Illinois Business Journal Illinois Business Journal
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Subprime mortgage bust result of perfect storm of greed and stupidity, analysts say
By ALAN J. ORTBALS

   The subprime mortgage crisis that's now impacting the country is the result of a combination of greed and stupidity, according to local industry analysts. Borrowers, lenders, mortgage brokers, appraisers, investment bankers and investors - all trying to make fast money - were speculating that the housing boom would never end.
   "Probably beneath it all," said Bart Solon, president and chief operating officer of Partners Bank, "was greed and stupidity - stupidity on both ends of the spectrum. Stupidity on the part of the person who got the loan, and stupidity on the part of the investor who was the end buyer of the paper."
   The word subprime refers to the borrower and means that the [continue]

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Analysts say a deluge of investment money, lax lending standards and outright dishonesty have led to a meltdown in the subprime mortgage markets. Financial institutions could lose more than $400 billion from the market bust.
 
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Metropolitan areas across the U.S. will see a ripple effect from the subprime mortgage crisis. The St. Louis metro area is expected to lose more than $1 billion in Gross Metropolitan Product, the value of all goods and services produced in the metro area, in 2008.		 .

Subprime mortgage meltdown to have $1 billion impact on area, study finds
By ALAN J. ORTBALS

   The foreclosure crisis will have profound economic effects across the nation in 2008, according to a report prepared by Global Insight for the United States Conference of Mayors and The Council for the New American City.
   Global Insight is a consulting company based in the United Kingdom that claims to be the world leader in economic and financial analysis. It has 600 employees in 23 offices in 13 countries, providing services to more than 3,800 clients.
   According to Global Insight, the peak years for the issuance of subprime and

other adjustable rate mortgages were 2004 and 2005. The most common types of subprime mortgages were adjustable rate loans called 2/28s or 3/27s that fixed the interest rate at an abnormally low level for the first two or three years, then adjusted with market [continue]
 

President, Congress and the Fed make belated attempts to repair subprime mess
By ALAN J. ORTBALS

   As the excesses of the subprime mortgage boom come home to roost, the Bush Administration and Congress are taking action to try to stem the growing tide of foreclosures. Without action by the government, 2008 is expected to be the peak year for foreclosures with more than one million in some stage of the process. Local economists, however, say that this kind of political interference is a mistake.
   Homeowner defaults on mortgage loans are being keyed by large jumps in interest rates on loans made to subprime borrowers. Many of these loans were referred to as hybrid, adjustable-rate mortgages with low, fixed-interest rates for two or [continue]