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HUD began mandating X% of GSE portfolio to contain loans to low income in the early 90's. Every year, HUD increased the percentage. It did not matter who sat the oval or held the majority.
FNMA/FHLMC lowered standards to satisfy HUD mandate and in some years did so in protest.
Some originators abandoned all standards because Wall Street was buying junk.
I don't see how you can make your case that Wall Street was to blame as TARP was less than $500 billion (and like I said, even Elizabeth Warren claims it won't end up costing anything), but the Federal Reserve has had to buy $2 trillion worth of GSE MBS.
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At peak, 85% of subprime did not meet FNMA/FHLMC standards and went straight to the private sector.
According to what? How many of those Countrywide and other "best lender" no credit history loans that the GSEs bought via their "Affordable Lending" programs did the GSEs actually classify as the subprime loans that they were?
I seem to remember, in the distant past, a time when Democrats were critical of "sub-prime" mortgages and how they victimized the people that received them...and couldn't make payments. In spite of the fact that is was Dems that passed laws and regs demanding them in the first place.
Will the bubble burst before or after November?
What bubble?
Some markets have experienced extreme appreciation in relative values which has nothing to do with loans to low income people. It's has more to do with local economies and/or foreign buyers.
Do you think what's going on in San Francisco has anything to do with low income borrowers or financing in general?
I don't see how you can make your case that Wall Street was to blame as TARP was less than $500 billion (and like I said, even Elizabeth Warren claims it won't end up costing anything), but the Federal Reserve has had to buy $2 trillion worth of GSE MBS.
According to what? How many of those Countrywide and other "best lender" no credit history loans that the GSEs bought via their "Affordable Lending" programs did the GSEs actually classify as the subprime loans that they were?
All these months later and you still don't get it.
You mean they sold them to the GSEs. Did you not see the Fannie Mae Foundation document I linked, which boasted about the Affordable Lending programs they and the other GSEs had with Countrywide and their other "best lenders?" No credit history required.
To quote your own link, " where applicants have no established credit history, CW uses non-traditional credit, a practice accepted by GSEs.
The use of non- traditional credit scoring is fairly common for all types of loans because a heck of a lot of people do not use credit cards or incur debt or are foreign buyers.
Non- traditional , expansion reports cost more because the scoring company has to do more, landlord verification, employment verification, utility bill payment, pay day loan repayment and repayments from unsecured loans from online lenders.
I have worked with several foreign buyers who were relocated to the US by their employers. It would not be possible for them to obtain financing unless a non-traditional credit score was used.
A no FICO score loan is subprime by definition. A prime loan requires a minimum FICO score.
"..."subprime" borrowers have lower credit scores and are more likely to default than prime borrowers. Historically, this group was defined as borrowers with FICO scores below 640"
My most recent foreign buyer, a scientist, was transferred to the US from the UK, by his employer, had no FICO score. He qualified for a $750,000 mortgage using non-traditional credit scoring. His income, UK tax returns and UK bank references were used to determine his score.
His interest rate was competitive for a Jumbo loan and not indicative of higher rates associated with sub prime.
Many factors across two administrations, lack of whistle blowers, regulators ceasing to make criminal referrals, acute lack of resources, lack of desire to prosecute, preference for financial settlement, anti- regulation ideology and more.
So, there we have it. $450 billion needed to cover the private sector MBSes, and $2 trilliion needed to cover the GSE MBSes.
The difference, of course, is that those $450 billion were basically given to the banks in exchange for almost-worthless assets, with the promise that they'd pay it back later.
While the Fed's actions with F&F's higher-quality MBS'es (I'm not sure what the number actually is, you lie about everything so I can' t trust your $2T figure) were swapping a risky asset for a less-risky asset.
There is a great difference in buying a house with no money down if you expect too live in the place for a couple or several decades and a house you expect to sell off at a great profit in a couple of years. the first is buying housing. The second is very low margin speculation and, if the prices stop inflating exponentially, they deserve the loss. The banks also deserve the loss because they knew they were financing speculation.
If by bank you mean mortgage originator, most sold the loan in the forward market, the day the buyer made application.
Many originators were unregulated ma/pa small businesses. They made their money in fees and moved on.
Disturbing indeed. Consistently clueless since '08.
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