Financial Underwriting

“This Is A Ridiculous Joke” – An Abandoned, Rotting Vancouver House Is Listed For $7.2 Million – Zero Hedge

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Source: “This Is A Ridiculous Joke” – An Abandoned, Rotting Vancouver House Is Listed For $7.2 Million | Zero Hedge

Welcome to peak insanity.

You might ask what does this have to do with underwriting?  Great question.  Here’s your answer:

Back during the savings and loan crisis in the US (yes, I’m old) I remember seeing lots of lender initiated life insurance applications to cover mortgage debt.  The applications were made years after the loans were on the books.  One app sticks in my mind.  Like any good underwriter I asked for and received a financial statement.  The valuation of the real estate seemed high to me.  I told the underwriter to decline the case based on inadequate finances.  I was questioned on my decision.

One of the properties (there were multiple properties listed on the balance sheet) was in the same city the underwriter lived in.  I said go drive by the house and you tell me if you think it’s worth $800,000 based upon appearance and location.  The next day he walked into my office.

“It’s an empty lot.”

Hey, at least there are buildings on this $7.2 million property in Vancouver!

 

How a Lawyer Exploited the Fine Print and Found Himself Facing Federal Charges – ProPublica

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ProPublica has taken a close look at the Caramadre case because it offers a window into a larger issue: The transformation of the life insurance industry away from its traditional business of insuring lives to peddling complex financial products. This shift has not been a smooth one. Particularly during the lead up to the financial crisis, companies wrote billions worth of contracts that now imperil their financial health.

In a series of detailed interviews, Caramadre said the companies designed the rules; all he did was exploit them. Their hunger for profits in a period of dizzying growth and competition, he contends, left them vulnerable to someone with his unusual acumen. The companies have argued in court that Caramadre is a fraud artist who should return every last dime he made. In his rulings to date, the federal judge hearing the civil cases has agreed with Caramadre’s contention that he was doing what the fine print allowed.

via Death Takes a Policy: How a Lawyer Exploited the Fine Print and Found Himself Facing Federal Charges – ProPublica.

by Jake Bernstein
ProPublica, Aug. 24, 2012

Well written and well researched, this article is worth reading.  An article from the Wall Street Journal in 2010 also makes for good reading and that link is below.

Investors Recruit Terminally Ill to Outwit Insurers on Annuities – WSJ.com.

Bruce Krasting on Social Security

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The SSTF has stated that the date in which the TF falls to zero will be 2033. The actual termination date of the TF is much closer than that. It could come as early as 2023. Anyone who is 55 or older should be worried about this. Based on current law, all SS benefit payments must be cut by approximately 25% when the TF is exhausted. This will affect 72 million people. The economic consequences will be severe. The drop in SS transfers translates into a permanent drag on GDP of 2%. In other words, when this happens, the country will be unable to have any significant positive growth for a long time to come.

via Bruce Krasting: Bernanke – My Goal is to Wreck Social Security.

TF = Trust Fund

Y’all better start planning for a much smaller Social Security payout.  Interesting viewpoint in this blog post.  Ignore at your own risk.