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Any law you have in mind when talking along these lines? I would like to take a closer look at it.
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Property Standards and Minimum Loan Amounts:
These standards should be checked for arbitrary rules as to the age, location, condition, or size of the property. Such standards could negatively affect applicants who wish to purchase two– to four–family homes, older properties, or homes in less expensive areas. Obligation Ratios: Special consideration could be given to applicants with relatively high obligation ratios who have demonstrated an ability to cover high housing expenses
in the past. Many lower–income households are accustomed to allocating a large percentage of their income toward rent. While it is important to ensure that the borrower is not assuming an unreasonable level of debt, it should be noted that the secondary market is willing to consider ratios above the standard 28/36.
Down Payment and Closing Costs: Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership by lower–income applicants. Lenders may wish to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs. Cash– on–hand could also be an acceptable means of payment if borrowers can document its source and demonstrate that they normally pay their bills in cash.
CreditHistory:Policies regarding applicants with no credithistory or problemcredit history should be reviewed. Lack of credit history should not be seen as a negative factor. Certain cultures encourage people to “pay as you go” and avoid debt. Willingness to pay debt promptly can be determined through review of utility, rent, telephone, insurance, and medical bill payments. In reviewing past credit problems, lenders should be willing to consider extenuating circumstances. For lower–income applicants in particular, unforeseen expenses can have a disproportionate effect on an otherwise positive credit record. In these instances, paying off past bad debts or establishing a regular repayment schedule with creditors
may demonstrate a willingness and ability to resolve debts.
Successful participation in credit counseling or buyer education programs is another way that applicants can demonstrate an ability to manage their debts responsibly. (See the section on Buyer Education.) Property Appraisal/Neighborhood Analysis: Terms like “desirable area,” “homogeneous neighborhood,” and “remaining economic life” are highly subjective and allow room for racial bias and bias against urban areas. The same holds true when lenders evaluate properties based on their market appeal or compatibility with the rest of the neighborhood.
(See the section on Third Party Involvement in the Loan Process.)
It should be noted that the Federal Home Loan Mortgage Corporation (Freddie Mac) has stated that neighborhoods undergoing revitalization should be assessed on their potential as well as their existing condition. Also, the Federal National Mortgage Association (Fannie Mae) will accept block–by–block underwriting analyses in urban neighborhoods being rehabilitated.
Employment History: It is important to distinguish between length of employment and employment stability. Many lower–income people work in sectors of the economy where job changes are frequent. Lenders should focus on the applicant’s ability tomaintain or increase his or her income level, and not solely on the length of stay in a particular job. Sources of Income: In addition to primary employment income, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and part–time work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment
benefits.
Should big banks, insurance companies, etc all deny all loans and insurance policies to minorities (blacks for example) who try to buy in certain neighborhoods? In an effort to keep entire neighborhoods white? Lets take this for example (from the article above).
Should this, in a free market capitalist society, be legal? In a laissez faire economy, shouldn't banks be able to decide to or not to give mortgages to whoever they wanted? Shouldn't they be allowed to create white only neighborhoods?
Banks should be able to lend to whomever they please, whenever they please. This is a property rights issue. If a bank or any institution for that matter wants to discriminate against a group of people then they are punish only themselves as that is a lost business opportunity. They will suffer as a result when their competitor comes along and offers his business to all who can afford it.
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Economist Stan Liebowitz wrote in the New York Post that a strengthening of the CRA in the 1990s encouraged a loosening of lending standards throughout the banking industry. He also charges the Federal Reserve with ignoring the negative impact of the CRA.[100] In a commentary for CNN, Congressman Ron Paul, who serves on the United States House Committee on Financial Services, charged the CRA with "forcing banks to lend to people who normally would be rejected as bad credit risks."[111] In a Wall Street Journal opinion piece, Austrian school economist Russell Roberts wrote that the CRA subsidized low-income housing by pressuring banks to serve poor borrowers and poor regions of the country /quote]
Where was Ron Paul and other conservatives/libertarians when government rejected the true free market low income housing solution by preventing the construction and sale of subsidy-free affordable housing?
If government had allowed a free market to provide low-income housing, there would have been no reason for liberals to cram CRA down our throats.
Banks should be able to lend to whomever they please, whenever they please. This is a property rights issue. If a bank or any institution for that matter wants to discriminate against a group of people then they are punish only themselves as that is a lost business opportunity. They will suffer as a result when their competitor comes along and offers his business to all who can afford it.
Developers should be free to sell to whomever they please, and should be free to build homes affordable to all income levels. If a free market had existed in housing, developers could have built and sold homes affordable at all income levels, thereby avoiding any excuse for liberals to cram CRA down our throats. This is a property rights issue. Where were the property rights supporters on THIS issue?
If the lower income individuals are credit worthy of course they should have an opportunity to access credit.
The problem is there's a disagreement as to standards of creditworthiness.
I once successfully paid 73 percent of my income for rent. So why should a lender decide that 40 percent of my income for a mortgage payment makes me an unacceptable credit risk?
Some low-income people live very frugally (maybe the middle class could learn from them) and can manage high housing expense ratios. So why should they be considered uncreditworthy on the basis of middle income overspenders who default when their ratios go over the line?
Developers should be free to sell to whomever they please, and should be free to build homes affordable to all income levels. If a free market had existed in housing, developers could have built and sold homes affordable at all income levels, thereby avoiding any excuse for liberals to cram CRA down our throats. This is a property rights issue. Where were the property rights supporters on THIS issue?
There is no such thing as affordable housing at "all income levels". Why would you think that? Borrowers still have to pass the criteria of a good risk.
The problem is there's a disagreement as to standards of creditworthiness.
I once successfully paid 73 percent of my income for rent. So why should a lender decide that 40 percent of my income for a mortgage payment makes me an unacceptable credit risk?
Some low-income people live very frugally (maybe the middle class could learn from them) and can manage high housing expense ratios. So why should they be considered uncreditworthy on the basis of middle income overspenders who default when their ratios go over the line?
Low income earners are not a good risk. They barely make enough to make payments. Making payments is one factor, the ability to save, for a sizeable down payment and thus lowering the risk of the lender is another factor.
Renters are not responsible for wear and tear problems on a house. Upkeep on a house drains money away that low income earners do not have. The more you make the easier it is to handle a temporary monetary crisis.
73 percent of rent but 40 percent of a mortgage doesn't sound right. A very high city rent and a very low cost house in the country???? dunno
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