Indymac.. that serious?

[highland]

hi how’s the situation of indymac?? the us largest mortage brokers?? how abt the other one, frendie mac?? sorry i’m not an american…

yr comments

 

[Rolltide]

hi how’s the situation of indymac?? the us largest mortage brokers?? how abt the other one, frendie mac?? sorry i’m not an american…

yr comments

Well, Indymac collapsed and was taken over by the government on Friday. Anyone with $100,000 or less in the bank (the vast majority of people) will get all of their money back due to the national FDIC bank insurance program. Anyone with more than $100,000 will get the first $100,000 back free and clear, but they will only initially receive 50% of the rest. As the bank’s assets are sold off, the government may be able to reimburse people more of their money.

Both Fannie May and Freddie Mac are on the verge of collapse and may have to be taken over by the government soon. The US government says that although they are willing to bail out these two companies also (which account for about 50% of all mortgages in the US), that all other companies in financial trouble are out of luck.

 

[puzzleannie]

this forum requires a link to a news story, here it is
msnbc.msn.com/id/25673878/

 

[roanoker]

The feds stepped in today to save Fannie Mae and Freddy Mac. I hate to see big bail-outs, but in this case I guess they really had to do it.

 

[Muzhik]

hi how’s the situation of indymac?? the us largest mortage brokers?? how abt the other one, frendie mac?? sorry i’m not an american…

yr comments

Yes. It is bad. Indy Mac serviced a lot of home mortgages in California. As people kept defaulting on their home loans, the bank continued to lose money until the bank did not have enough money to cover the value of money people had deposited in the bank. It shows how bad the mortgage crisis is in California.

There are two main government-controlled companies that are supposed to help people buy houses: Fannie Mae and Freddie Mac. These corporations loan money to the banks, who then loan money to people. (This is an oversimplified explanation, but good enough for now.) The money Freddie Mac gave to Indy Mac is now gone. If another big bank fails, then both Fannie Mae and Freddie Mac will have to cut back the amount of money they lend banks. When (not if) this happens, the banks will not be able to lend money to businesses. This will start a set of businesses failing, meaning those businesses will not be able to pay the money THEY owe, meaning more banks will fail.

Watch Florida. When the banks start collapsing there and the businesses start closing, it is only a couple of weeks before the rest of the country collapses, then a very short time before markets in the rest of the world collapse.

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[matt1985]

I don’t understand how so many smart people believed that lending money to people who couldn’t prove their income was a good idea. The subprime crisis seemed to be preventable.

 

[Thunderbird]

The subprime crisis seemed to be preventable.

Oh, without a doubt. Just like the oil situation is ‘preventable.’ But what you have here are people that are faced with the choice of either being fiscally responsible or getting instant gratification and assuming that it will all work out if they just ignore the consequences.

That goes for people that seek out these loans, too. They should have known from the start that paying a 1.5k/month mortgage when you only make 1k/month…but everyone’s so busy trying to keep up with the Joneses that small details like that are considered Minutiae.