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I believe sub-prime were maybe 6-8% of the loans. Seems they are tackling the small problem, not the big one. THE BANKS!!!
Banks have always understood the risk of making subprime loans. It was not until government started buying these loans (and the risk that goes with them) that the banks began making them.
The borrower's overall credit rating or "FICO" score was adopted by Fannie and Freddie in the mid 90's as the primary basis for approving loans. Some of the criteria that previously would have disqualified a borrower were buried or obscured in the FICO score. After adopting the FICO score it was MUCH easier for previously unqualified borrowers to get a mortgage loan.
Each piece of the credit report is evaluated by FNMA. It's done by a computer called Desktop Underwriter. It's not all about the score.
FHA loans are not credit score driven. You can get an FHA loan with 3% down with any credit score if you meet the guidelines. If there's one thing I hate it's people talking about things that they don't really know about.....
Last edited by Rick Roma; 03-31-2011 at 06:41 AM..
Well if it causes a melt down in the housing industry you may change your mind about this being a good thing.
A small down payment doesn't mean a borrower can't repay. high debt to income ratios and escalating interest rates will have far more to do with that.
If you think the banking issue was because of low downs then you don't understand what happened.
Hello?????
There has been meltdown of the housing industry. In fact that's what led to this recession in the first place. It was all about foreclosures, ARMS, subprime loans and a very big housing glut.
There was a reason in the past that banks wanted a down payment and some evidence that the borrower had some ability to pay the mortgage loan.
Well if it causes a melt down in the housing industry you may change your mind about this being a good thing.
A small down payment doesn't mean a borrower can't repay. high debt to income ratios and escalating interest rates will have far more to do with that.
If you think the banking issue was because of low downs then you don't understand what happened.
Quote:
If you think the banking issue was because of low downs then you don't understand what happened
nope it wasnt just 'low downs'...it was the clinton era.. NO downs, no docs. 100% fin, reverse, 50yr arm
clinton in 1995 directing Henry Cisneros (head of hud , and his sucessor Andrew Cuomo (now NYS governor)) to ease ALL the rules on mortgage loans cause a skyrocketing effect
Last edited by workingclasshero; 03-31-2011 at 06:53 AM..
Why would anyone cry racism? A HELL-OF-A-LOT of those loans went to white folks and everyone knows it!
True - and no one should believe Clinton or Bush who promoted this really did it because they cared about minorities, this was done for the big money types, those housing builders who were raking in big money from the big housing bubble.
Like everything - follow the money. Some people profitted very very nicely from the big housing bubble. When it burst they benefitted from the bailouts.
The people who were talked into or given bad loans were just the dupes.
The people who were talked into or given bad loans were just the dupes.
no they werent "talked" into the loans they did it them selves
ANYONE knows what they make..anyone can figure out that your housing cost should not be more than 50% (actually 30%) of your income
its like that guy on CNN back in 07 who was crying about losing his house...we all felt sorry for him.....until we found out he bought a 700,000 dollar house..and only earns 50,000 a year...under the pre-clintin rules..he would have NEVER QUALIFIED for a mortgage of 700k..he would have qualifies for 200k MAX...but with the clinton "no-doc's" people like this guy, helped to skyrocket housing, and make it bust with bad loans
The legislation you referenced was aimed at preventing red lining relative to mortgages in poor inner city and rural districts. Seems to me that the Alternative Mortgage Transactions Parity Act of 1982 (AMTPA) had more to do with the change in down payments and when risk came into play.
no they werent "talked" into the loans they did it them selves
ANYONE knows what they make..anyone can figure out that your housing cost should not be more than 50% (actually 30%) of your income
its like that guy on CNN back in 07 who was crying about losing his house...we all felt sorry for him.....until we found out he bought a 700,000 dollar house..and only earns 50,000 a year...under the pre-clintin rules..he would have NEVER QUALIFIED for a mortgage of 700k..he would have qualifies for 200k MAX...but with the clinton "no-doc's" people like this guy, helped to skyrocket housing, and make it bust with bad loans
it wasnt the lender...it was the lendee
"a educated comsumer is out best customer"
I think in many case unscrupulous real estate agents did push people into buying houses that they could not afford.
Who profitted? That's the problem - and in many cases it was people trying to profit and knowing full well the buyer was not in a position to buy a particular house. Just like car dealers will sometimes try to push a more expensive car onto a buyer.
Banks have always understood the risk of making subprime loans. It was not until government started buying these loans (and the risk that goes with them) that the banks began making them.
And it didn't crash the financial system as some want people to believe. Blaming the poor and sub prime loans. It was by far the minority of toxic debt.
This is just more smoke and not covering up the real problems.
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