A Look at the Subprime Mortgage Problem


The recent focus on the near-collapse of the subprime mortgage market has raised some interesting issues regarding fraud. Some borrowers are unable to meet their obligations due to legitimate reasons, while other are defaulting because of fraud committed in the process of getting the mortgage.

Either way, the high number of defaults on subprime mortgages is rocking the economy, and no one knows how bad things will get. The first to see the effects of this “crisis” were the large mortgage brokers, but smaller lenders are feeling the pain as well. As the real estate market has cooled, the effect of higher default rates is affecting businesses and individuals who are relying on credit for their survival.

The effects of this problem go far beyond just the housing market. This credit crisis is affecting many industries, and the world economy is feeling the pain as well. What was initially an increasing rate of default on home mortgages has now escalated to a full-scale crisis that is affecting the availability of credit in the world markets.

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No Elderly People in My Neighborhood!!!

What has this world come to when neighbors are protesting against a house for elderly people? God forbid that the elderly people’s family members come to visit them. They might bring with them *gasp* traffic!

This is the house that Jacquelynne Chiarelli wants to turn into a residential facility for elderly people. If you’ve ever had to find assisted living for an elderly family member, you can appreciate how difficult it is. In the Milwaukee area, there are more residents than there are beds.

So Jacquelynne, a licensed nurse, decided that she would open her own community-based facility. These types of facilities are important for people who need some assistance with daily living, but don’t need or want to be in a nursing home.

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Overstock.com Cooking the Books?

This is Sam Antar’s final installment in his three part series on all the “unusual” things showing up in Overstock’s financial statements. Unusual because they don’t align with multiple statements made by CEO Patrick Byrne in a variety of interviews and earnings calls.

The bottom line is this: Byrne and Overstock management have made statements about their inventory that cannot possibly all be true. They are in conflict and cannot coexist, therefore at least some of the statements must be false.

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Insurance Companies Win Major Katrina Ruling

Back in June, I reported that homeowners who lost homes in Katrina were waiting for a major ruling in their case against insurance companies.

U.S. District Judge Stanwood Duval Jr. had ruled in November that the insurance polices were ambiguous with regard to the language excluding water damage. He said the policies should have distinguished between floods caused by (a) a natural disaster, which would not be covered by most regular homeowners’ policies, or (b) a broken levee, which might be considered a man-made disaster and might be covered under regular policies. His decision was in favor of the policyholders.

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The “I Forgot I Already Voted Today” Defense Fails

A Milwaukee county man was convicted yesterday of voting twice in a November’s election. Michael Zore voted twice within 6 hours, once in Wauwatosa (where he lives) and once in West Allis (where he used a fake address).

Zore told a jury that he forgot he already voted. I’m not kidding. The guy really said that he went and made up a fake address to vote in a city in which he doesn’t live because HE FORGOT HE ALREADY VOTED.

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Jessica McBride Calls Out Eugene Kane for Ignoring the Truth

On Sunday, Jessica McBride had a great post on Eugene Kane, and his failure to accept the truth when it’s coming the sources. Eugene Kane is a liberal columnist for the Journal Sentinel, who is always moaning about the injustice and racism in the world. Nothing is ever the fault of the individual. It is always the fault of the cruel, cruel world, which is run completely by racists.

Kane’s column on Saturday focused on his visit to a youth prison. In typical Kane style, we don’t start off by acknowledging that the boys in this prison have committed serious crimes. Nope. It’s the fault of the racist system:

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