The Giant Pool of Money, by TAL and Chicago Public Radio
This NPR radio episode runs just under 54 minutes. Click on the “download” button; it will take several minutes to download. While you’re waiting, browse through some of our other articles on Ethics in Mortgage Lending!
In order to better understand why we are currently facing massive mortgage loan defaults of epic proportions, this radio program takes us back in time and helps us understand how investors looking for high yields created a groundswell demand for risky mortgage loan products.
So are these investors to blame for the mortgage industry crisis?
It’s safe to assume that no wholesale lending reps held guns to the heads of loan originators and demanded that the LOs originate pay option ARMs.
Perhaps it is a choice. There is at least one bank that decided not to participate in subprime loans and now that bank is not seeing record default ratios on their residential loans, though their story has not yet been told in relation to commercial development loans and construction loans.
I agree with you about moving towards a more professional acceptance of the fiduciary responsibility - it will make more ...
The protection for the consumer from goverment is welcome, of couse, the time consumed would be a function of direct ...
Comment by Rita Green on 10 August 2008:
I believe that the lenders, regulators, and Loan Originators are to blame for the mortgage industry crisis. Greed drove them into granting and/or selling loans to some who could not afford the loan.
The No Income No Asset Verification loan was okay but the guidelines under which you could qualify should have been more rigorous.
Stated Loans again are fine.
The NPR Broadcast mentioted very little about ARMS and Interest Only Loans.
Of the foreclosures what percent were caused by huge increases in rates due to ARMs? The Government should have regulated the percent of which loans could increase via ARMs. I have talked to many people who have lost or are in danger of losing their homes and overwhelming the response has been that they were able to make the payments until their notes jumped by $400 and in one case $2,000 per month. Such an increase in a monthly note is ridculous! Many consumers did not understand that their note would increase at the end of a specified time period.
Loan originators failed consumers because they did not explain to them that they needed to refinance by a specified time period to avoid the huge increased monthly note caused by their rising ARM rate. In order to refinance consumers would have to keep their credit and debt managed so that they would qualify for a loan at a specified date.
Greed is the root of all evil. It was greed that caused Lenders to create loans that would allow them to capitalize on the investment market. It was greed that caused LO’s to get people into loans that they could not afford and now we are seeing the consequences of what being too greedy can do.
In the end it is the middle class taxpayers who will have to pay for the mess that the Lenders and government caused by loosening the guidelines by which you could secure a home, and creating loans that had skyroecketing interest rates.
Comment by jaesuk cavner on 11 August 2008:
its quite obvious that massive greed concerning all financial institutions are to blame for this debacle
Comment by Kevin Haynes on 8 September 2008:
Yup, investors looking for higher than average return are to blame. Lenders, such as Countrywide promoted themselves “your pay option ARM lender” are to blame as well as originators promoting these products and stickiing borrowers with 3-year pre-pay penalties and collecting 2-3 points on the back end.
Comment by Laura Young on 16 September 2008:
I believe the lending industry as a whole are to blame for the crisis we find ourselves in today. I believe that the general public was ill informed as to exactly what the terms of their loans were and the consequences of the ballooned payments to come. Being faced with the larger payment as well as a pre-payment penalty which many consumers weren’t aware they had made it impossible to excape the inevitable forclosure and weekend economy.
Comment by Sandi Paradiso on 28 October 2008:
Amen, Amen Amen and Amen. Those banks that decided not to jump on board is the kind of bank I want to do business with. Bank of America is one of those banks, I watched a segment on TV. They decide not to get into the subprime lending, just to put anyone in a house. There mentality was about the consumers, What is so bad is it does effect all of us. No one held a gun to any LO’s head, but when you have your boss screaming for you to sell sell sell, what do you do? Maybe that would have been a good time to find another job, But as the circle goes, LO’s where making good money and they probable lived above there means, so they had to continue to do what they had to do, and the circle goes on and on. Hopefully we all have learned a lesson. I hard one at that
Comment by Michael Belisle on 3 November 2008:
I believe everyone was to blame including but most importantly the consumers taking the money. If I gave you 1 million dollars and told you had to pay me back in one year and the worst that would happen if you didn’t was you would lose your house would you do it? That was what was happening with people cashing out there equity year of year to live. They new they would not be able to pay it back. Basically every lending institution was giving away money not thinking about the pay back of the loan. You have to put some Blame on the borrowers signing the line.
Comment by Jeff Rafuse on 4 November 2008:
I believe you cannot blame any one party for the problem we have. For sure, many loan originators are partially to blame. Also, mortgage lenders deserve some blame, and also Wall Street. I agree that greed was the predominant factor for every party involved, but, that also applies to some of the homeowners. It is unrealistic to assume that every homeowner that can’t afford their mortgage right now was a victim only, and was never told what their loan was. I talked with countless prospects that simply demanded that I find lower payments than what a conventional 30 year mortgage would offer. I lost business sometimes when I would suggest that a prospect re-evaluate their price range rather than take a risky product.
Comment by John Mayfield on 6 November 2008:
It looks at though it started with the investors. You can’t entirely blame them though. As an LO they should have seen that a guy making 37,000 dollars a year could not possibly afford a 550K mortgage! It failed before it started.
Everyone had their hand in the pot. The investors started the ball rolling, the LO’s wanted to cash in but the bubble could have not gone as high if appraisers would have been realistic and never inflated the appraisal. Then the lenders should have never issued the loan in the first place. The cycle just went in a circle.
Comment by Garry Carlin on 7 November 2008:
Oh boy, you’ve done it again. A question that brings out all kinds of answers.
I’m just not sure blame or credit can be placed on any one sector. I’ve been in this business long enough to see this happen at least twice before, just not quite to this extreme. Without exception it has always been driven by supply and demand both on the side of the investors and the home buyer trying to get into that first house. It goes back to that balancing act of trying to supply a product that the consumer will take advantage of while keeping the investor happy. If either the investor or the home buyer gets the least bit greedy everything goes up a notch.
Up and up it went until some little piece broke then it all imploded. The bright spot is now modest buyers can once again afford to buy a home!
Comment by Denise Swafford on 9 November 2008:
As a former underwriter and having dealt with these bulk bundles of loans that were sold off this current situation was forseen. Banks that state that they made no subprime loans is not totally accurate. They brokered out those loans to larger bank so as not to service them and therefore not responsible for a buy back after the 3 to 6 month window.
All parties are involved and to blame. Borrowers wanted more than they could afford. Lenders wanted to get every one a loan regardless of whether or not they could afford the loan. The pools wanted the investment, they wanted some risk, then high risk, and it was provided. Sound financial decisions were thrown out the window and that opened the door to opportunists.
Gone were that days that a loan officer sat down with a borrower and really addressed all the expenses and needs owning a home required and how to live with in a buget.
I know from my own experience that the upper management didn’t care what production saw….they were concerned with continuing the cash generating juggernaut.
The problem is that not everyone will learn from this collapse, in my humble opinion.
Comment by Sarah Batson on 12 November 2008:
I agree that greed of all parties involved caused the colllapse. Lenders, investors, LOs, and homeowners all contributed signifcantly and in their own way with the same motivation of wanting more or too much without thought of responsibility or accountability. One could have had this effect, it took all to come together and contribute in order for the cycle to be complete.
The changes that have been and are being made are attempting to rectify the factors that have contributed and to move forward. The changes are also making it increasingly difficult to approve clients, often even ones that seem to be valid and sound. I am hoping that a balance is found sooner than later as this is a major contributing factor to our economy and the american dream.
Comment by Catherine Rawlins on 17 November 2008:
Really this all gets down to a lack of ethics among every participant who chose to play the game. It is also frightening to realize that the entire world’s economy could be brought down by a systemic failure of oversight by the very systems that were designed to protect us.
There will be no easy answers or solutions. And, it will be years before we fully recover.
I will be very thankful if I still have a job in the mortgage industry a few months from now.
Comment by Tiffany Grosely on 18 November 2008:
Just starting out in this business, seeing everything that has happened is a real eye opener. I see many people who are barely making it, and their mortgage payment is the last thing they can afford. I think it’s neither the LO or the homebuyer’s fault that this happened. Their are faulty LO’s out there who put many people in ARM’s and those people figured they could REFI out of that loan in a few years, which then they never had the chance. I think you need to have a lot of trust and respect for the person who is going your loan before you even attempt to buy a home. For those LO’s who cannot seem to put the public’s best interest at hand, they should not be allowed to originate.
Comment by Sam Tabatabai on 18 November 2008:
When things goes wrong everybody blames someone else and everybody needs to point to someone and say he or she is the bad person. I am proud to say that none of my clients are in trouble with their loans and even if they are it is not because of the nature of their loan. Those of us who have been in the industry know that greed was the cancer. From top to bottom everybody was at fault. If kids in a household are doing wrong things it is solely the fault of their parents. When we have no regulation and oversight these things happen. No where in the world could you drive a taxi and or be a carpenter, a janitor and also sell loans on the side, million dollar loans even, commercial loans where millions of dollars would change hands. Where were all the senators and the congressmen that now point to wall street and say here are the bad guys? On the other hand Many of those customers who wanted those fancy loans, would do anything to get them and if you told them that is not a good loan for you, they would get them elsewhere and tell those people you know that this loan officer does not do a good job and does not have all the products that the other (good) loan officer does. Many times I had to fight my clients not to get into option ARM loans. At the end we are going through a sobering headache the next day after a great party.
Comment by Theresa Reyna on 21 November 2008:
Who to blame?…EVERYONE and NO ONE.
I’ve been in this industry for less than a year, but what I’m learning, seeing and hearing is that This all happen for a purpose and a reason. Having seen the worst that this industry dish out, I’m still extremely excited about it.
As a consumer, we wanted to be like the Jones, we wanted to have the same things they did, so we spend more than we can afford.
As an LO, we were making a living, believing that the product we offer was what they wanted. I have a lot of friends who were in this business for more than 10ys and did they benefits from selling these loans. Did they know it would hurt their client at the time? Maybe and maybe not. They just know that it was what the consumers wanted….and that was, get me this house with little to no cost, otherwise I can go some where else and get it.
As for the investors, they thought they could create a product that would best fit the demand. Did they get Greedy? Yes, but that greed was fueled by the market and the consumers.
So who to Blame? EVERYONE and No ONE.
Comment by phylis nelmark on 25 November 2008:
I feel fortunate for not getting involved in any of the sub-prime mortgages. It all seems so confusing as to how this all happened. I still think and am convinced after reading this whole episode that it still all comes back to big money on Wall Street. I lived thru the 70’s crisis and even took over a 9.750% mortgage to buy a house but it did not seem to have the same effects that this meltdown is having. I really feel sad for all those buyers about to go into forclosures. I guess I never understood how we were so tied to the World Market.I”ve earned a decent living as a broker but 80,000 per month: no way
Comment by richard martin on 26 November 2008:
I enjoyed listening to this great program so well sequenced with actual source material so the history of this incredible financial misadventure is easy to understand. As I saw it it started with need then became greed, Bill ane Jane wanted a house then they wanted a bigger house they all wanted to get involved in the great Real Estate get rich quick scheme, anybody could be a loan officer and push loans earn fantastic commissions Mortgage Brookers pushed their people to close more and more loans never mind if the borrower could afford them or not it did not matter, Investers got involved and it morphed into a world wide frenzy of lending borrowing refinancing and asset aquisission or so they thought.
My own view is that had the rating agencies done their job it would have been subsantialy checked, or maybe they were in on the whole scam themselves. can they be sued? or what, what happens next?
Comment by Robert Duppenthaler on 28 November 2008:
I loved the program as sort of a summary of the mortgage professions’ condition. Now we know “THE REST OF THE STORY!” I hope that we will all reign in temptation and just do our job. I consider my “job” to present information in a professional way, educate and ensure total understanding of the possibilities and help complete the transaction. Then to encourage, communicate and followup for ever!
My commitment is to never complete a mortgage loan until the borrower is in complete understanding of their real needs, their goals, their financial abilities, and have looked at least three loan options. THEN THEY CHOOSE! Why would they ever need to go anywhere else?
Comment by jeremy hickling on 2 December 2008:
I remember listening to this when it originally broadcasted – I appreciate the the x-marine, Richard, and his hosety about realzing he was taking a risk. He was using a tool provided by lending institutions and his best laid plans failed. Holding Banks excempt in this fiasco but holding LO’s and Brokers souly responsible doesnt make sense. Educating borrowers as to what exactly they were getting into was and is still a priority with me. Legislation is forcing professionals to essentially educate the clients – unfortuanetly legislation also ties our hands.
Comment by Brad Toft on 5 December 2008:
Ira Glass is one of the most manipulative condecending personalities on the radio (my wife listens to him every saturday afternoon). That being said, this segment had me in stitches most of the time-especially the knothead who hung with B list celebs.
Problem with this segment is that it completely absolves Fannie Mae of any responsibility–by omitting them from the discussion. Fannie was in the exact same business, and sponsored by the Federal Government. Oversight of Fannie was non-existent and it enjoyed a substantial advantage over its competitors. Arrogance ran as deeply in our government as it did with mortgage brokers, investment bankers and borrowers. Because of this, it becomes laughable that the leaders in our government who aided in facilitating this problem, will now be the architects of a solution.
Comment by beth ward on 7 December 2008:
I believe that if I wouldn’t do the loan it isn’t a good loan … no options no ARMs no interest only no 3 optional plans – would the people offer these loans to their mother/father. I believe that we need to be responsible for our own actions and that will clean up a lot of the problems.
Comment by Deborah Cook on 9 December 2008:
Beth I find your comment about your mother/father great. I use that often myself! I have been in this business a very long time and while I will not say I have not done ANY sub prime, I did VERY, VERY little of it and only when it made perfect sense. ( self employed with major writeoffs etc) I only did 2 POA’s and both were to short term investors with over 60% equity. Treat people like you want someone to treat your family members. Sounds easy doesn’t it.
The problem I believe started with Greenspan sleeping on the job for the past several years in his position and for some reason everyone just assumed he was on top of it. They always regarded him as some sort of genius. Truth was no one could understand what the heck he was talking about half the time and they would have a news commentary to disect it afterwards! With such a powerful position it should not be one that is controlled continually by the same person for so many terms. The same reason the president can only have 2 terms!
Countrywide and WaMU were the King and Queens of the pay option arms, look in a phone book, they advertise it and most LO’s I know that worked at those places couldn’t even imagine why you would do any other type of loan.
It is time to get back to basics, does anyone even know how to do a gfe and til by hand anymore with just their calculator? If not they should and also start manual underwriting your loans before they leave your office for the lender. Trust me right now the lenders that are left only want to work with quality brokers, prove that you are one.
Even in this tough time, I have been able to close A paper and have my client base and referrals. My motto, do a lot of loans at a fair price. Not a few loans at a high price. Because the real high price will be closing my doors.
Comment by Teresa Gallaher on 9 December 2008:
This is just supply and demand. The investors wanted higher yields and so the lenders supplied loan programs for higher risks clients to provide those higher yields to the investors. It just snowballed into more and more extremes and higher and higher profits. Greed took hold and we got to the point where anyone who wanted a mortgage could get one. I find it difficult to put the bulk of the blame on the mortgage brokers-which is what the media is doing. How can you blame the salesman for selling the product he is given to sell. I did not put my clients into loans that they did not understand or could not afford. I did do stated income loans for self employed borrowers who took large write-offs, but could afford their homes. The stated product was a viable product, it was just abused. Now it is not available to those that really need and deserve it. The fact that credit requirements were significantly lowered on conventional loans and higher risk clients were offered lending does not make me a bad loan officer. The lenders offered the money, I provided the money to my clients.
Comment by James A. Nelson on 9 December 2008:
We must all remember honesty really is the best policy. There is
nothing wrong, either, with remembering what the real Golden Rule
states: Do unto others what you would have done unto you. Un-
fortunately, in recent times too many at all levels of responsibility thought it was only “Them’s that have the gold make the rules.” Perhaps after this financial mess our Country is in today, the United States will return to a saner economic foundation. I just pray we can turn this weary old Ship of State around to head for sounder shores. While I have not been in the mortgage industry very long, I have been a Professional Salesman
for over 50 years; Blaming the low man on the Pole of Corporate Shame is nothing new. I’ve always said it’s the bastards at the top, sitting on their deal asses in their G-4 corporate jets who should be marched off to jail first.
Comment by Vance Won on 11 December 2008:
Free market is a good thing most of the time. Unfortunately this is what can happen when you have too much of a good thing and not enough people overseeing what others were doing. Too many people turning the blind eye due to the greed. Markets are either driven by greed or fear. We had the greed for awhile and now the fear has taken over.
Comment by Gail Burgess on 11 December 2008:
Did everyone that was put in a subprime loan understand the loan they
were in? Propably not. However many borrowers did and many borrowers
are not in a foreclosure situation. Neg am loans were not all bad loans. Some commissioned employees took advantage of this loan and paid
as agreed, catching up during a good month and making minimum payments during down turns. However if you earned a minimum wage this year and
were going to ear a minimum wage next year, how in the world could you ever afford this kind of mortgage. There are many people responsible here in my opinion.The Lo, the borrower, and the lenders all played a part. I only did a couple of neg am loans and they went to other people in my industry who understood exactly what this loan was about.
It served a purpose, as did a stated loan product when used correctly.
Will there ever be any common sense back in the lending industry?
Comment by Laura Shields on 12 December 2008:
Greed, INFLATION…….and what goes up, must come down….just like anything. The ‘dot’ com industry crashed from growth too fast.
The lenders/investors were lending on anything for competition and it got WAY out of control…..when things speed, they crash….
It will recover and in the mean time, everyone is cleaning house!
Its a good thing…..
Comment by Neal Eifling on 13 December 2008:
Excellent broadcast. Interesting insight to understanding “THE CHAIN” from top to bottom. Everything evolves around one thing: GREED. Greed created a delusion of common sense in not seeing the future of Fallout City. Only the professional will emerge to rebuild tomorrow’s trust. Everyone is at fault for allowing check and balances to be relaxed. God help us all.
Comment by Jenn Fick on 15 December 2008:
I found the whole broadcast interesting and actually enjoyed it. I feel that everyone involved, no matter what angle or side of the spectrum is to blame – even the borrowers. However, people like Glen Pizzolorusso with WMC Mortgage – their percentage of blame is definetly highler in my opinion. Glen’s commentary really rubbed me the wrong way for some reason. It was like he had no remorse or was every arrogant about the whole thing. For instance, when he made a little chuckle when talking about borrowing money or when he said that he would pay “just enough” of his mortgage to keep the lenders off his back…like it was a game or something. And then you hear from guys like Richard (I think that was his name, the guy in the marines) who was absolutely devistated that he had to take money from his sons college funds to pay the mortgage.
Bottome line – as pretty much everyone has said – greed.
Comment by Tom Strain on 16 December 2008:
Giant pool of money was a giant pool of greed for all. From our government and greenspan/Lenders/Investors/wholesales reps/loan officers/ and customers. In my opinion everyone turned their cheek. Green span helped encourage opening the door and It helped boom all aspects of the economy at the time. Lots of money flowing and being spent. property values rising. Blue sky forever. Wrong! Well thats what everyone thought. And with Lenders/wholesale reps/ Loan officers offering- no income/no asset verification and ARms that allowed people with 80/20 loans that covered 100% in a market where they could turn it and make a profit in a short period, and qualify for something they might not qualify for. Well customers were guilty of the big hit, the american dream. Everyone is at fault. From an ethical standpoint I do not believe that the lenders and wholesales and loan officers did what was right for the customers best interest. It was available and acceptable and the customer wanted it. But due dilagence was not done to let the customer know that it may not be in their best interest.
Comment by Branda Luke on 17 December 2008:
This was an extremely interesting and eye-opening broadcast. In the mainstream news, it was only a small part of the entire picture that got the blame for the mortgage meltdown and a majority of it fell upon banks and brokers. This broadcast does a good job detailing how EVERYONE from the top on down failed everyone all the way down to the consumer. The dead people loans was something new to me and was shocking that it came to that point! Although consumers weren’t forced to take these loans, it was the hope of getting out of their current situation like Clarence Nathan’s example that drove consumers to accept certain loans that were not right for them at the time. I know a ton of customers who have had the 6 to 9 month plan that wound up not working out. I believe that not only was greed a driving factor of the mortgage crisis but also unrealistic plans and expectations.
Comment by Grant Bowery on 18 December 2008:
Regulation has its reasons , otherwise the culture of greed takes over . Trickle down Reagon economics does not work because giving tax cuts to the rich helps no one because they
do not re invest thier money for the benefit of the middle class
as it was supposed to
The real estate gains were caused by the availability of easy non regulated financing .Years ago the bank made the loan and kept it
derugulation allowed unbelievable greed to take over . De regulation
allows a few to get rich and eventually harms others . It was all a pyramid scheme and many suffer while a few made gains .
“The needs of the many out way the needs of the few ”
Spock in his dying breath in star trek movie 4
Comment by Luis Diaz on 19 December 2008:
I agree that greed was one important foctor for this deteriorate mortgage market (meltdown). In all, If we go back in time at said, true, Investors wanted more ROR per dollar; Unrealistic loan programs (as 40 yrs loans vs 30yrs to make pmt more afordable to the consumer) and what is missing is a little part not mentioned which is house prices “over inflated”. I am sure that this little factor has to do its part too. If a Broker or LO or Investor inflated the values on the properties, go ahead and eon them this matter too. I point on this factor (over inflated house values) because lots of consumers where expecting their homes to appreciate on a suppoable real state market. I recall when I was buying my own home three years ago while visiting the same houses within the same day, the RE Agent in two cases will raise $30K and $60K the original price withing the same day… Yes, greed again. True is that LO’s did not follow up and advising their current borrowers in the future years while pretending giving borrowers assistance to rise up their credit scores with the LO’s support (customer service) that for the most part neve happened leaving the borrower in a tremendous burden becasue the borrwer never increased their income as they could increase their credit scores. While looking on all these scenarios, it sound to me that the rich will have biger opportunities to capitalize ones again of this market and the middle income families will tend to disapear as they keep paying for everybody’s mistakes in this current economy.
Comment by Pedro Riojas on 20 December 2008:
It is difficult to pin point percenages of blame becuase all involved were after bettering their financial situation . Making money ! And that is normal . The problem as mentioned many times was greed. I believe, that is one side of the equation . The other side was human need . Those looking to make money did so at the expense of those in need that were seeking the american dream of owning their own home. A perfect condition for the creation of greed. When greed came into play many of the good traits developed in earlier years , like good relationships ,caring for the client and been ethical were set aside. Making money becme the main focuss. It is crusial that we reverse this trend.
Comment by Toby on 20 December 2008:
I’m sure I’m in the minority here, but doesn’t the consumer have some responsibility? You can’t tell me everyone who signed on for a ARM didn’t understand that eventually the ARM would adjust…and by approximately how much. Nor can you tell me that someone stating their income didn’t know the danger of overstating. Can you honestly say that someone who took a NINA loan with possibly no job didn’t know what they were doing? I agree that there are money hungry unscrupulous lenders, lo’s, brokers, bankers, appraisers, underwriters etc… that have mislead consumers. But somewhere along the line consumers bear some responsibility as well.
Comment by Alice Yu Uy on 20 December 2008:
Banking if very complicated, but their are some who gets areoun with the system and let greed play the major role in our industry is the main cause of this disaster.
Comment by Jim LaLone on 23 December 2008:
IF I HAD THE ANSWER TO THIS ISSUE I COULD RUN THE TREASURY DEPT. ALTHOUGH THERE’S PLENTY OF BLAME TO GO AROUND, AS USUAL, THE GREEDY POLITICIANS AND INCOMPETENCE OF THEIR BUDDIES AT FANNIE AND FREDDIE, EAGER TO JACK UP THE BONUS MONEY. HAVE YOU SEEN THE SALARIES OF THESE CLOWNS? RANES, SUMMERS,GORELICK, ALL MULTIMILLION DOLLAR WONDERS…. NO, YOU YOU WON’T HEAR THAT ON NPR. THE MONEY GOING TO DEMOCRATS CAMPAIGNS..THERE MUST NOT HAVE BEEN A GUILTY REPUBLICAN, OR THESE THIEVES WOULD HAVE NAMED HIM. HOW MUCH WENT TO THE CLINTON FAMILY LIBRARY AND MASSAGE PARLOR?? GREED?? WHAT GREED?
Comment by David Nelson on 24 December 2008:
Having been in and around the mortgage business 1992 made me reflect about the dramatic changes the industry made in loosening credit. I never had the whole picture until now. How dumb can we have been!!!
Comment by Maria White on 24 December 2008:
How many of us could have predicted the last 18 months when we put some one in an ARM which was to be a short term solution? The payment was and is affordable yet was not meant to be long term. When the crash started many clients would have had a prepay of up to $10K if they would have refinanced at that time. Wait one more year and no prepay. One year later and the house value has dropped. Refinancing out of the ARM was part of the plan yet now their house is not worth what is owed. They can not refi nor will their lender work with them. Who is to blame here? Their neighbors who short sell their homes and devalue the rest of the neighborhood, the lender who won’t help negotiate new terms until their credit is ruined or the LO that did the loan? Hindsight is a strong tool.
Comment by Navie on 24 December 2008:
I can honestly can say I am glad I was not involved in the sub-prime or option arm market.
Comment by Mark Middlebrooks on 24 December 2008:
I think that there is plenty of blame to go around for the mortgage industry crisis. I do feel that there were several LOs, brokers and lenders who were pushing people into loans that they knew were horribly risky. When an LO is putting somebody into a neg am loan that they probably shouldn’t be in and then putting them into a 3 year pre-pay penalty to make a bug YSP, that is an extremely greedy move. Also let’s not forget that the lender is offering those huge YSPs for the three year pre-pay penalty on those loans. As I said, lot’s of blame to go around.
Then there is the homeowner. I have actually been pretty disturbed at how little intelligence and responsibility our society seems to be expecting from homeowners. PLENTY of blame for them in my opinion but we seem more concerned about coddling their emotions rather than recognizing their fair share of blame.
In all of the loans I have secured I have only put two people into Option Arm loans and I turned several people away from them. In my opinion there are very rare occasions where an option ARM makes sense. They were way over sold by the lenders, LOs and brokers and the borrowers couldn’t seem to get enough of them either.
I think that lenders, LOs and brokers in general probably abused the stated programs as well. In my opinion stated never had any business going hand in hand with low or no money down programs.
For the past several years my wife and I have been self employed and have invested in a handful of rental properties. Both being self employed, we needed the stated programs in order to make those loans happen. We would put 20% down and get the properties cash flowing as rentals. We have good rates on those loans and they are very safe for the lenders as well as for us. I think that stated programs are getting an unfair negative rap because so many were structured incorrectly and now they are the new sub prime as a result.
Comment by David Nelson on 24 December 2008:
With such huge epidemic of greed building it was bound to overtax the emergency rooms!!
Comment by sam Tabatabai on 24 December 2008:
I listened to this program on NPR before and it is very good butit is not tell you the whole story because I think the people talking have never been mortgage brokers and did not directly talk to clients. I have one question: what happens when you load a gun and give it to a child and say don’t shoot your brother with it please. would taht work? That is what happened to the mortgae industry. When you are faced with making thousands of dollars,are you going to say no. Well I did to a whole lot of loans but at one point when the NINA and SIVA etc… are in front of you and you have a realtor who is pushing you to get the loan for their client you will use one of them otherwise the realtor will go to another shop and that is the end of it. This whole thing was a mess created on the top at the wall street and then the big guys(you know who) were paid to look the other way while many families were gettig raped.
now we all pay for it, plain and simple. Those of us who had ethics and worried about their clients well being will still do well even in this economy. I may do less loans but I am not worried abot all this new disclosure act because I always did it for my clients anyway.
Comment by Yoshiho Takamoto on 26 December 2008:
I believe everyone; lenders, investors, LOs, and home buyers had major contributions to the crisis. Everyone thought about themselves and only themselves. GREED is the only thing it was on their mind. Now, the tightened regulation is choking some people who was abusing the system. It is a good way to weed out some bad people in industry and hopefully everyone can find a median where it will mitigate the situation we are in.
Comment by Marty Boswell on 28 December 2008:
Unfortinately to say we were all involved. We had the opportunity to originate the loan, we had the lender to broker the loan to. The lender had the invester to sell the loan to. I do have to say the lenders had some pretty appealing YSP for the ugly Pre-payment penalties they wanted us to push onto the borrowers. I hated to even put them into a 2 year pre-payment penalty but the high LTV would need the 2 year gain of equity. I did very few sub-prime loans and luckily none of my borrowers suffered the way some have and will suffer in the future.
Comment by Angela on 28 December 2008:
I do believe Mortgage Brokers, Loan Officers, Lenders are responsible. As a processor I worked with several LO’s that simply put their commission over their clients best interest. I really tried to steer clear of Option Arms and Sub-Prime loans.
Comment by Scott E on 28 December 2008:
I dont think its just any ‘ones’ fault about the mortgage crisis. Obviously driven by greed and the prosperity of capitalism. Regardless of who we point fingers to we can fault everybody all the way to the borrower! Without borrowers, the lending arena would not exist. I believe in the long run, its up to the borrower to pay the payment. As with a patient, a doctor recommends a certain medication and lifestyle, and its up to the patient to take their meds and lead a certain lifestyle to maintain health. Most people do not lead a healthy lifestyle. Are we going to blame the increasing deaths in doctors? I think not.
Comment by Richard Davis on 29 December 2008:
Clearly if we knew then what we know now we all would have made different choices. Blame is difficult to assess. Predatory lending practices are wrong and did cause tremendous havoc.
The loan solutions most of us sold (ARM’s) back then all had exit strategies dependent upon a totally different lending environment then we have now.
The real question is what have we learned. The days of everybody qualifies for a loan maybe over. The days of lenders running to Wall Street with bundles of good and bad loans is probably over. The days of refinancing to cover consumer debt is not realistic. Real Estate can come down and regulations are needed. I don’t like it but it is true.
If I were to blame anything it would be greed and consumer ignorance. Our cultural values have to be re-evaluated. Our economy is complex and the way money works is volatile. I have been watching and reading a lot on this subject. The causes that make the most sense to me are the 4 deficits which created the perfect storm. Leadership deficit, credit deficit, savings deficit, trade deficit. These 4 issues are bigger but are key factors in the current dilemmas. If we had been watching these more closely the Wall Street factor may not have been a factor. I am sure that there will be many more opinions released after the New Year.
Comment by Benjamin Bergsma on 29 December 2008:
I believe teh majority of the blame should be upon the lenders/banks. They created these loan programs. With ouit the programs and the greed that was provided by them, the consumers and LO’s would have nothing to sell. That is why Lehman Bros, WAMU and Indymac went bust.
Comment by Bartholomew Henning on 29 December 2008:
There is greed of all sorts that drove us into this mess. You can’t blame someone who saw the big pool of money, how easy it was to grab a piece, and jump into it. Yeah, the lenders are part of the blame, they are they ones with the ultimate ‘yes’ or ‘no’. But also, the LO’s who knew better. AND, the Realtors who ‘educated’ they buyers on why that 1,200 sqft house in Los Angeles should sell for $1.2 million. Appraisers saw record sales – everyone in the industry! BUT, in the end, the lenders had the final say. Bottom line.
Comment by Carmen Ziranda on 29 December 2008:
I’ts amazing how everyone is finger pointing at each other, really I think the whole problem started with the government and eded with the greedy LO’s.
The government waited a little to long to start investigating what was behind this mortage loans. LO’s never put the borrowers interests first, it was their own selfish interest first.
At this point we can say that “everyone” that was suppose to be taking care of the borrowers interests “FAILED” them.
Comment by Roger Ingalls on 29 December 2008:
When disasters of this magnitude occur, with SO many complicit in the benefits from group think, it is counter productive to waste too much human capital and energy assigning the blame.
Better to grab a shovel, a hammer, whatever tools at hand, and work to make it better, and try to piece together what happened, and how we might avoid similar mistakes in the future.
Coming on the heels of another greed fueled Christmas buying frenzy, I don’t really think it has sunk in yet, that our worship of pathological excessive consumption is at the root of the problem.
Comment by Brian Paine on 30 December 2008:
Exactly! That was great…finally a piece that everyone knows about but hadn’t heard at one sitting. LO’s to blame? I don’t think so…a portion of the problem perhaps, but they didn’t create the monstor…Dr. Frankenstein were the Mike’s on Wall Street and their greed! Now, LO’s like the originator of the “Marine’s” loan, yes, blame his lack of ethics…so tell me, what laws, guidelines or regulations would have protected any consumer from him…Answer: None…will he go to jail? Perhaps, but what about that consumer. What if that LO had a degree or certificated as a mortgage professional, would it matter? Again, not to the consumer. So what is to keep history from repeating itself? New cool laws that someone can put their initials on?
Comment by Dennis Tyler on 30 December 2008:
It starts at the top. During the Clinton administration lenders were told to loosen up. They did. Wall Street loved the yields and demanded more of the same. Lenders obliged by offering rediculous loan programs. Originators and consumers all got caught up by it, and the news sold it. Frankly, with as low as 30 year rates were for much of the time in question, it’s hard to understand why so many stupid loans were made and gotten. Hopefully we all have learned, and will take the higher and safer road.
Comment by Mark Johnson on 30 December 2008:
Mark Johnson
510-LO-44600
509 457-1944 Fax
I think that everyone should share in the blame for the mortgage crisis. Politicians were partially at fault for asking for guidlines to be eased for first-time home owners. Investors for demanding high yields. Banks for making products available. Some Loan officers for pushing the NINA and Option Arms. Realtors for trying to sell anything. I home that this crisis has taught everyone to be more professional, etical and to work with more integrity.
Comment by Kent Kiser on 30 December 2008:
To hear this program just reiterates the simple fact that blame goes to all parties. Consumers buying into dreams they couldn’t afford and now pointing the finger at lenders and brokers who were just trying to help. Competition drove this into the ground. The simple fact of the stockholders demanding more from the production staff and management doing what they could with the products they were given to sell.
Blame goes to all involved who acted in a manner that jeopardized the well being of the consumer. And shame on those consumers who didn’t simply get their calculator out and do their homework on the front end.
Comment by Benjamin Bergsma on 30 December 2008:
I be;ieve that we all should share the blame for this moergag cisis. Banks got greedy, LO did not explain programs good enough to the clients and the LO’s were not educated enough on the prograns to explain them in an educated manner to the clients.
Comment by Mike Vandenbos on 31 December 2008:
The Investors who created and promoted the Option ARM program knew what they were doing and how Loan Officers would fall over themselves to originate this product. I recall a loan officer charging 3 points on the back end, charging the client the highest margin possible, with a 3 year prepay penalty, and telling me that the client requested this. Huh? Now that’s a great tribute to educating the customer. I recall another loan officer sending out thousands of flyers a month and closing 5-10 Option ARM loans a month through this advertising. When the client would call to ask for for more info about the loan, he would focus on asking them how they were going to spend all that money they were saving on “cashflow”.
So yes, I do put considerable responsibility on the investors because they did not confine the recipients of these loans to sophisticated borrowers, much like the SEC mandates guidelines for accredited investors. The pricing structure was designed to give incentive to the loan officer to charge the highest margin while giving the investor security through prepayment penalties.
I applaud HomeStreet Bank for exercising integrity for the not only their borrowers and investors, but also for the economy at large.
Comment by John Sarausad on 31 December 2008:
I feel that this market is where it’s at today because of everyone’s misconception. From what I read and hear of people who were in this industry during the last refinance boom, it seems like we were living in fantasy thinking that value will keep going up and loan programs will get easier and easier. It just had to happen when it did, and it had to happen in the volume it did. Today the market seems great to me, because I started when everything got bad. My second week in the industry during the beginning of August 2007, I would listen to fellow co-workers lose deals that were supposed to fund that day because their lender went out of business, along with 120 others to follow shortly after. That is brutal. Fortunately, I have managed to keep my head above water while experiencing the ups and downs of this cut throat industry, and today I realize that I was born to close loans the right way at the highest level of service, putting our clients in the best financial situation, and practicing good ethics, and being a consultant by going over the pros and cons of each scenario, rather than to think of that dollar sign like a salesman does.
Comment by Jim Haechler on 31 December 2008:
Alot of blame to go around starting with Greenspan. Greed from the whole industry has effected the world economy. What amazes me is that the world pool of money can double in just a couple years and then greed sets in. All the bad loans. (SIVA,SISA,NINA) I remember the 70’s and it was a scary time. Where in for alot of changes. Changes for the better.
Comment by Rand Wood on 3 January 2009:
Keep blowin’ in a balloon and it will pop! I’m really glad that I listened to this broadcast. It was very well done and enlightening too. I have skirted around some of these issues with my friends and customers. Many of my answers were generalized based from media opinion. Now I have a pretty good grasp on what really happened in mortgage security. Interesting-The Giant Pool of Money. Asked again “what happened” I feel I can give an answer with substance.
Comment by Mila Usher on 3 January 2009:
I think thaty are partially to blame. However their are other people and companies in the mix that are just as much to blame. This crisis came from a group effort of people in the entire industry.
Comment by Mila Usher on 4 January 2009:
Yes, these companies are to blame. I also believe the brokers, And L.O’s tht put people in these loans are to blame. We know enough about loans and the industry to realze tht these loans were not suitable for all clients. Yet we put them in it anyway. It wasa ll about lining our pockets. I think the entire industry is to blame.
Comment by Beth Damery on 28 January 2009:
I want to start by saying I really enjoyed listening to this and understand more of what actually happened myself now. It would be a great idea for all LO’s to take the time to hear this. What happened reminds me of watching a snow ball roll downhill and pick up such momentum that it was unstoppable. It seems that greed did play a large part in all of this but the mortgage industry is not the only industry who gets caught up in this kind of game. For those of us left originating mortgages we have weathered this storm and will be better for it personally and for our clients.
Comment by Laurie Morgan on 28 January 2009:
What an interesting presentation. Well dramatized. However that said, I feel that there is big difference between Sub Prime ARMs which adjust at the 2 – 3 year point and Pay Option ARMs. Pay option ARMs aren’t for everyone but a product well worthing mentioning to a client who might benefit from the payment options. Which means that interviewing the client, looking at their long term goals with regard to their real estate, and then perhaps a POA. I think personally they have great advantages, on of which is happening now, monthly reduction in interest rates (based on each margin and index). Again this simply goes back to doing right by your clients and they will be your best source of referrals during the current market. If you educate them, treat them with respect they will remember that.
ps for Deborah Cook – the reason WAMU sold so many option arms is simple. The bank compensated it’s Loan Consultants well on this product, and paid their lowest splits on the good old fashioned conforming loans. Their managements greed only fueled their demise.
Comment by Vladislav Baydovskiy on 31 January 2009:
The blame cannot be put on LO originators! The lenders offered the products, the borrowers wanted it, the wall street was buying it, and loving it!!! LO are offering, what is available on the market, if the products would not be introduced, and promoted havily, like it was, it would not push LO to offer it. Borrowers, in some cases, would come in, and without and questions just aks for it: I want the neg am loan. My questions to them was: do you know what it is? Their answer was: i dont care, i want the low payment like my friend does. At that point it was really hard to talk them out of getting that loan. It’s simple lenders offered it, the borrowers wanted it! As far as sumprime – its 100% stated at 580 FICO, that is what tanked it!!! If it would be subprime ( below 620 FICO) at lower LTV’s it would have totally different effect and foreclosure rate.
Comment by Chrissie Durrin-wheatman on 5 February 2009:
So are investors to blame for in the mortgage industry? Well yes very much so! I believe the lending industry as a whole are also to blame!!They didn’t care to disclose everything to these clients.But then again the clients weren’t asking either they just wanted follow by lead of other’s and wanted to be a part of the “American Dream of home ownership Although they should have know they weren’t able to afford it.
Comment by Teresa Tait on 8 February 2009:
There are so many different directions that blame can be placed. I am not sure that looking to blame one more than the other will help us make sure that this will never happen again.Greed probably played the biggest role and was shared by all.I hate to see Option Arms get so much negative publicity.I personally own 3 homes and have had option arms on them for 6 yrs. Used the way that they were meant to be, they can be very beneficial to the homeowner. I also sold them to clients and educated them on the correct way to utilize this mortgage. None of them have had problems. I also chose to never put anyone into more than a 1 yr prepay. I learned a long time go that noone can guarantee what their financial situation will look like in 3 yrs.I hate to see responsible consumers loose access to loan programs that can work for their benefit.
Comment by Sharon Eva on 9 February 2009:
We cannot blame the investors for this whole mess. It’s a combination of investors, banks, brokers, etc. I hope we learn from this crisis and never implement loans like NINA, SISA, again. There are many Clarence’s out there and the only thing we can do is learn from our mistakes and trust our instincts. Banks who have been in business for years should have known better not to create loan programs that instinctly many felt were “toxic or liar loans.” I think we should get rid of ARM’s, prepayment penalties, etc. to regular homeowners and leave it with the investors.
Comment by Robert Paterson on 10 February 2009:
Greed got in the way common sense. Everyone was suppose to make money on these risky loans. Investors thought that they were getting safe investments with higher interest because they bought consolidated debt obligation “‘CDO’s” from wall street. They where suppose to be safe because wall street bundled a lot of loans together to even out risk. What more interest take on more risk. LO’s made money because they originated more loans. Home buyers thought they could just sell there house and collect the appreciation. Who’s to blame? As Thersa Reyna said “Every One and NO One”
Comment by Laurie Morgan on 19 February 2009:
This is a very interesting story and good way for people to understand what was going on behind the sceans in the lending world.
Today we see the fat cats from Wall Street sitting before congress explaining their big bonuses and many other missuses of money.
To not understand that that the LOs were mearly the messenger not the provider of the loans that consumers were asking for. We didn’t make up those pools of mortgage backed securities or step all over our selves like Allan Greenspan did, inviting all those overseas investors to Wall street to make money.
Comment by Beth Damery on 19 February 2009:
As I mentioned in my Ethic’s comment on this same NPR episode, this is a good example of what could happen and did happen. Again education of the consumer and honestly explaining the programs correctly is the job of the LO, but we were never pressed to sell anything. These programs were not made up by the originators but wall street.
Comment by jason brock on 22 February 2009:
Wow, where do I start. First of all I live my life with Integrity and service in mind any time I work with my clients. If I am not meeting their needs then a loan will not be processed and closed. I do not believe the problem lies directly within just the lending community alone. The problem lies in the consumer and in the leadership of our country. When the Feds allow loans that are stated income, stated assets, high DTI and high loan to value… that is the problem. Do not blame this on me the mortgage broker. I have not nor will I ever write a loan that I would not put my self into. On that note people more specifically clients need to be fully informed. RESPA is very confusing… work off referrals and check references of the Broker you are going to work off of. Consumers don’t be a sucker and also do not play dumb… you knew exactly what a ARM was, you knew that it would adjust at a specified date and that your loan would be due. You home is not Las Vegas and you should not gamble with money that is not yours. Now because of you I have to pay more in Taxes to bail you uneducated *** out. America wake up.
Comment by William Platts on 27 February 2009:
Well, chalk another one up for greed run “amuck”. I’ve never pushed the “rip off” loans, but I have had a few borrowers after being told the loan they want is total crap insist on going ahead with it. Why? Because it was the only way they could get the house at the time and they thought the most important thing in life was to own there own home. And the nightmare began.
I blame the banks, Wall Street, a “paid for” government and all the other greedy participants in this endeavor. In my younger years I may have got caught up in this mess. I understand all sides, the LO pressured by the realtor, the need to make a little more $$$ and the rising value of your home will make it all ok. I also agree with Jason, I won’t help people hang themselves but hey consumer, pay attention, look at what you are doing, what the heck happened to personal accountability. We are responsible for what we sign, wake up, we have fallen into some mystified world where someone else is always resposible for what we do to ourselves, no wonder our country is in shambles!
Comment by William Platts on 27 February 2009:
Well, chalk another one up for greed run “amuck”. I’ve never pushed the “rip off” loans, but I have had a few borrowers after being told the loan they want is total crap insist on going ahead with it. Why? Because it was the only way they could get the house at the time and they thought the most important thing in life was to own there own home. And the nightmare began.
I blame the banks, Wall Street, a “paid for” government and all the other greedy participants in this endeavor. In my younger years I may have got caught up in this mess. I understand all sides, the LO pressured by the realtor, the need to make a little more $$$ and the rising value of your home will make it all ok. I also agree with Jason, I won’t help people hang themselves but hey consumer, pay attention, look at what you are doing, what the heck happened to personal accountability. We are responsible for what we sign, wake up, we have fallen into some mystified world where someone else is always resposible for what we do to ourselves, no wonder our country is in shambles!
Comment by LINDA COFFMAN on 27 February 2009:
When I started in the Mortgage Business the Loan Officer that was training me had a very strict rule, “not everyone is qualified to purchase a home”. Yes the Global Pool of Money and the Banks made it very easy to dip into large commissions by offering loans that masked the initial doom to follow. It still comes back to the business accumen that you as an idividual follow. All lessons always return to greed and ill gotten gains are easily lost. We have a new era before us and I hope to be a part of the change that offers hope and committment to clients by all in our industry.
Comment by Chris Madden on 28 February 2009:
Preditory lending practices are mostly to blame for this mess, but everyone played a role. There were clearly companies out there selling bad loans. Im glad there were banks out there that stayed away from this mess. We must work to restore the trust and integrity that our industry once had. This industry needs to learn that its okay to “throw one back” once in a while.
Comment by Terry Birkland on 3 April 2009:
I blame liberal policticians that demanded social justice for unqualified potential home buyers. This started a process of facilitating easy unreasonable credit standards. Yes its a LO’s dream come true that you could write loans all day long and make really exceptional incomes. So too for lenders. Creative packaging of loans into CMOs with no way to rate them as investments. As someone said last year, “the chickens have come home to roost.” Maybe we’re on a better path now, I hope so.
Comment by Mary McGraw on 21 April 2009:
i believe that alot of the banks back them were in just to help themselves get rich and really didnt look at what they were doing to the consumers. some of the problems do lie on the consumer for not reading everthing they should so they know whats going on before they signed on the paper. So we can say its alittle of everyone fault.
Comment by Raylene Ramos on 23 April 2009:
I think during the time of subprime lending and other risky loan lending, most investors probably didn’t care whether or not the consumer could ultimately pay back the loan in the future. Most people think of themselves and how to make a quick buck. Not to say every investor is that way, but it sure created alot more transactions out there which in turn creates more money in pockets.
Comment by Joe Dahleen on 14 May 2009:
I agree that all partied are culpable for the meltdown in someway or another. I also agree that some are very culpable and should be banned from our business for life.
But I would also say that 65% to 70% of all subprime loans would have qualified for a fannie mae or freddie mac products with better interest rates and terms without prepayment penalties.
Most just got so used to just going with stated income that they never even bothered to run the calculations to see if the borrower really truly qualified for a better product. Most bad actors during that time frame got into the business without every even knowing how to figure out the true income off the paystub. Had they just tried to structure the loan first they would have been better off trying to get the loan file approved by Fannie OR Freddie.
The biggest problem was that subprime lenders is that they didn’t run the files for an agency approval first. They felt they could get a better execution by going directly to Wall Street. Well that options is no longer available.
Why can’t we just go to a completely different model. Why don’t we have all of the verification done by Rapid Reporting and ever rely on the borrower to deliver us any documentation again. They would save us a ton of money, time and reduce the whole process down to disclosures and a 4506-T.
Most banks didn’t understand the history of the business. A major set back seems to happen every 7 – 10 years with minor set back every 3 – 5 years. Did they every think that what if the ride is over – what do we do now? Oh yea – Bail Out. The ultimate fail safe plan.
Comment by melissa morgan on 21 June 2009:
There were so many layers of greed as this process evolved and grew and then it just exploded.
Where was the regulation when they first determined increased loss due to delinquency?
It grew to a point where the pressure to originate and process these types of loans was tremendious. Offering considerably large yield spread premiums. The conservative were forced to expand into these programs if they were to be competitive and survive.
These loans with no documentation to support income or assets should have been rated properly in the first place based on risk and never should have been placed in a global investment category that most do not understand and rely soley on the rating system that it must be safe because it is rated AAA. This was a huge mistake in the beginning.
But as this crisis evolved more and more layers of risk presented itself. It all boils down to greed vs. better judgement and prudent underwriting.
Countless times my conservative borrower requesting a modest amount of cash was presented with a much larger amount available to them. Given the opportunity as with the majority of society would do they would take the larger amount because they could and all of a sudden had all kinds of things to do with the extra money and felt that it must be okay because the bank wouldn’t loan the money unless they could afford it right?
We are the professionals dealing with borrowers livihood. They rely on us to make the intelligent decision for them because this is what we do. Sometimes they need us to so no. They may not like to receive that denial (whats that) but will be much better off down the road for it.
Comment by Ross Palmer on 31 July 2009:
I believe all parties involved were to blame for the fall of the market, and people are certainly money hungry. Although I have never originated a risky loan, if I were to put someone in this situation the biggest concern would be educating the consumer on what they were getting themselves into. Most people do not have the means to jump into a high risk situation such as the option arms, but if they were to do so they need to know exactly how they work and how they will perform for the better or the worse.
Comment by Elisa Wu on 28 February 2010:
I don’t think the consumers should be blamed; the banks were the ones should be blamed; they just want to get rich and rich and do not care consumer’s rights. THey give you a candy attacting you to get in their house and after that you are lost and you have to give whatever you have in order to get out of the door. All those documents given by the banks just making the consumers believe everything is legally processed and they trust the bankers and do whatever they ask them to do. So again, the bank are the ones without ethic and should be blamed.