A Little Pity, Please, for the Poor Lender

[flashl]

General Motors thought it had found a safe and profitable business, far away from the ups and downs of the automobile business that was causing so many headaches. Instead, it found an albatross that is now forcing the company to put up billions of dollars just to stay in business and hope for a turnaround.

That business was residential mortgages, and G.M. went into it in a big way. It bought one of the more aggressive lenders around, Ditech, and came to specialize in the kind of innovative mortgages that flourished in recent years.

...

The result has been a wave of defaults and foreclosures, bringing on big losses for both the company and for those who bought securities backed by those mortgages.

Now the mortgage company is warning that it may not be able to pay its bills, and has set out to force those who lent money to it to agree to accept only a fraction of what they are owed. It appears that its lenders have little real choice. If they insist on being paid all that they are owed, they will go to the back of the payment line, with the risk they will get nothing.

The mortgage industry has bitterly opposed legislative proposals that bankrupt homeowners be able to ask judges to reduce the amount they owe. But that is what this company hopes to accomplish through the threat of a bankruptcy filing.

NY Times

[peace frog]

1. Got yer pity right here, pal

Where's that "jerk-off" emoticon when ya need it.

[SlipperySlope]

3. It ain't that simple

It reads simple, someone lent GM millions, GM can't pay them back, and they've got the gall to want our sympathy?

But what if that "someone" is your union's pension fund, or your state employee's retirement fund?

[truedelphi]

4. You say:

What if that someone is your union's pension fund, or your state employment fund

Yep, lot of people don't realize that that money is handled by money managers who in order to aggressively get teh top dollar for the investmentm, invest in these bubbles.

For the last twenty years, I have been very dubious over the notion that the workers shoul dput their trust in the aggressive and very "unconservative" fianncial whiz kids.

[Vincardog]

2. When are they going to tell me how much my mortgage is going to cost me?