The good mortgage fairy crashes and burns.

It just gets better and better. The industry that brought you SIV's, CDO's, LBO's, ARM's, GUDD's, ROE's and last but not least, OPM's has seen the light. It has finally dawned on these financial geniuses that loaning money to people with no apparent, much less real means of ever repaying these loans was probably not such a hot idea.

In the begining it seemed like a slam dunk. The country was full of folks that had never owned a home (guess why). No one had ever offered them a mortgage(guess why).
No matter... we'll just make them an offer they can't refuse. Don't make enough income to cover the note, not to worry...we will make the note so artificially low that now, even you can afford it. And then when you get rich in a couple of years(doesn't everybody in America), and the note doubles, you will still be able to pay it.

WOW, this is so easy let's not just make thousands of these magical loans let's make millions of them. Of course we will collect lots of fees along the way and since we are so clever we will mix these timebombs in with all the real AAA rated paper and foster them off to unsuspecting investors far and wide.

And so they did just that. And the good mortgage fairy was kept busy night and day slicing and dicing and packaging these wonderous instruments and mixing them in with the good stuff and selling it to hedge funds, and retirement funds, and mutual funds and money market funds. Any of these sound like your funds? No?...lucky you.

Unfortunately, not all of these folks got rich on schedule. In fact very few did. Some even got poorer, imagine that. Well all the financial geniuses, the ones with CEO, or COO, or CFO after their names, those very same ones making tens of millions of dollars in yearly salaries, they started to fret, some even stopped golfing or playing bridge to come in to the office to check on the condition of their SIV's, CDO's and how the ROE on the OPM was doing. Not too hot, was the answer.

So it was that the folks that had never owned a home before, and had never had a mortgage before, and had never payed their bills before... still didn't.

Not quite sure about the alphabet soup?
SIV- structured investment vehicle,
CDO-collateralized debt obligation,
LBO-leveraged buy out,
ARM-adjustable rate mortgage,
GUDD-gold up dollar down,
ROE-return on equity, and last but not least,
OPM-other people's money!