Goldman & Paulson’s Bad Loans
This is a very interesting article and scary with regards to some of the loans in the pools that John Paulson bet against. This is just scary and shows you the horrible loans that were written. People should be in jail. I have written about the book called “Chain of Blame: How Wall Street Created The Credit Crisis” of which goes into great detail about how it all happened. It makes me sick!
One mortgage in the Abacus pool was held by Ms. Onyeukwu, a 43-year-old nursing-home assistant in Pittsburg, Calif. Ms. Onyeukwu already was under financial strain in 2006, when she applied to Fremont Investment & Loan for a new mortgage on her two-story, six-bedroom house in a subdivision called Highlands Ranch. With pre-tax income of about $9,000 a month from a child-care business, she says she was having a hard time making the $5,000 monthly payments on her existing $688,000 mortgage, which carried an initial interest rate of 9.05%.
Nonetheless, she took out an even bigger loan from Fremont, which lent her $786,250 at an initial interest rate of 7.55%—but that would begin to float as high as 13.55% two years later. She says the monthly payment on the new loan came to a bit more than $5,000.
She defaulted in early 2008 and was evicted from the house in early 2009.