Patrick Kelly

“But in the new housing marketplace of the 21st century, everything had changed. People were getting rich, House values were soaring. There was no need for archaic processes values were writing or income verification. This was a new era. And no one wanted in on the profits more than Wall era. Ainvestment banks. They couldn't stand to sit on the sidelines and watch everyone else get rich. Making money was their game, and they not only wanted to play, they wanted to write the rules. And so they did.

And what did these "Titans of Finance" create? The "100-percent financing, No-Doc, Stated Income, Negative Amortizing" loan. I laugh as I write this. Literally, a person could wrap all those features into one loan. It was beyond comical. It was insane. And what do these terms actually mean?

• 100-percent financing: The buyers didn't need to contribute a single dime to actually purchase the house. They could finance it all, transferring all of the risk to the financial institutions.

• No-Doc: The banks didn't verify such silly things as job status or credit history. Nope. If you could sign your name, you could buy a home.

Stated Income: The clients told the banks how much they made. In other words, they lied.

• Negative Amortizing: The clients payments wouldn't be large enough to even cover the monthly interest, so the principle balance on the loan would increase each month, putting them further and further into debt”
― Patrick Kelly, The Retirement Miracle