Hey subprime meltdown, I want my $143 back

The International Monetary Fund estimated Tuesday that the subprime mortgage meltdown could zap almost $1 trillion from the world economy, according to news sources.

The IMF predicts losses of $945 billion after adding up batches of bad mortgages, securities and other commercial loans. The Chicago Tribune says that amounts to about $143 for each person on Earth.

The IMF's number exceeds the highest prior estimate by $345 billion, according to Forbes, which also says The Street's consensus is that the subprime fallout has cost $170 billion to date.

The scariest part of today's news reports is this, from Forbes:

The bank said that the crisis is spreading outside the U.S. subprime market into "the prime residential and commercial real estate markets, consumer credit, and the low- to high-grade corporate credit markets." The report identified the U.S. as the crisis "epicenter" that has become a contagion. Once considered an isolated problem, the IMF wrote that U.S. troubles are affecting other nations' financial institutions that have "the same overly benign global financial conditions" and "weaknesses in risk management systems and prudential supervision."

Hindsight is always 20/20

NPR ran a story on Wednesday in which reporters spoke with mortgage broker refugees who told stories about the piles of cash they made each month during the subprime craze. One broker said it was not unusual for him to bring home $15,000 a month when we was making subprime loans.

The brokers interviewed by NPR did not deny that there was some unscrupulous behavior going on behind the scenes. Some brokers were known to have CPAs in "their back pocket" who could provide certain statements needed to push through stated-income loans.

However, these brokers also said that many times the borrowers did not care about the long-term consequences of the loan even when they were spelled out clearly. They just wanted to cash out equity, lower monthly payments, or get the biggest house they could possibly get.

Wait, there is some positive news here:

Some out-of-work subprime loan brokers are now being trained at the Neighborhood Assistance Corporation of America, or NACA, a nonprofit that is working with borrowers facing foreclosure all over the country to help them refinance or restructure their subprime loans, NPR reports.

Some of the former high-rolling loan brokers in that story are now helping to untangle this mess.

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