Another Subprime Lender Bites it - ResMae was the 21st biggest

ResMae is the 3rd major Subprime lender to go bankrupt in the last 2 months. Not only will it's investors lose a lot of money, but its impact on communities I believe will be concentracted to poorer communities, outlying communities, hispanic and african-american communities, non-english speaking communities. Places like: Stockton, Fresno, Tracy, San Leandro, certain neighborhoods of Hayward, Union City and Newark. Fremont should generally see little impact in its neighborhoods with high performing school, but some areas around poorer performing schools may be impacted. Some of the vicitms will be little old ladies or retires, as well as first time home buyers. Often times I see people put in subprime loans even though they would qualify for an "A-Paper Loan" simply because the loan officer put them into a product they made the most money from. A loan officer can make 4-5 points on a subprime loan. And surprisingly, many times its a relative that the borrower relied upon that put them into the crappy loan there in, which now they are defaulting on.
I was at a mortgage broker's conference on Tuesday, and talking to a rep at a firm that was saying it was selling hybird ARMS now, instead of Option ARMS. A Hybird ARM is basically an Option ARM with a fixed interest rate, albiet a very high interest rate.