Chuck Ponzi May 8th, 2007

Just another cheery story about insane lending practices over the past 3 years.  Reuters gives us the dish:

On September 15, 2004, the clock was ticking on Lelon DeWitt’s life and his subprime loan.

When the transmission repairman underwent open-heart surgery, he told his mortgage broker he didn’t want a housing loan that was in the works.

“I didn’t know if I was going to be dead or alive,” DeWitt later recounted.

But the mortgage broker, Troy Musick of Wholesale Mortgage Co., was so eager to clinch the deal, he followed the couple into the hospital, said DeWitt’s wife, Ruth DeWitt.

As a surgeon cracked Mr. DeWitt’s chest open for a quadruple heart bypass, the broker approached her in the waiting room of Elkhart General Hospital in Elkhart, Indiana.

“It’s now or never,” she remembers him saying.

Afraid of losing out on the chance to buy a home, she left the hospital and signed the loan documents. Lelon DeWitt survived the surgery, but not the $143,400 loan from Irvine, California-based Argent Mortgage.

Normally, I would insert some pithy analysis of what went wrong, and how it was really the borrowers’ greed that caused their own downfall, but I’ll refrain.  It’s bad enough that people are losing their home.  To point out that they probably never should have had one in the first place is just salt on the wound.

The story includes some of the most insightful commentary by some of the biggest names in the lending industry, but basically it’s the story of how subprime (and all lending for that matter) lost their compass and began giving money to everyone and anyone that could fog a mirror.  No questions asked.  That’s the cause of the housing bubble.  Throw away all of our fancy charts and graphs about job growth, employment, and migration patterns.  The alpha and omega is lending.

And so I say, good riddance, bad loans.  We hardly knew thee.

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