Mortgage Crisis in a Nutshell - Presented by John Campbell

In this one-hour video, Attorney John E. Campbell explains the main aspects of the mortgage crisis that has devastated the U.S. housing market and the economy.

This video is divided into the following sections:

I. The Big Picture and its Many Parts (:55)
II. Banks Flood the Market with Subprime Mortgages (3:54)
III. Banks, Securitize their Mortgages (10:05)
IV. Banks Cry for a Bailout (13:57)
V. Wall Street Malfeasance (16:54)
VI. Foreclosures, Robo-Signing, Trustees and Conflicts of Interest (18:20)
VII. MERS ("Mortgage Electronic Registration System) (33:45)
VIII. The Mortgage System Used to Work (43:42)
IX. Credits and Further Readings (52:43)

Erich Vieth
John Campbell
CAMPBELL LAW, LLC
1500 Washington Avenue
Suite 100
St. Louis, MO 63103
Office: 314.588.8101
Fax: [phone]

It is their intent to offer a video for both lawyers and non-lawyers that presents an overall picture of an area of law that has, especially over the past decade, become intimidating in its complexity. If this video inspires you learn more about the mortgage industry, including bank misconduct, securitization and foreclosures, you are invited to explore the websites of these three excellent organizations:

Wikipedia also offers many articles to get you started, including the following:

[CrowAnarchy]

Thank you very much for the well-organized overview of the current mortgage/financial crisis. You did a great job of mapping it all out into a narrative that makes sense, and providing the details necessary to begin to grasp how it all works (and doesn't work). I'm an aide for a state legislator in a non-judicial foreclosure state, and will definitely share this with colleagues and constituents who are working to find ways out of this mess. Rock on!

[SulisHana]

Get ready..love it <3 excellent, thankyou

[Nagare]

Great explanation! One of the better ones about the crisis

[shawnsulliv]

Very good presentation! excellent job!

[berniemckenna]

congratulations. That was a brilliant presentation .

[freddyb]

Thanks for showing one of the many faces of this complex system. Others sides are the "Trustees" with Goldman, the insurance from AIG. Even the building material suppliers were making a quick dollar (Chinese dry wall). My a/c handler when out a couple of days ago, and the repair said that this was a common problem with units built around the same time period. They couldn't keep up with demand so they started building them on the cheap. Moral of the story - Only so many hands can fit into a cookie jar, until you have to break the jar. 

[RamonPolo]

Wow... You put a lot of work into this!

Thanks for sharing.

[MrPatrickslovell]

Nice job. Love the sentiment and clarity about the basics. There's so much more but really appreciate your effort.

[easilyscan]

When I bought my first home on July 1 1994, before I signed the papers, I asked the bank president one question. My brother lived in California @ that time, & was having trouble with payments on his home. The local bank where his loan originated, had sold the loan to a bank on the east coast. He would mail his check 2 weeks before the due date but was continually getting notices of late payment. So the question I asked the bank president was “do you sell your loans? He said he couldn't guarantee it, but they had never done so in the past, and had no plans to do it in the future. I even went with an adjustable rate, which everyone told me not to, but it worked out fine.

Appreciate the video. MERS was very interesting and scary at the same time. All that being said, and I mean no disrespect by this, but you left out a lot. I think you only mentioned Fannie Mae & Freddie Mac once. These GSE’s played a huge role in this, along with our very own government. Fannie Mae was founded in 1938 under FDR, & made a "private" corporation in 1968, under Lyndon Johnson, as a Government Sponsored Enterprise (GSE). Freddie Mac is nothing more than another GSE that the government ‘invented’ to ‘supposedly’ compete with Fannie Mae.

You also left out how housing advocates, including politicians, pressured banks to go against the proven method of issuing mortgages you showed in the last 4 or 5 minutes of your video, & instead encouraged them to issue subprime loans @ will.

George W Bush was a very unpopular president, but he had people warning congress that more oversight/regulation was needed in this area as early as 2002. Unfortunately, politicians like Barney Frank, insisted everything was fine. The ‘Wall street banks’ certainly played a part, but the government & housing advocates created the ‘infrastructure’ for this meltdown beginning in the late 70s. I know this is unpopular, because you touched on it in the video, but the lack of finance knowledge of a substantial percentage of the people who were affected by this is appalling.

Here's a link to another explanation of how this meltdown happened. I'd love to hear your thoughts on it.

[ericoshimatta]

This video was really helpful and explained the mortgage crisis in a very good way.
I want to see more videos with this man and I'd even want him as my teacher in economics!

[kjnoinjijimi]

amazing lecture.... very simplified for the regular joe

[indrekk]

Never knew about the MERS or foreclosure procedure. Thank you for explaining that

[MrLittleHorus]

Not long watched the big short and it was really complicated even thou I kinda understood it alittle. this video has completely explained the full thing in a very simple way. I applaud you for this video thank you.

[technologysimple]

Wow.... i am listening to you at 1 in the morning in Germany and it is the BEST explanation of the subprime mortgage ever !! You have amazing explanation skills . I believe you should make small animation videos that break all these things explaining all such concepts that are a fun and oriented for everyone !! You explain really really well. bRAVO !

[androydnyc]

pretty good analysis-- a couple of quick notes from a loan portfolio trader who was in the room-- the Street conduits [aggregators & securitizers of loan pools- Lehman's Aurora, Goldman's Littman] actually created a market Demand for exotic loans [SISA/ NINA piggyback Pay-Option ARMs] by offering up to 108% face value over 103% for traditional A paper-- Bill Dallas/ OwnIT mortgage noted that he finally caved to their Demand bc he couldn't keep declining 5 points on his BILLION a month production [5%/1Bn= $50Mn].
Street firms would then take out CDS to improve risk profile to get AAA/aaa+ [not to mention inherent Conflicts of Interest in Sell side ratings] and then repackage the "B pieces" into CDOs [w/ CDS] until they got the holy grail- AAA/ double digit ROI security okay for sale to Pension Funds, the ultimate target market all along.

[MortgagebyAdam]

Very well put. The best improvement in the industry since the meltdown was probably the need to prove: the ability to repay.

[jamesmurphy]

I am often asked who is responsible for the mortgage crisis. The answer is we all were.From the Loan Officer to the Appraiser. Joe really did know what he was getting into. There was a lot of bad thing happening with exotic loans & shady lenders, but Joe knew and he was okay with it.In his mind, by the time the payment caught up to him, he was going to sell that house for a large profit anyway...an idea that was spoon fed to him by his Realtor. Many people forget that. Thanks for making this -

[porschadominguez]

I really don't understand how a Notary in Texas can notarize a document for some random person that is not a part of the transaction in California. Why is that random persons' signature needed when they are not at the bank or even in the same state? What part does that person play in the transaction if they were not a part of it and why is the Notary not in the same state of any of the signers? I pull Deeds, Notes, & other mortgage documents and they all look shady and bothers me that all of the signers often have never met.

[gohappypanda]

Wonderful video.  Interested to know what his thoughts are with the present day housing market - overpriced homes v. slow salary increases.  Even though the banks have tighten up their ability to give out loans, hardworking, honest home buyers still suffers because now they cannot compete against cash buyers, usually ones from outside of the U.S.  And of course, as a seller, why lower the price if there is cash to be had?  These cash buyers purchase these properties just to resell them or increases rent to recover the high costs plus profits.

[drondello]

if the subprime loans we're never written in the first place and they would have verified income like they're supposed to and the FICO score would have been an average of 720 instead of below 600 a financial collapse 2008 would of never happen