Wednesday, July 23, 2008

The Credit Crisis Explained

I found and article posted on that totally pissed me off. Sorry for being so blunt but there really is no other way to to express how I felt. It was an article in cartoon format that attempts to explain the mortgage crisis in layman's terms.

This cartoon actually explains it very well except for the first entries blaming Mortgage Brokers for making Bad loans to people that didn't qualify. This is so incredibly wrong, false, untrue, and a total misconception of how mortgage brokers operate.

The captions labeled "Mortgage Brokers" should have been labeled "Subprime Lenders, lenders, or Fannie Mae and Freddie Mac"! Let it be know to all ... that mortgage brokers do not determine or set underwriting guidelines or loan qualification requirements. The guidelines or qualification requirements or lack there of are set by the lender or investor!!

The Mortgage Broker is obligated and required to follow those rules and they do not have an option to deviate from them!! HELLO ... !! In today's market crisis the independent mortgage broker is as much a victim as the consumer.

Yes, a few dirt bag Brokers, lenders, and investors may have committed fraud, which is falsifying documents and misrepresenting products, but that is not what this cartoon is about. Fraud is found in every industry that involves man. Fraud is not what created the mortgage crisis.

In all fairness I might add that perhaps the author of this article is not familiar with the role of a mortgage broker in the united states.

So, take a look to see a good explanation of the credit crisis. Just remember it's not the mortgage broker, it's the lenders. The Credit Crisis Explained in Black and White.



  1. I agree it is a good account of how it happened. Let me also add that it was the Democrats who forced and passed legislation to require that lenders approve a certain percentage of minority applicants when 89% of whites were being approved for home loans and only 72% of blacks. Also discrepancies in where people lived caused loan approval rates to drop and Democrats screamed racism. Now look at this mess when lenders were required to relax restrictions and put money where they didn't want to. The point: don't regulate or "oversee" markets and that includes "oil speculators" known as commodity traders

  2. What was the legislation bill number that changed the % of categories of applicants approved for home loan? I am working on a research paper and could use that information. Thanks!


  3. I'm not sure of the bill number but if you go to I'm sure you will be able to find it. If you email the owners of that site, they will probably know and reply quickly.

  4. if you want a great cartoon version for this explanation check this Google presentation!