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Niteline just had a woman that bought a $325,000 house 2 years.
She was a full time student without a job, and though married her husbands income was not considered or listed on the application.
Why was she given a mortgage?
Why did she take out a mortgage?
Where was the business sense on the part of the lender?
Where was the common sense on the part of the borrower?
How could this reckless behavior on the part of both parties NOT cause the mess we are in today?
Niteline just had a woman that bought a $325,000 house 2 years.
She was a full time student without a job, and though married her husbands income was not considered or listed on the application.
Quote:
Originally Posted by Asheville Native
Why was she given a mortgage?
Because legislation was passed and government fiddling demanded that poor people be able to buy homes as well, so many traditional qualifying factors were waived to allow these people to buy them.
Quote:
Originally Posted by Asheville Native
Why did she take out a mortgage?
Because everyone was buying houses at the time (fad) and many like her wanted one too. When you want, you get, you don't think, you just do.
Quote:
Originally Posted by Asheville Native
Where was the business sense on the part of the lender?
Could be various reasons, influence by the government to lend at these requirements, the loans provided a big profit margin due to their design and since many were insured by the government, there was no major risk to the lender, so no reason to be responsible with it.
Quote:
Originally Posted by Asheville Native
Where was the common sense on the part of the borrower?
Sense isn't all that common these days. My wife works in collections of loans and while some are honest cases of hard times, many are just really really stupid people who act with extreme irresponsibility and no restraint on their spending habits.
Quote:
Originally Posted by Asheville Native
How could this reckless behavior on the part of both parties NOT cause the mess we are in today?
While both parties have their hands dirty in this issue with different reasons, the bulk of this problem was created by certain democrats and Clinton who signed in the law which made this possible. Not only that, but in 2004 when calls for regulation and investigation to the issue were made by certain republicans, the democrats acted in outrage, derailed the investigations and blocked any legislation to correct the problem they saw coming.
Because legislation was passed and government fiddling demanded that poor people be able to buy homes as well, so many traditional qualifying factors were waived to allow these people to buy them.
This is not true. Only 20% of the lending institutions that went under even fell under these Federal guidlines.
More on your bogus "minority lending did it" argument.
Janet L. Yellen, President and CEO, Federal Reserve Bank of San Francisco, made the following case in a March 31 speech:
"There has been a tendency to conflate the current problems in the subprime market with CRA-motivated lending, or with lending to low-income families in general. I believe it is very important to make a distinction between the two. Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans, and studies have shown that the CRA has increased the volume of responsible lending to low- and moderate-income households. We should not view the current foreclosure trends as justification to abandon the goal of expanding access to credit among low-income households, since access to credit, and the subsequent ability to buy a home, remains one of the most important mechanisms we have to help low-income families build wealth over the long term."
University of Michigan Law Professor Michael Barr,
a specialist in banking and finance law, flatly rejected claims that the CRA was "a significant factor in the current crisis. CRA was enacted more than 30 years ago. It would be quite odd if this 30-year old law suddenly caused an explosion in bad subprime loans from 2002-2007....Subprime mortgages were mostly made by mortgage brokers and lenders and securitized by investment banks -- institutions not covered by CRA," he told the Huffington Post, adding, "CRA only covers banks and thrifts, and these institutions mostly have not suffered to the same extent or kind from bad lending as the non-CRA-covered institutions at the core of the current crisis. The problem here is not CRA. It is what the late former Fed Governor Ned Gramlich called 'the giant hole in the supervisory safety net' -- bad lending by firms outside the banking sector's rules for prudential supervision, capital requirements, consumer protection and yes, the CRA."
Along similar lines, University of Oregon economist Marc Thoma
Cited the long delay between enactment of CRA and the current crisis and the fact that only 20 percent of subprime loans were made by CRA-regulated lenders, adding two other points: that "subprime loans grew twice as fast in institutions that did not have to meet the conditions of the CRA" and that the scope of coverage of CRA was reduced in 2004 under the Bush administration, "but even though fewer banks were subject to CRA restrictions, the growth of the subprime market continued unabated."
Because legislation was passed and government fiddling demanded that poor people be able to buy homes as well, so many traditional qualifying factors were waived to allow these people to buy them.
This is not true. Only 20% of the lending institutions that went under even fell under these Federal guidlines.
Stop blaming minorities.
Minorities? You mean people who couldn't afford loans based on traditional qualifications right? I never brought up minorities, you did. Many people got these loans of all types of race. This wasn't a race issue (though republicans were accused of this when they attempted to reign in the dealings with these loans.)
Yet all of them could lend under those regulations and insure them federally, could they not?
Minorities? You mean people who couldn't afford loans based on traditional qualifications right? I never brought up minorities, you did. Many people got these loans of all types of race. This wasn't a race issue (though republicans were accused of this when they attempted to reign in the dealings with these loans.)
Yet all of them could lend under those regulations and insure them federally, could they not?
Well then you are even more wrong. CRA has to do with minority lending. There are no gvt regulations promoting lending to "poor people." I made the mistake of assuming you half knew what you are talking about.
Just lay your cards on the table. ....source this whopper of yours why don't you?:
Because legislation was passed and government fiddling demanded that poor people be able to buy homes as well, so many traditional qualifying factors were waived to allow these people to buy them.
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