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You have a right to buy it, but a lending institution has the right to decide to lend you money or not, based on whatever rules there are at the time. I think you might be referring to how it is so much harder to get a loan right now. So, I mean, yes you have a right to buy, but the lender has the right not to lend also. The seller also has a right not to sell it to you. It works both ways.
I had a lender (employer) but not the right to buy a home I could afford because such homes were not allowed by the zoning code.
Nothing wrong with wanting people to own their own home. A LOT wrong with FORCING banks under threat to make loans to unqualified applicants.
The driving factor for sub-prime mortgage market was not a government mandate but the demand for mortgages with high yields to be used in the derivative market place.
Take for example the case of Merrill Lynch, which was not under a government mandate to offer sub-prime mortgages.
Merrill turns the bonds over to its sales force to peddle to hedge funds, pension funds, and other investors. The appeal of CDO bonds is simple: They pay better rates than corporate issues with identical credit ratings. And in the low-rate environment of the past seven years, yield-hungry hedge funds were eager to buy any paper that offered extra returns. "The whole idea," says Brad Hintz of Bernstein Research, "is taking a pool of risky, illiquid bonds and, through the magic of securitization, offering higher yields than on similarly rated securities."
....
How are CDOs able to offer premium yields on their bonds? Most of them did it by purchasing the riskiest, lowest-rated mortgage-backed bonds - you know, the ones built on loans to borrowers with spotty credit and dubious résumés. Such bonds paid what were then super-high rates of 9% to 11% in 2006.
....
At first, Merrill treated the CDO trade as a client business. The idea was to get in and out quickly - help structure the CDO, hand it to the manager, and pocket the fees. But as the fees rose, so did Merrill's hunger for market share. The driving force was CDO chief Chris Ricciardi, who constantly pushed the troops to top the league tables. Merrill rose from a bit player in mortgage CDOs in 2003, with just $3.4 billion in underwritings, to the leader from 2004 through 2006, posting $44 billion in deals backed by mortgages last year.
O'Neal primed the pump by purchasing First Franklin, one of the nation's largest originators of subprime mortgages, in December 2006 for $1.3 billion. In early 2007 one unit at Merrill was busy packaging First Franklin's loans into subprime ABS that another Merrill unit bought for the CDOs. Incredibly, in the first half of 2007, Merrill underwrote $28 billion in mortgage CDO bonds, far exceeding its pace for 2006.
....
What was going on? Instead of backing away from subprime paper, Merrill Lynch and other big players were gobbling all they could, because they needed it to feed their CDOs. Their bottomless appetite for the stuff kept prices high and yields low, against all economic logic. "What we had was a perpetual-motion machine driving mortgage prices to uneconomic levels of risk vs. reward," says Friedberg.
With the yields on the subprime paper falling, the yields on the CDO bonds sank as well. Even so, hedge funds and other investors continued to snap up the lower-rated paper, which still offered relatively generous yields. But they were rejecting the AAA-rated bonds, which paid just 30 to 50 basis points over LIBOR, the international interbank borrowing rate.
....
To keep the merry-go-round spinning, Merrill apparently made a pivotal - and reckless - decision. It bought big swaths of the AAA paper itself, loading the debt onto its own books. "Merrill took the top tranches onto its own balance sheet," says Scott Sprinzen, an analyst with S&P. "The amounts were staggering."
....
Also, Merrill execs apparently believed that the credit market turmoil would ease and the bonds would once again be easy to sell. That turned out to be far too optimistic, of course. But the overarching explanation is probably that Merrill became addicted to the fees that flowed from financing CDOs, which reached $700 million in 2006. "They must have had their eyes on the fees and not the risk," says Friedberg. Other big players, like UBS and Morgan Stanley, may have followed the same script.
As the article indicates there was a "bottomless appetite" for sub-prime mortgages which were the desired ingredient for the CDOs. There was no need to force the Banksto feed this market; they did it willing because they were making lots of money selling them to willing buyers.
Excuse me, but right or wrong, calling anyone that type of name on any forum is inexcusable and not okay. When some one disagrees with you, it does not give you the right to become less than hospitable.
Debates are not won in such a manner as you so aptly pointed out in the above post.
Uh, I suggest you read the thread over again.
One poster (a different one I believe) made a claim. I called b.s. on the claim. I did not call the poster in question a liar. But that did not stop the poster in question from basically calling me one -- repeatedly. I tried to stay civil, but it became clear that this person didn't want to...so I throw it back at her/him.
Are you offended because I made a crude reference to a part of the anatomy? Well, sorry, I guess...I wasn't aware that we were living in the Victorian Era. Judge the substance of the message, based on the facts. Judge my post less by the words I use.
Last edited by chickenfriedbananas; 12-07-2011 at 02:45 PM..
Haha, I didnt call you a name, but you surely called me one
Again what have you posted to support your position?
NOTHING
Oh shut it.
In each of your little posts you say "lie!" "lie!"...insinuating that I'm lying. That's defamatory. But then you want to walk off in high dudgeon when I call you out on your act.
I posted videos to backup my positions, what have you posted to backup yours? Nothing..
Wow, you posted edited and spliced videos. Very credible.
I'm not going to do your homework for you. I've posted facts about the timeline of the housing crisis, which began long after CRA went into effect and well before Barney Frank became the House Financial Services Committee Chair.
Was Barney Frank as deluded by political contributions as a lot of other members of congress, Republicans and Democrats alike? Probably so.
Was he incorrect in saying that there was not a housing bubble, to the point of being negligent? Probably so.
It doesn't matter. You are arguing that the Financial Services Committee, first and foremost, pressured federal lenders to make bad loans to people and that it was this factor, more than any other, that seemed to be the principal cause of the housing, financial, and credit crises.
And I'm telling that is revisionist history. The facts show clearly that most of the damage had nothing to do with the causes you cite. They had more to do with a combination of numerous factors, which began with the loosening of financial and real estate regulations, and ended with speculators buying mortgages that were repackaged as financial instruments, without having much real knowledge about the original value of the debt they were 'investing' in. That's what happened. Somewhere along the way, Federal Reserve policy also played a role in that low interest rates basically made lending extremely cheap and extremely easy, and it invited all of the wrong people to the dinner table. But financial institutions were negligent, and all too happy to make a quick buck.
Barney Frank might be a tool, but he's not the cause of the housing crisis. I'm sorry to disappoint you.
By virtue of being human, people have a right to some minimal level of dignity and safety. I think that includes shelter. Not a new home-- Not even a home they own, but shelter yes. It is a right.
Housing is not a "right" per se, and it's safe to say that all of the attempts to make housing possible for so many may have at one point been a genuine gesture before the banks got involved and started doublespeaking everybody into their dream houses for prices they couldn't afford.
If someone can afford to buy a house then they deserve it. If they have other means of obtaining a house, which does not fall on the rest of society, then they deserve a house. If they can't afford a house, surely they can rent an apartment. If they can't do that, then they need a more stable income. All of the economic troubles aside, it's still possible to have a place to live.
However I can see the real dilemma for cities with extremely high COLs as opposed to wages, and people who can't afford to live in these cities are better off leaving cities like that if they have no means of getting by.
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