By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.
“We’ve had to recalibrate our business”
Refinancing mortgages is a phenomenally profitable and nearly risk-free business for banks, and one of the few growth sectors that were actually spawned by the Fed’s herculean efforts to force down long-term interest rates through waves of quantitative easing. Banks went on a hiring binge to shuffle all this paper around and extract fees along the way before they’d dump most of these mortgages into the lap of government-owned and bailed-out Fannie Mae and Freddie Mac. And then they’d run.
Refis accounted for up to 70% of all mortgage lending in the first half of this year. But they’ve been plunging since early May, consistently, unrelentingly, week after week. The Mortgage Bankers Association’s Refinance Index, after being down another 4.6% for the week ending August 16, reported yesterday, has swooned 62.1% from its recent peak in early May.
Mortgage rates have jumped over a full percentage point from 3.59% in early May to 4.68%, as of the week ending August 16, according to the MBA. By now, given how much Treasuries have jumped since August 16, mortgage rates have risen even further. Thus, much of the incentive to refinance a home has evaporated, especially when fees and points are taken into account.
It’s all part of the process of interest rates returning possibly to some sort of old normal as the Fed palavers more and more intensively about tapering its purchases of Mortgage Backed Securities and Treasuries. And the folks who were hired to process the tsunami of refis are now massively getting axed. Because what QE giveth, the end of QE taketh away.
The biggie: TBTF and bailed-out Wells Fargo Bank. Mortgage lending accounts for about 22% of its fee income. And in the second quarter, it produced over 20% of all residential mortgages in the US, Reuters reported, citing the industry publication Inside Mortgage Finance. In the first quarter last year, it extended $131 billion in home loans; in the second quarter this year, it only extended $112 billion. But actual home sales this year have been way ahead of last year, and purchase mortgages in the latest week still ran 5% ahead of the same week a year ago, according to the MBA (though that advance has been shriveling). The difference: plunging refis.
In response to this industry debacle, Wells Fargo is sacking 2,300 people in its mortgage business, according to an internal memo that Reuters got a hold of. That’s about 21% of the 11,000 mortgage loan officers that Wells Fargo had on its payroll at the end of March.
Franklin Codel, Wells Fargo’s head of mortgage production, wrote in the memo that mortgage refinancing has plunged to around 50% of mortgage lending, from 70% earlier this year, and would fall even further in the coming months. “We’ve had to recalibrate our business to meet customers’ needs, and to ensure we’re operating as efficiently and effectively as possible,” explained the memo in elegant corporate speak. “Unfortunately, displacements within our team are necessary.”
There had been a shot before the bow. During the July 12 earnings call, Wells Fargo CFO Tim Sloan warned that jumping mortgage rates would likely grind down that refi bonanza. For seven quarters in a row, Wells Fargo had made more than $100 billion in home loans, extracting rich fees along the way, but…. “We just don’t think that we are going to see $100 billion of mortgage volume, given the current rates today, in the third quarter,” he warned. “We will need to go ahead and make some adjustments.”
JPMorgan, during its earnings call the same day, said these rising mortgage rates could chop volume by 30% to 40%. Which would result in a “dramatic reduction in profits” in the business, explained CEO Jamie Dimon.
Now the time for these “adjustments” has come. The 2,300 people to be sacked, as interest rates head back to some sort of normal, received their 60-day notice on Wednesday, a Wells Fargo spokeswoman told Reuters.
JPMorgan and other banks will similarly decimate their mortgage divisions. And so comes to an end one of the few real economic benefits – shuffling mortgage paper around to extract fees – from the Fed’s $3-trillion bond-buying binge and zero-interest rate policy.
Printing money and forcing interest rates to near zero, that’s how the Fed and other central banks papered over the Financial Crisis, duct-taped the bursting credit bubble back together, inflated new asset bubbles, and propped up TBTF banks, like Wells Fargo. It accomplished a huge feat: a worldwide tsunami of hot money. Which is now receding. Read…. When “QE Infinity” Turns Into A Pipedream: Hot Money Evaporates, Rout Follows – See Emerging Markets
Silly question, but an answer would help me understand this article: Where exactly is ‘Heck’?
who needs to go to Norway when it exists in Michigan?
Both completely outdone by this little Cayman gem: https://en.wikipedia.org/wiki/Hell,_Grand_Cayman
By the Fed lowering mortgage rates like it did, it helped create an unsustainable volume of mortgage refis. There’s just no way to produce more refinancings in a rising rate environent short of lower credit standards or encouraging consolidated equity take-out loans, neither of which is particularly attractive for the sysem as a whole.
Disagree completely. The FED did nothing. That was all globally driven inflight.
Japan left first and now the Euro’s are starting to tip toe back and see if everything has calmed down.
RE is dead as a economic driver. Who cares about it?
You have an interestingly loose definition of “economic driver” if you included RE there in the first place; How the hell can ficticious capital drive anything except itself?
The buckling edifice of toxic debt has probably reached critical mass. Lethal waste is leaking from every seam, and like the Fukishima reactor, injections of fresh liquid are having little effect. They’re simply pumping the backwash of radioactive eflluvia into a wider environment.
Never mind. As the economy recedes, the police state advances. We’re all on the reservation now, and every crisis is another opportunity to convert the environment into a waste land and society into a vast prison gulag.
Welcome to corporate capitalisms Endgame.
In the inimitable words of William S Burroughs:
“Listen to my last words anywhere. Listen to my last words any world. Listen all you boards syndicates and governments of the earth. And you powers behind what filth deals consummated in what lavatory to take what is not yours. To sell the ground from unborn feet forever –
“Don’t let them see us. Don’t tell them what we are doing –”
Are these the words of the all-powerful boards and syndicates of the earth?
“For God’s sake don’t let that Coca-Cola thing out –”
“Not The Cancer Deal with The Venusians –”
“Not the Green Deal – Don’t show them that –”
“Not the Orgasm Death –”
“Not the ovens –”
good call, Aussie
But who allowed this take order through their apathy and choosing the easy way and the path of least resistance? We allowed this Frankenstein monster and now we have to live with it. I know there will be plenty of weeping and wailing as everyone claims innocent victim status. The only innocents are the young people being brought up in this meat grinder and having no choice about it. Their parents and grandparents had choices and chose to play dumb, to pretend this fairyland of plenty we’d created would magically last forever. And they all didn’t live happily ever after…
One can make the argument we are getting exactly what we deserve. Then hope future generations will learn from our mistake, create a better society and safeguard it.
One can make the argument we are getting exactly what we deserve.
One really can’t. Those who are owed their just desserts are the very least likely to receive them.
..neocons and their blindly obedient Milton Friedman-“Chicago Boys” free marketers would love to blame the VICTIMS for Wall $treet (WK Black-Michael Hudson) “criminogenic accounting fraud”…
scapegoating of “the people”, whose representative government has been run into the ground by anti-government corporatists, taking “campaign contributions” from corporations=influence is ridiculous, but no different than 30’s depression era…
..during 30’s depression there was a “tea party” corporate sponsored movement also, and political parties pointed fingers at one another, as voters elected one, then the other, in HOPE of ending fiscal insanity…
Smedley Butler was the Bradley Manning-Edward Snowden of his day…FDR had to threaten his Supreme Court with expansion of justices to end fundamentalist
rulings, leading to such as these examples:
Justice Dept. Sues Texas over Voter ID Law
“The Justice Department has announced a lawsuit seeking to prevent Texas from enacting the voter ID law that helped spark the recent U.S. Supreme Court case over voting rights. A federal court last year ruled the Republican-controlled statehouse in Texas discriminated against people of color in its redrawing of political maps for congressional and legislative districts ahead of the 2012 election. But the ruling was struck down in June when the Supreme Court invalidated a critical portion of the 1965 Voting Rights that required nine states with a history of racial discrimination to obtain federal approval for changes to voting rules. Texas began enforcing the voter ID law after the Supreme Court decision came down.”
Colin Powell Chides North Carolina Governor on ID Law
“The Justice Department is expected to file lawsuits against other states, possibly in North Carolina, which approved sweeping curbs on voting rights earlier this month. On Thursday, North Carolina’s Republican Gov. Pat McCrory heard direct criticism of the state’s law from former Secretary of State Colin Powell at a public event in Raleigh. Moments after McCrory left the stage, Powell said governments should enact policies that “encourage every American to vote, not make it more difficult to vote.” Powell said the new law sends a message to minority voters that “we are really sort of punishing you.”
Appeals Court Upholds Overruling of Arizona Ban on Planned Parenthood
“A federal appeals court has upheld a lower court ruling that struck down an Arizona law barring funding for the reproductive services group Planned Parenthood. The law banned the use of public funds by state or local government to contract with any organization that provides abortions as one of its services. The Ninth Circuit Court of Appeals sided with the decision that the law illegally denies Medicaid recipients the right to choose their medical options.”
Planned Parenthood Challenges Indiana Law
“Planned Parenthood has filed a lawsuit challenging a new Indiana law that says clinics that provide the abortion pill must have full surgical facilities on hand. Planned Parenthood says the measure would halt abortions at its clinic in the town of Lafayette.”
Protesters Stage White House Rally for Fracking Ban
“Dozens of protesters rallied outside the White House on Thursday in a call for a ban on fracking on federal lands. The actor and activist Daryl Hannah was among those taking part.
Daryl Hannah: “We all depend upon the very finite, increasingly finite, fresh, uncontaminated water resources. We depend upon uncontaminated and non-toxic soil. We depend upon an atmosphere and air that is not polluted. And we depend upon a somewhat stable climate. And fracking is anathema to all of those things.” The Bureau of Land Management recently unveiled proposals for drilling and fracking on public lands. On behalf of more than 200 organizations, the group “Americans Against Fracking” submitted to the White House public comments against fracking from over 650,000 people.”
New York City Council Overrules Bloomberg Veto of Police Oversight
“The New York City Council has overruled Mayor Michael Bloomberg’s veto of a pair of measures increasing oversight of the police department and expanding safeguards against profiling. Approved by the City Council earlier this year, the Community Safety Act creates an independent inspector general to oversee the New York City Police Department and broadens the definition of biased profiling to include age, gender, housing status and sexual orientation. Bloomberg had struck them down, calling them “dangerous and irresponsible.” Thursday’s vote overruling Bloomberg came over a week after a federal judge declared the NYPD’s “stop and frisk” tactics unconstitutional for discriminating against people of color, particularly African Americans and Latinos.”
and as the U.S. president continues policies of secreting of TRUTH, leading to this:
Manning Supporters Heckle Obama in Syracuse
“During a speech in Syracuse, Obama was heckled by two audience members calling on him to pardon Chelsea Manning, the convicted Army whistleblower formerly known as Bradley Manning after announcing a gender transition on Thursday. Both protesters were removed from the event.”
…and blamegame scapegoating of VICTIMS continues; pensioners, state employees, teachers and their unions, schools, immigrants, the poor…while wedge issue politics attempt to distract-divide and conquer, from TRUTH…
I’m not playing the blame game. The fact is, as things fall apart many will be in shock and feel they’ve been violated in some way. It will be a big Pity Party on a societal scale. As such attitudes allowed this takeover to occur in the first place, it also will do nothing to fix the problem.
There’s a simple reason the 1% in control are in control: they will stop at nothing to get what they want. Even murder, killing thousands of people on the other side of the world is not beneath them. Now we can lay low and hope they self destruct, giving us the opportunity to replace them and create something better and more fair. That is my preferred strategy. Or we can confront them and attempt to remove them from power. But peaceful protesters against those who will kill at the drop of a hat. It’s easy to see who wins in the short term. I’ve nothing against peaceful protesters. In fact I admire them. I just don’t like their chances of success.
However there is a large group that isn’t lying low and certainly isn’t protesting against anything. They love the system so long as it works for them. But when it begins to work against them you are going to see some classic temper tantrums. I’m sorry but these people DO deserve what they get. Yes the criminals deserve worse but that’s another issue.
So are you saying that in order to confront the Beast, we must become Beasts ourselves. A Pyhrric victory, if that were to happen…
Why was it ok in 1941 to travel halfway around the world to confront the Beast, yet today, if we confront him in our own backyard we somehow demean ourselves?
The Nazis never really threatened the liberty of North Americans, nor tampered with our food supply, nor had the potential to destroy our environment. But these modern day Nazis get a free pass because it’s beneath us to fight them? Is something only worth fighting for when someone waves a flag?
It’s either an eye for an eye or turn your other cheek… your strategy depends on your opponent.
Moneta expresses “DUALITY”..good-bad, right-wrong…high-low…it’s much, much simpler than “the extremes”…it’s about the $$$$-simply remove the $$$$
from politics-NO campaign contributions=influence of “the people’s representative government”..
as for Paul’s “I’m not playing the blame game”…can you FOLLOW THE $$$$???
2001, Wall $treet derivatives valued around $2 trillion-by 2007, over $600 trillion…blame goes WHERE, Paul???
As you likely cannot follow the $$$$, here’s that documentation-inform yourself:
Excellent. We are all collaborators, but to varying degree.
..oh, so “we are all responsible”?? So whistleblowers are NOT exposing secrets held from public scrutiny? So corporations controlling media are NOT refusing
to allow TRUTH for public scrutiny? So everyone in America knows the 5 reasons given for building 7 destruction?? (most I meet no nothing of building 7)
So you and others can follow the $$$$ from Wall $treet around $2 trillion in derivatives, 2001, to over $600 trillion, by 2007, documented here:
and explained here:
…don’t allow scapegoating of the VICTIMS….
“Democracy is when we are all guilty”, observed Camus. We are a long, long way from such a perfectly even distribution of responsibility.
If everyone is guilty, no one is guilty…
Right. Finding 1 scapegoat will really do the trick… LOL!
Sadist and masochist
Yin and Yang
Takes 2 to tango.
We need to stop the bankers and put them in their place but the general population needs a good grounding also.
..I reproached you above; your penchant for “DUALITY”, Moneta…
Your version of “yin-yang” is quite western…the opposites. Truth is, the point of “the opposites” in circle is the line running between the two…that never quite reaches either extreme…that line is “the WAY”…and amounts to nearly all events…a “balance” between the opposites…
“The best government is that which is unknown…(unheard of-doesn’t trouble lives of the people)
The next best is that which is known and loved..
The next best is that which is despised…”
Sorry I should have written:
I don’t think so. If I’m innocent of anything, it’s the banking and money system.
And a good thing too, since that is the root of very much evil that I might be partly responsible for, in my ignorance in some cases.
Couldn’t have happened to a nicer group of BS jobs. So perfect in combo with the earlier article about Graeber’s piece.
The grunt-level processors and underwriters getting the axe aren’t that different, morally, from grunt-level white collar workers in any other industry. They’re desperate for an income stream to survive; this is what was available. A lot of this employment was temp-to-perm stuff, paying poorly.
It’s like heaping anger on the poor sod in the call center that disturbs your dinner every evening. Most of them hate it as much as you do, but it beats living in the street, standing in the soup lines.
It’s quite sad actually what people are opting to do or stuck doing to make a buck.
Last Thursday, I went to a fast food joint that everyone knows but I will not name and ask them for a small cup for water. I am told that they do not have small cups but they have big cups for pop if I upgrade to a combo. I tell her I get the concept but I don’t want pop, I want water. She is visibly upset and walks away into the kitchen. The other clerk, obviously uncomfortable with her reaction takes over and gives me a cup.
As soon as I walk into my house, the door bell rings and this hot water tank salesguy tries to sell me a new one. I think we get 2 visits per week and they are scams. I did not know there was so much money in water tanks! I tell him that I am not interested and he then tries to make it appear that I am legally obligated to change it. He asks how old it is (he wants to get into my house). I say I don’t know. So sure enough he says that he could figure it out in a second if I let him take a look at it. I tell him that no one comes into my house without an invitation or a warrant. He is getting aggressive and I manage to make him walk away.
I close the door and soon after, the phone rings. It’s a telemarketer who calls every day, 2x per day, to try to sell me insurance on my credit card. I have told them to put my name on the do not call list but every month they tell my it takes 30 days to register. Then I notice there is a message. It is a recording from a NY telemarketer trying to sell me a refi.
So I look at my mobile phone to see if I have messages, and sure enough there is one for a Katarina (I guess the previous owner of that number) from a collection agency.
After supper, the doorbell rings. I answer and my face must show my feelings because the guy looks at me and says: “Don’t worry, I’m not here to sell you anything. I’m just collecting money for charity.”
No one ever thinks to offer the actual cheapest mortgage outright to the actual punter, let alone a scheme that would revert to insured rent in hard times etc. instead of financialisation profits.
“(I)nsured rent in hard times”. What is that? Could you provide a description of this?
Here’s how it works in our area –
See low rates advertised
Go to bank (bank is a little weird when the neighborhood is mentioned) We’ll reccomend an appraiser.
Go to appraiser
Appraiser “There are several foreclosed houses in your neighborhood so the appraisal is low” “And that will be $400.”
Bank says ” Well the good news is that you aren’t underwater but you will have to pony up $ 25,000 to get your rates as low as advertised”
And of course this makes no sense so no refinance.
And so mutiply this by a few million and a minimum of refinancing is done.
And the banks layoff but also the savings due to refinancing never hit the economy.
For my parents it went…
Go to bank
Bank wants to appraise the house before refi
Appraiser takes three months to come out, while the interest rate rises
The rest is the same though…
Famous last words: “We’ve had to recalibrate…”
Recalibrate?! Right. “This sucker’s goin’ down.” (GWB)
these refi positions were some of those bullshit jobs being debated yesterday – mostly nonsensical to begin with.
the trouble is, the lack of and need for their paycheck. I doubt the laid-of will get adequate UI payments, or for long enough to go out and find some new bullshit, wage-earning position.
I;m sorry folks are losing jobs. But seriously, as someone who went bankrupt, has spent the last five years dealing with these scoundrels (and yes, the Green Tree service dept. woman who called me to ask “What are you going to do to pay off your discharged debt? and then got very huffy and hung up when I told her I felt sorry for her breaking the law for such a corrupt firm, and she proudly brayed “They pay me very well.” TO which I replied, “They should. You could go to jail. Although, of course, that would never happen.) I am sick and tired of all the people who have been blaming those of us who hit hard times for somewhow being responsible for the frauds committed against us, while happily sucking up their subsidized loans and buying our foreclosed properties for cash.
While I know this will not materially affect Uncle Orifice, it is nice to see Wells take a hit on their chief grift. But his Tar Sands play, is timely, and BFF Obomba can make that VERY worthwhile by approving XL, just as he did making sure “Foamy” Geithner made the banks more than whole.
And yes, I am still fighting Wells to take my court approved payments going on five years after my payment was approved in BK. They send the check backs, try to foreclose, I hire lawyers. Rinse, repeat. Planning a jury trial in L.A. That should prove interesting.
Maybe Obeyme can plan a bus tour of Wall Street to show us all how well things have worked out.
Here hear…SICK of VICTIMS being BLAMED=scapegoated….(and we all should be)..of course internet is now full of cronies attempting to scapegoat-distract from those speaking TRUTH to power…
I am going to be very forthright here.
Over the last decade, I have sacrificed a lot relative to my peers to be mortgage free. I have been marginalized for this choice. Ostracism is probably one of the toughest things a normal individual can endure.
There is no free lunch. If some people get one, it’s because someone else is paying for it. Therefore an entire population can not get one forever.
Those who were frugal learned a lesson in psychology during the making of the bubble. Those who took too much debt are now learning their lesson. And we now have to make sure that the bankers and elite get theirs too if we want to make sure the system gets fixed properly.
As long as each group in the system does not get its proper lesson, nothing will get fixed. However, one must remember that there will always be a few Teflon people that will get away with their crimes. If you can’t get past this fact, you will be miserable for the rest of your life.
Anger can be used in good and bad ways. The bad way is to make sure that you get vindicated and focus on retributions. This way, you never get closure as future generations keep on trying to save face.
The good way is by makings sure the system gets fixed so it does not happen again for a long time… a proper fix will naturally emasculate the fraudsters.
People who took too much debt gave me grief for a decade.
I tried to warn them and they laughed in my face. I tried to tell my bosses they should not be skimming the middle class and they too laughed in my face.
I sacrificed my friendships and career to not participate in the fraud.
So nobody will be able to convince me that both creditors and debtors don’t share the blame.
Neither your “mortgage” nor anyone else’s, broke the U.S. $6.5 trillion per year, world $16.5 trillion per year economy…
FOLLOW THE $$$$…
“mortgages” (due largely to Texas repubLIEcon Senator Phil Gramm’s DEregulation of Glass-Steagal-slipped into Clinton omnibus bill) were favored by banks perpetrating predatory lending because they had therefore become
SECURITIES…which they could LEVERAGE…
Now, Moneta, what did they DO-where’s the $$$$????
You are obviously angry and, frankly, I can not see how you will get closure from me… Let me ask… What did you sacrifice in the last decade to try and starve the beast?
the fundamentalist, “you are an angry person” avoidance…blame those you cannot debate, contrast, issues with, for “their anger”…
I personally “sacrificed” 11 years to enough education to be able to follow the $$$$…show us how it leads to your theorem…
now quit attempting to obfuscate, and YOU follow the $$$$ to support your intransigence…demonstrably, you are avoiding doing so…
Most of us just take out a mortgage to buy a home. Stop paying and you are on the route to eviction. Fees and such are usually levied at massive rates just when you can’t afford them. Whenever I’ve looked at mortgage payment guarantee the policies have been worse than PPI generally. Policies that allowed a mortgage to lapse to rent with upkeep provisions could end foreclosures – at least in hard times in the old cycles (in the UK housing benefit would pay rent) The problem now is our economies are bust and real jobs very unlikely to return.
Such schemes need caps to stop hustlers buying mansions, but that’s easy enough and the detail is much simpler than some repo re-hypothecation of a CDS based on the death of your neighbour’s grandmother on a Wednesday.
The problem now is our economies are bust and real jobs very unlikely to return. allcoppedout
No. The problem is unjust wealth and income distribution as one would expect from a government-backed credit cartel. Usury is bad enough but the addition of government-backed credit creation drives most everyone into debt too.
Speculation is problematic… eh.
F Beard-the “blame government” crowd (government credit card) is uninformed-it wasn’t government who broke the U.S. $6.5 trillion, world $16.5 trillion per year economies for over 7 years already…government debt (QE 1,2,3-at $80 billion per month) has been sent to the very Wall $treet banks who
DID break economies…follow the $$$$-you still can’t.
What did Wall $treet DO with “mortgages”?? They “securitized”…so they could be LEVERAGED…it is those very $ecurities that government has been “buying back” at full paper debt value…some have said if ALL that paper debt had been placed on market at same time, they would have valued perhaps 30% of paper debt value…yet are being bought back at full, 100%, over TIME…it does appear
THAT time factor was government “deal” with Wall $treet…
and it gets banks past “statute of limitations” for their “criminogenic accounting fraud”…
As noted by others, Wall $treet banks have been making their $$$$ $peculating…and leveraging…which is what they used “securities”, which they phonied up, for…
I don’t blame government per se but banks, if we need them at all, must be 100% private businesses for VOLUNTARY depositors ONLY!
What about a Post Office bank?
It should not be a bank but simply a fiat storage and transaction service unable to make loans and unable to pay interest and it should be free up to normal household limits on account size and number of transactions.
And after it is established government deposit insurance and the Fed should be abolished. That would starve the beast but good!
We should not have to choose between the mattress and having our own deposits used against us. Let the banks create, store, and transact with their own private monies if they can get anyone to accept them and I’d bet their only hope of that would be to use their own common stock as private money.
…or, a “state bank”? Even FED banks-members have suggested breaking up the largest Wall $treet banksters:
NATIONAL HARBOR, Md. — The largest banks are “practitioners of crony capitalism,” need to be broken up to ensure they are no longer considered too big to fail, and continue to threaten financial stability, a top Federal Reserve official said on Saturday.
Richard Fisher, head of the Fed’s Dallas branch, has been a critic of Wall Street’s disproportionate influence since the financial crisis.
He took his message to a small audience in a secondary ballroom at the Conservative Political Action Conference in National Harbor.
Fisher said the existence of banks viewed as likely to receive government bailouts if they fail gives them an unfair advantage, hurting economic competitiveness.
“These institutions operate under a privileged status that exacts an unfair tax upon the American people,” he said.
“They represent not only a threat to financial stability but to fair and open competition (and) are the practitioners of crony capitalism and not the agents of democratic capitalism that makes our country great,” said Fisher, who has been a vocal opponent of the Fed’s unconventional monetary stimulus policies.
Read more: http://triblive.com/usworld/nation/3674658-74/banks-fisher-financial#ixzz2cwnJZ14R
Follow us: @triblive on Twitter | triblive on Facebook
Who cares of these jobs exist or not. Useless.
I’m surprised that people are surprised. This is how the business has always worked since the late 1980s. When interest rates fall, there’s a refinancing boom. When interest rates start rising, the boom turns into a bust. The difference in 2004 was that Greenspan and loan originators, whose fraud was not policed, started pushing ARMs with teaser rates.