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You asked "Was there even 1 bank that was not under the regulation to lower standards and make loans they normally would not make"?
My answer is yes.
Some banks were forced by legislation to make some loans. But most of the bank lending was none voluntarily because they deemed it profitable, including the subprime lending. Banks make loans to make a profit; therefore these would be loans they would make.
You asked "Was there even 1 bank that was not under the regulation to lower standards and make loans they normally would not make"?
My answer is yes.
Some banks were forced by legislation to make some loans. But most of the bank lending was none voluntarily because they deemed it profitable, including the subprime lending. Banks make loans to make a profit; therefore these would be loans they would make.
they did it by HUD, FHA and fannie/Freddie STANDARDS.....BY LAW, banks MUST adhere to the GOVERNMENT STANDARDS
Quote:
Giving Credit Where Credit Was Denied
Published: June 08, 1997
Giving Credit Where Credit Was Denied - NYTimes.com
Mr. Kent received what his lender, GFI Mortgage Bankers, calls its ''no-doc product'' -- as in no documents needed.
''With the Federal Government directing it, we've created new products for people who have glitches, hairy credit,'' said Abe Eisner, executive vice president of GFI. ''No-doc means all we need is your name, address and Social Security number, depending on your credit history.''
Even quasi-governmental agencies have primed the subprime pump. The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) have recently developed computerized underwriting systems that allow lenders to speedily and reliably evaluate an applicant's credit-worthiness. The loans rejected by the automated system are, by definition, subprime. http://www.nytimes.com/1997/06/08/re...anted=3&src=pm
===========================
...In 1995, the Clinton Administration changed the law governing GSEs' mission -- the Community Reinvestment Act (CRA) -- to encourage more lending in poor neighborhoods.
Previously, the CRA directed government to monitor banks' lending practices to make sure they did not violate fair lending rules in poor neighborhoods.
--snip--
....With the 1995 change, the government published each bank's lending activity and started giving bank ratings based primarily upon the amount of lending it performed in poor neighborhoods.
--snip--
These changes empowered community organizations, such as ACORN, to pressure banks to increase lending activities in poorer neighborhoods -- which involved reducing mortgage loan standards -- or face backlash from those organizations' private and political associates.
--snip--
lol you're the one chasing you're own tail. All you've done is make an argument on how it was made worse. Too busy playing the blame game instead of addressing the cause.
Government forced lenders to make little to no down payment loans to people who didn't normally qualify under the self regulated system the loan industry policed themselves with. The standards were lowered. That's a basic economic premise and anyone who ignores that is an economic hack and should never be listened to. Let me guess 1+1=14 right?
Have you ever bothered to study the logic of the CDO? Which by the way were first used to sell the bad assets owned by the failing savings and loans.
Financial institutions by the alchemy of CDOs believed they had found a safe way to make money off of risky loans. Although the volume of CDOs involving mortgages has greatly diminished. Similar derivatives still exist today and are still being used to raise capital in non-housing areas.
Have you ever bothered to study the logic of the CDO? Which by the way were first used to sell the bad assets owned by the failing savings and loans.
Financial institutions by the alchemy of CDOs believed they had found a safe way to make money off of risky loans. Although the volume of CDOs involving mortgages has greatly diminished. Similar derivatives still exist today and are still being used to raise capital in non-housing areas.
they still exist today- Bespoke Tranche Opportunities...
but it's all HUD's fault b/c Dems forced banks to lend money to poor minorities...
except that's not the case- government neither created nor enforced NINJA or pick a pay loans..but keep trying....I'm not arguing lowering standards was a good thing btw...problem is you don't really know the subject matter as well as you think you do so you harp on one part of it to fit your binary political understanding of it.
You didn't say anything. Read the American No Payment Left Behind Dream Act.
"Actually, yes they were. The regulators charged with enforcing the CRA praised the lowering of down payments and even their elimination. They told banks that lending standards that exceeded that of regulators would be considered evidence of unfair lending. This effectively meant that no money down mortgages were required. A Treasury Department study published in 2000 found that the CRA had successfully lowered down payments not just for CRA loans, but for all mortgages."
do you not understand many subprime loan were made by shadow banking system not just Chase and BOA?
did I say chase or BOA....
subprime was done heavily by fannie/Freddie...and was directed by the government...and many ''loan companies' were just created out of thin air in the late 90's early 00'.... and many got bought up by the bigger banks, many just simple folded or disappeared once they packaged the mortgages and sold them
A) Show me where in the CRA it authorized or forced 105% loans.
Use your head. The biggest obstacle to getting a home loan is a sizeable down payment. That's common knowledge. AND YOU KNOW THIS!!!!!!!!!
Quote:
Originally Posted by WilliamSmyth
B) Most of the sub prime loans where not CRA or issued by banks that were covered by the CRA. C) The institutions that where raising the capital didn't need government incentives; they believed they were engaged in a highly profitable operation with very little risk. They were competing with each other to grab as much of the market as the could; crowing about how well they were doing against each other.
sigh
Countrywide, the nation's largest mortgage lender, had committed to $600 billion in low-income or "subprime" loans as of 2003.
"We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming"
"Actually, yes they were. The regulators charged with enforcing the CRA praised the lowering of down payments and even their elimination. They told banks that lending standards that exceeded that of regulators would be considered evidence of unfair lending. This effectively meant that no money down mortgages were required. A Treasury Department study published in 2000 found that the CRA had successfully lowered down payments not just for CRA loans, but for all mortgages."
Have you ever bothered to study the logic of the CDO? Which by the way were first used to sell the bad assets owned by the failing savings and loans.
Financial institutions by the alchemy of CDOs believed they had found a safe way to make money off of risky loans. Although the volume of CDOs involving mortgages has greatly diminished. Similar derivatives still exist today and are still being used to raise capital in non-housing areas.
they did it by HUD, FHA and fannie/Freddie STANDARDS.....BY LAW, banks MUST adhere to the GOVERNMENT STANDARDS
when HUD, FHA lowered the standards to get more mortgages to lower income/minorities/lesser credit people...that was the timebomb
Bolded for the truth. Also a mention that when the interest rates were lowered to miniscule, the bad loans took off.
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