THE CREDIT CRISIS: 10 YEARS AND COUNTING RICK TOBIN The implosion of the subprime mortgage industry, AltA mortgages, EZ Doc (no income and / or no asset verification options) 1st and 2nd mortgages, owner and nonowner occupied EZ Doc credit lines, option pay ARMs (adjustable rate mortgages) that had starting negative amortization payment rates of 1% and 40year terms, and 100% loan to value owner and investor loans up to as high as $1.4 million (one to four units) with no money down began vanishing earlier in 2006 prior to rapidly decreasing in loan program numbers in 2007. Perhaps the main reason why there were millions of foreclosures filed across the U.S. between the last major housing market peak near 2006 or 2007 and over the next few years was that a majority of home buyers and investors in pricier regions or “bubble” or “flipper” states such as California, Arizona, Nevada, and Florida qualified for third party mortgages to buy the properties with no income verification that later disappeared after the financial markets almost imploded. Buyers usually need money to get into and out of a deal. Once the money dries up, it becomes more challenging to unload a property to anyone besides an allcash buyer. Once the “music” stopped playing (or the easy money flow) on a larger scale beginning in 2007, then property owners, investors, and new buyers had far fewer lending options available to them to either refinance their existing mortgage debt or qualify for no money down, EZ Doc loans to buy the properties that were for sale at the time. It was akin to the music stopping during a game of Musical Chairs as there were more people actively seeking the safety of available chairs. In many ways, it was like passengers on the Titanic ship reshuffling deck chairs trying to survive instead of grabbing the nearest lifeboat for safety. The 2007 version of the Titanic “icebergs” were the frozen financial and derivatives markets that were sinking lenders, investment firms on Wall Street and elsewhere, investors, and property owners around the world. Sadly, the U.S. subprime mortgage implosion has been blamed by many financial analysts around the world as the catalyst or primary cause of the ongoing Credit Crisis. Yet, delinquent subprime mortgage loans only accounted for less than 1% of all total outstanding defaulted financial debt towards the early years of the Credit Crisis back in 2007 and 2008.