to be changed. Glkanter (talk) 06:27, 23 September 2010 (UTC)

One last comment and question. From what I've looked at, this is a very well done article. I just don't like the title is all. Farcaster, how does Wikipedia reconcile that those two prominent charts are not credited to a source, rather, it's indicated that you prepared them independently, with the 'no OR' rule? I'm in a dispute on another article regarding an image that is being challenged as being OR and therefor not appropriate for inclusion in the article. Thanks. Glkanter (talk) 06:41, 23 September 2010 (UTC)

Believe me, those charts got debated a lot out here and went through several iterations. These are in the archive, probably the first or second one. You can create a chart yourself, provided it is based on factual sources. For instance, the foreclosure bar chart is easy to trace to sources. The two diagrams you mention are more complex and try to illustrate the factors involved, sequence of events or cause/effect. These charts actually found their way into official UK government documents and are in multiple locations on the web. Multiple sources corroborate the logic in those charts, but please see the archive on why they were kept. This is a high traffic article and they've been out there a long time.Farcaster (talk) 14:05, 23 September 2010 (UTC)

Three observations: first, the above is correct, this article expresses a point of view of a "subprime" crisis, when in fact it was a broad base crisis brought on by worldwide mortgage bubbles - this might as well be called a "non conforming mortgage crisis" because of all the Alt A loans that also deteriorated, a "conforming loan crisis" because of all the conforming loans that collapsed, and so on. The whole premise of this article is not rooted in reality, but instead in a point of view. Second, i am still waiting for this article to address the fact that A) the CRA only applied to the united states, but the mortgage bubble popped WORLD WIDE including places like Latvia and Spain, and how our governments supposed "pressure" to lend these "subprime" loans caused these bubbles in far off places too...along with the fact that less than 10% of loans were subject to the CRA (and a fraction of a percent of the total amount of mortgages that failed WORLD WIDE), and the gross majority of "subprime" lenders were not subject to the CRA...even though it is listed as one of the causes of the "subprime" crisis in this article. Third, jumbo mortgages of the rich are defaulting at a higher rate than "subprime" mortgages, yet there is no wikipedia article about that?

This article is the equivalent of blaming a "weak heart" for the death of someone who was electrocuted, because the heart was unable to work at a high enough level to sustain life at 50,000 volts. The subprime loans were one of the first to go when the bubble collapsed, it was not the other way around. And every other loan type has failed too. My question is - how do you delete an article? Should i do it paragraph by paragraph or can the whole thing be deleted at once? —Preceding unsigned comment added by 71.60.82.197 (talk) 22:19, 18 November 2010 (UTC)

The article is outstanding. Just the title needs fixing. Glkanter (talk) 22:23, 18 November 2010 (UTC)

Clearly it is not for the reasons above that no one can seem to answer/dispute. How did "subprime" loans in the US, or their supposed causes, cause worldwide bubbles? Why do "subprime" loans get an article when there is no "alt A loan crisis" article or "jumbo loan crisis" or "subprime irish loan crisis" articles? This article clearly attempts to rewrite history, calling an EFFECT of a worldwide mortgage bubble popping, a CAUSE of said event. CAUSATION MATTERS - just not in this article i guess. —Preceding unsigned comment added by 71.60.82.197 (talk) 22:30, 18 November 2010 (UTC)

The first sentence of the article - "The subprime mortgage crisis is an ongoing real estate and financial crisis, characterized by a fall in U.S. housing prices, a rise in mortgage delinquencies and foreclosures, and severe disruption in the shadow banking system, with major adverse consequences for the economies of the U.S. and Europe."

First, it is not the "subprime crisis" that is an ongoing real estate crisis, it is a REAL ESTATES CRISIS OF ALL LOANS that is on ongoing real estate crisis. Second, the "subprime crisis" is not a FINANCIAL CRISIS, the FINANCIAL CRISIS is the financial crisis that is ongoing. The "subprime crisis" is not uniquely characterized by a fall in housing prices, the entire mortgage bubble popping is... There is no "subprime crisis" anymore than there is an "alt a" crisis, jumbo loan crisis, etc. How do "subprime" loans uniquely cause "severe disruption" in the shadow banking system more than Alt A, jumbo, etc? Subprime loans are being blamed for the ENTIRE COLLAPSE of mortgages bubbles in LATVIA, SPAIN, etc, according to this article - "major adverse concequences for the economise of the U.S. and Europe." Again, when the article later blames the CRA, how does that have anything to do with the inflation or subsequent popping of Ireland's real estate bubble? Anyone? —Preceding unsigned comment added by 71.60.82.197 (talk) 22:37, 18 November 2010 (UTC)

I'm with you. I started this section, and I posted about this on some board specifically for this problem some months ago, but I didn't manage to convince anyone. I'll support your efforts 100%. Glkanter (talk) 22:49, 18 November 2010 (UTC)

How about this - the article gets rewritten along something like this factual premise - "The US subprime mortgages crisis was one of the first effects of the deflation of the united state's real estate bubble, and at the time of its initial decline was thought by some to have been the cause of said real estate bubble's collapse. It was one of the first effects that foreshadowed the impending collapse of the real estate bubble and subsequent financial crisis."

The get rid of all the lies about the CRA, etc, and its fixed. Fair enough? Oh - and where is the mention that housing prices in the united states followed close to inflation for over 100 years, until 1997 when the bubble actually started? From reading this article, i find that subprime lending took off in 2004, 7 years after the bubble actually started, but now they are a "cause" and a "crisis"? How so? —Preceding unsigned comment added by 71.60.82.197 (talk) 22:45, 18 November 2010 (UTC)

Use of image

What is the purpose of the image? Is it a positive contribution to Wikipedia? It doesn't really help to explain nor understand the economic problems. I request that it be removed.

http://upload.wikimedia.org/wikipedia/commons/thumb/6/64/Banks_are_bastards.jpg/295px-Banks_are_bastards.jpg —Preceding unsigned comment added by Mrpops2ko (talk • contribs) 14:08, 22 September 2010 (UTC)

I agree with removing the image...and with the image.Farcaster (talk) 20:21, 22 September 2010 (UTC)

The GSE contribution

I've been looking into the GSE contribution to this crisis lately - there's a 2010 Republican report on it, [www.aei.org/docLib/Pinto-High-LTV-Subprime-Alt-A.pdf Pinto's estimate] that the GSEs contributed a heckuva lot, and some commentary on Pinto's analysis from Belsky and colleagues (1, 2). However, I'm still trying to work it out all out. Putting this down for the record, but help would be appreciated. II | (t - c) 00:29, 30 October 2010 (UTC)

Check out this article: NYT - Pressured to Take More Risk, Fannie Reached Tipping PointFarcaster (talk) 16:18, 30 October 2010 (UTC)

Requested move

The following discussion is an archived discussion of a requested move. Please do not modify it. Subsequent comments should be made in a new section on the talk page. No further edits should be made to this section.

The result of the move request was: no move per objection below. - GTBacchus^(talk) 04:54, 26 December 2010 (UTC)

---

Subprime mortgage crisis → US subprime mortgage crisis — This article is only about the subprime mortgage crisis in the US and nowhere else, its title needs to be changed to reflect that. I have no other issues with the article. Eyreland (talk) 08:47, 15 November 2010 (UTC)

Is it necessary to disambiguate? The US usage seems to be the primary topic and there is no contention for this title. —  HELLKNOWZ  ▎TALK 20:30, 16 December 2010 (UTC)

The above discussion is preserved as an archive of a requested move. Please do not modify it. Subsequent comments should be made in a new section on this talk page. No further edits should be made to this section.

subprime mortgages weren't really ARMs

I can't come up with the research to verify the facts from independent sources; my statements below are based on direct experience, which is a form of original research, disallowed on Wikipedia. And a good write-up demands more skill than I can muster. But I want to post this request that someone come up with a source and rewrite the second sentence of this article, which reads: "Approximately 80% of U.S. mortgages issued to subprime borrowers were adjustable-rate mortgages.[1]" I'm concerned this sentence creates an erroneous impression that rising interest rates triggered subprime defaults. These were loans that were unsustainable as written, whether interest rates rose or not.

In an adjustable rate mortgage, as more generally understood prior to the advent of what are now called subprime mortgages, the original loan documents contained language on when the rate would re-set, what index would be used and the margin above the index. In general, if there were no change in the index, the interest rate on the adjustable rate loan did not change. (Later, while there were ARMs with teaser rates, set to rise even if the index stayed constant, the provisions were less aggressive than still later, subprime mortgages.)

Rising interest rates couldn't have been the cause of defaults in the subprime mortgages made in 2004-2006, because rates didn't rise. Instead, provisions in the original loan documents committed the borrower to either refinance and pay off the loan, sell the house, or make much higher monthly payments. The rate of interest charged (and in some cases the rate of amortization) were set up in the original loan document for automatic, large, upward revision. There was no intention that anyone would actually make those higher payments, but that continuously rising home values and continued easy borrowing would allow the borrower to either refinance the loan or sell the house at a profit and pay it off. By the time those original payment increase provisions took effect, lending standards had tightened and home values had fallen, preventing refinance or sale of the house, leading to default. --Madison Max (talk) 19:56, 28 November 2010 (UTC)

What a Toothless Article

An article about the mortgage crisis with only three mentions of President Bush and his policies. This is one toothless article! It's plain to objective observers that Bush hands-off policy in regard to regulating the banking industry is primarily responsible here. If Gore had been elected president in 2000, none of this would have happened. SCFilm29 (talk) 19:55, 8 December 2010 (UTC)

Freddie Mac and Fannie Mae are not in receivership

This statement is incorrect:

Government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac either directly owed or guaranteed nearly $5 trillion in mortgage obligations, with a similarly weak capital base, when they were placed into receivership in September 2008.[203]

The GSEs were placed into conservatorship, not receivership.

The statement's footnote's link ([203]) is dead, so this (possible) source of the error is not available.

Omni4 (talk) 03:19, 12 December 2010 (UTC)

Spitzer's "Partners in Crime" revelation

Being new to this article I didn't want to just jump in on the editing, but I was surprised there was no mention of Eliot Spitzer's revelation re: the bush admin's role in blocking investigations into predatory lending in all 50 states. This is a crucial piece of evidence of deliberate wrongdoing.

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html

This is at a time when insiders were betting against the mortgage market while selling MBS's to unwitting investors. A little intelligence like this could make them a heck of a lot of money. — Preceding unsigned comment added by Rwinkel (talk • contribs) 12:19, 20 June 2011 (UTC)

fraction of adjustable-rate mortages

The lead says, "Approximately 82% of U.S. mortgages issued to subprime borrowers were adjustable-rate mortgages." (It did say 80% until just recently.) The link provided as a reference is a dead link [1]. Searching for something similar brings me here, where it says, "2/28 adjustable rate mortgages comprise up to 80% of subprime loans today" (where "today" was February 7, 2007). "Up to" 80% is different than "approximately" 80%. Unfortunately "up to 80%" is almost meangless, and so I don't think just changing the phrasing in the article will help. We need a better reference if that's worth keeping. CRETOG8(t/c) 16:29, 16 September 2011 (UTC)