United States Congress takes mortgage
The United States Congress takes mortgage companies to task for the subprime mortgage meltdown by inviting leading companies to testify as to what happened and why today.
Catchy headline, don't you think? 
At any rate, and pardon me just a bit more sarcasm before I really discuss the mortgage meltdown and housing bubble schmubble, lawmakers who spend like drunken sailors (and I certainly mean no offense to the fine members of the Naval branch of our military who are defending our country, I'm just borrowing an old saying from times when sailors had a lot of fun on shore leave). The members of Congress have been running up a deficit in the trillions of dollars and haven't balanced the Federal Budget in forever. These lawmakers who probably can't balance their own checkbooks are questioning businesses who are setting aside reserves to cover business losses from bad lending decisions and who, in most cases, are still highly profitable companies.
As I've pointed out in previous posts, bad lending decisions were made. Loans were made that shouldn't have been. Some borrowers didn't really understand the terms and now can't repay. Some are putting their homes on the market because they can no longer afford the monthly payments. Hence, too much inventory on the housing market will naturally cause home prices to decline. Because of the tightening of lending standards as a result of these bad loans, fewer buyers are able to qualify for a mortgage and demand is currently less than before. Too much supply and less demand will result in lower prices.
That does not mean the housing bubble has burst, rather, it is a correction from the excess experienced over the past few years as prices increased much more than normal and affordability decreased accordingly. This caused borrowers to find alternative methods of being able to purchase a home. Of course, some abuses were part of the process as speculators found new and creative ways to finance flips until the flipping flopped. Other home buyers thought the price gains would go on forever and they would be able to refinance once they had equity in their property. With the end of rapid appreciation, their bill came due and repayment was unable to be made by some. The mortgage lenders are taking "heat".
To listen to the media, you might think that just about every house in America will be in foreclosure in the very near future, the reality is that while delinquencies and foreclosures are up, it is still a very small percentage of all homes and loans in the country.
Angelo Mozilo, CEO of Countrywide, the largest mortgage lender in the country is one of the businesspeople being called to Capitol Hill to testify. I saw a very interesting interview with Mr. Mozilo on CNBC with Maria Bartiromo a few weeks ago when he indicated that the U.S. mortgage sector was entering a "liquidity crisis" but that investors and speculators are overreacting by punishing healthier lenders as well as marginal ones and "it's going to get uglier" but that Countrywide would likely come out of this bigger and stronger.
Some mortgage firms have failed, others will in the future, but business will go on, there will be buyers and sellers of homes today and tomorrow and loans will still be made. Despite the most negative predictions, real estate will not cease to exist as an asset class.
An outstanding article regarding the subprime mortgage market, courtesy of Todd Sullivan at Seeking Alpha, please read, Housing and subprime: Enough already - this was no surprise. Seeking Alpha does sell advertising on its website and I had to laugh at a Lending Tree ad offering a $295,000 mortgage for only $984 a month, bad credit options available, placed on this page (by mere coincidence, after all, Lending Tree is a very big advertiser on many websites).
Of course, the real payment for a $295,000 loan with a conventional 30 year mortgage and 20% down (a $369,000 home) with good credit at a current rate of 6% would be approximately $1770 for principle and interest, (taxes and insurance additional). As Todd says, this was no surprise.