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Are We Seeing a Financial Debacle Like Never Before?

As non-bank mortgage lenders find no one is buying their ridiculous no doc, income state, liar’s loans any more, they are going down with breathtaking speed. Implode-o-Meter now stands at 109 lenders that have imploded since December. It has really been shocking to watch that number go up month after month.

If you need a line of credit to fund your loans, you are probably going down. No more pretty packages all tied up with a nice bow for investors. Those packagers will be treated like Typhoid Mary at a buffet.

Next in line to go down? Probably Novastar – which has suspended funding on some of its loans. Accredited Home Lenders next? The list keeps growing, and few will be immune to the consequences of irresponsible lending practices.

Many believe Countrywide and IndyMac will fare better because they operate banks, so can dig into their own pockets to fund loans. But if this really gets any bigger, how deep can they keep digging?

Dr. Housing Bubble did a great post yesterday with an account from a lawyer of the impact of the big bubble crash of 1929.
It’s kind of eerie reading that in light of today’s financial messes.

Law suits are in motion – because even though every indicator coming from non-biased sources (not the newspapers relying on real estate advertising, nor your bubble-we-don’t-got-no-stinkin-bubble broker, nor the CEO of the mortage lender who probably was selling all his stock while talking it up to the public) was that subprime was a disaster and would end very, very badly. Maybe you couldn’t catch on until late 2006. But why would you still be holding a subprime, nonbank lender’s stocks in 2007?

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