Subprime Mortgage Situation
Dave doesn't believe there's a mortgage crisis in America today - there is a subprime mortgage crisis.
QUESTION: Madonna asks how the subprime mortgage crisis is affecting the economy.
ANSWER: It’s more a bunch of crap from the media with the exception of the subprime mortgage crisis. Several years ago, we saw a bunch of people with bad credit and no money buying houses they couldn’t afford. Lenders were willing to loan these people money where they wouldn’t have before. They put crummy terms on these loans like 3-year balloons or stiff prepayment penalties. These companies were making money, and when people weren’t able to make the payments, the foreclosures started.
These subprime idiot lenders brought on this trouble that we have right now. It’s a small percentage of the economy, but the media is blowing it up and making it seem like the sky is falling. There is NO mortgage crisis in America today. There is a subprime mortgage crisis, but regular loans are made every day and houses are selling fine in almost every area on traditional mortgages.