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What's wrong with giving low income folks a shot at home ownership?
Home ownership requires either substantial cash flow or really good home ownership skills. I have seen poor people inherit homes free and clear from their parents, only to have the houses deteriorate into rubble in short order. Older homes require continual maintenance. Low income home owners don't get to drink beer and watch sports on TV on weekends. Most of them have neither the skills nor the discipline to pull it off.
It was the wealthier flippers that triggered it, not the subprime borrowers. In this chart you can clearly see the top 50% ranked by credit worthiness were the ones who caused the spike, not the bottom 25% subprime folks whose default rate remained mostly constant.
So based on this article are you saying it's okay to loan to people who are low income that don't qualify based on income since this is the premise if this whole set of posts? That they are not riskier than people who make more money and not considered low income and that they will not have a high default rate?
You have everything right except you are are discounting the role of subprime loans. Many people defaulted on their loans, but it makes sense that the most loans that did so were by those who were lower income and really should never have gotten the loans in the first place.
No doubt they took what was offered to them but the bottom line was they should have never been lined the money to start with. While people in all income levels defaulted, some didn't. You can bet it was people that had enough income to weather the storm and not the low income people.
I mentioned that my cousin and I did a lot of discussion about this when it was happening. He did a Lot of research and educated me on much of it. Trust me he is not on the far right.
Subprime != Low Income. At least not always. There's plenty of people who make good money who have crap credit. And there's people who don't make a whole lot who have splendid credit.
While you're right in the statement that people who had enough income were able to weather the storm.. The part about it not being low income people is incorrect. The guy who makes $40k a year and bought a house with a payment of $500/mo who still had a job trudged right along.
The guy with the $200k/year job and the $3000/mo payment who lost his job and was out of work for 3 years would be the one more likely to default.
Economic levels have little to do with this in my eyes. It's people who overextended themselves, regardless of how much money they made. Coupled with people who did not overextend, but circumstances snowballed so much that they wound up in trouble.
It was the wealthier flippers that triggered it, not the subprime borrowers. In this chart you can clearly see the top 50% ranked by credit worthiness were the ones who caused the spike, not the bottom 25% subprime folks whose default rate remained mostly constant.
With all due respect, you are wrong. We lived it in our neighborhood. Bought responsibly well below our means in a brand new neighborhood. Little did we know that anyone breathing was being approved for the same house and mortgage we were. Most of them loaded up uhauls in the night two years later, leaving us with worthless real estate.
They had bragged how you could get a home so easily; even illegals got mortgages.
With all due respect, you are wrong. We lived it in our neighborhood. Bought responsibly well below our means in a brand new neighborhood. Little did we know that anyone breathing was being approved for the same house and mortgage we were. Most of them loaded up uhauls in the night two years later, leaving us with worthless real estate.
They had bragged how you could get a home so easily; even illegals got mortgages.
That’s right! Now blame the illegals. Yeah, all their mounds of disposable income crashed the market once they figured out how to further game the system, creating even more hideous variants of credit default swaps.
With all due respect, you are wrong. We lived it in our neighborhood. Bought responsibly well below our means in a brand new neighborhood. Little did we know that anyone breathing was being approved for the same house and mortgage we were. Most of them loaded up uhauls in the night two years later, leaving us with worthless real estate.
They had bragged how you could get a home so easily; even illegals got mortgages.
Did you read the article I posted or view the plotting chart? Clearly the subprime borrowers were not the instigator that the media would make it seem.
So based on this article are you saying it's okay to loan to people who are low income that don't qualify based on income since this is the premise if this whole set of posts? That they are not riskier than people who make more money and not considered low income and that they will not have a high default rate?
I'm saying based on the article it appears that the subprime borrowers were not the cause of the massive defaults like what has been portrayed in the national press ie "the subprime loan crisis".
It clearly shows the subprime borrowers hardly budging on their default rates throughout the entire ordeal.
That’s right! Now blame the illegals. Yeah, all their mounds of disposable income crashed the market once they figured out how to further game the system, creating even more hideous variants of credit default swaps.
They were our NEIGHBORS in Texas who bragged about getting these subprime mortgages. Research it. They had no savings and in some cases no good credit or income.
Subprime != Low Income. At least not always. There's plenty of people who make good money who have crap credit. And there's people who don't make a whole lot who have splendid credit.
While you're right in the statement that people who had enough income were able to weather the storm.. The part about it not being low income people is incorrect. The guy who makes $40k a year and bought a house with a payment of $500/mo who still had a job trudged right along.
The guy with the $200k/year job and the $3000/mo payment who lost his job and was out of work for 3 years would be the one more likely to default.
Economic levels have little to do with this in my eyes. It's people who overextended themselves, regardless of how much money they made. Coupled with people who did not overextend, but circumstances snowballed so much that they wound up in trouble.
Yep it looks like to me, the big issue was folks who had good credit who lied about income in order to purchase multiple homes.
In general, those with higher incomes have higher credit scores. (See chart below)
Back in 2007-2008 I was knocking on doors offering to help folks accomplish a short sale with the goal of doing a double close back when it was legal. The article I linked to correlates what I saw back then.
The VAST MAJORITY of the hundreds of homes I visited in my area were middle class or above homes occupied by renters. These homes were bought by individuals on interest only loans and then rented out with the intention of selling in a year or two to make a quick buck. There were homes, of course, bought by those with low income/bad credit who couldn't afford them with bubble payments etc but that was not the majority who entered default.
They were our NEIGHBORS in Texas who bragged about getting these subprime mortgages. Research it. They had no savings and in some cases no good credit or income.
Your anecdotal experience does not correlate with the data on a national scale.
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