Ali’s blog

Mostly quant stuff with occasional digressions

“Ninja” loans

Posted by alifinmath on March 13, 2008

I was unaware of “Ninja” loans until today. In the Telegraph:

It is now pretty well established, too, that these loans tended to go not merely to the poorest families, but, in general, were marketed at America’s black and Hispanic populations. They were the most likely to take on the so-called “ninja” loans (no income, no job, no assets). According to one real estate broker in Oakland, all some credulous households were told was: “firma, fecha” – Spanish for “signature, date.”

One family – the husband is a janitor, the wife a cleaner – bought their two bedroom bungalow in Oakland for $420,000 in 2005. Now their mortgage rate has reset and it is on the market for $119,000. It probably won’t fetch the list price.

Over in Detroit there are now more than a handful of properties on the market at $100 (and no, that’s not a misprint – just search through property website to see).

And the take from Barbara Ehrenreich (another favorite American writer of mine):

Incredibly enough, this may be the first case in history in which the downtrodden manage to bring down an unfair economic system without going to the trouble of a revolution.

First they stopped paying their mortgages, a move in which they were joined by many financially stretched middle class folks, though the poor definitely led the way. All right, these were trick mortgages, many of them designed to be unaffordable within two years of signing the contract. There were “NINJA” loans, for example, awarded to people with “no income, no job or assets.”

Then, in a diabolically clever move, the poor – a category which now roughly coincides with the working class — stopped shopping. Both Wal-Mart and Home Depot announced disappointing second quarter performances, plunging the market into another Arctic-style meltdown. H. Lee Scott, CEO of the low-wage Wal-Mart empire, admitted with admirable sensitivity, that “it’s no secret that many customers are running out of money at the end of the month.”

Ehrenreich writes well for an American but she’s afflicted with the same malaise as so many other self-styled American “liberals”: no grounding in European socialist thought. Without this grounding, the reaction of American liberals to unfolding economic and military developments can only be one of moral outrage; they simply don’t understand the structure of the system they live in. They feel that the system they live in is “unfair,” exploitative,” “murderous,” and engaged in brutal militarism abroad. But without the unified theoretical perspective that European socialist thought affords, they can’t see all these phenomena as intricately and organically related, as part of one fell beast that has to be dispassionately examined. After all, one doesn’t blame a tiger for being a tiger, a shark for being a shark: that’s what they are. This lack of objective theoretical analysis is the real failure — with a few exceptions such as Paul Baran and Paul Sweezy — of the so-called American “Left.”


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