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"Now it has happened, and there's going to be no easy way out, and no quick fix."
Ah, a place for common agreement.
"we're deluded to think that we're going to find answers from the government"
I knew it wouldn't last... I think that one is deluded in thinking that all the answers will be found inside of government or outside of government. But the height of delusion is the believe that there has to be a private/public resolution with the understanding that government involvement does make one run off to the hills screaming the "Commie's are coming."
I keep hearing this, the government invented default credit swaps?
You can continue to cover your ears and scream "Lalalalalalala!" all you want.
For DECADES the "rule of thumb" is that you need a 20% downpayment, a steady job and good credit, to buy a house. And guess what? For the most part, it worked!
Then we had the liberal-inspired Community Reinvestment Act -originally appearing in the mid-70s, and truly blossoming in the late 90s - that basically insisted that EVERYBODY needed to own their own home. And hundreds of millions of dollars were pumped into that program.
People were buying houses for 0% down, even rolling the closing costs into the mortgage loan. People were lied to about what they could afford. The beast snowballed into a behemoth industry that was pushing stupid people to take 125% loan-to-value mortgages, interest-only loans, ARMS and Jumbo Loans became the NORM. The prices paid for houses became incredibly stupid, and the whole thing spun out of control.
Stupid people were using Home Equity Lines of Credit to buy cars, take expensive vacations and build swimming pools. The bottom line is that people who NEVER SHOULD HAVE OWNED A HOUSE were loaned money to buy over-priced houses.
Then, suddenly, the mortgage market slowed down.
Any idiot can see that government policies helped get us into this mess, and only an idiot would be naive enough to think that government policies will get us OUT of them!
I'm a democrat and I just wanted to say that this is the first thread showing that Republicans are not all bitter christian wingnuts. I have seen an honest inteligent conversation from people that would make me consider voting for a national republican candidate, if there was one that represented your part of the paty. I completely agree with the op. Usually when I read through most of these threads and here the whining it turns me off. So for those of you that were willing to let the crap go I praise you and hope you get your party back. It would be the best thing you can do for our country.
I'm a democrat and I just wanted to say that this is the first thread showing that Republicans are not all bitter christian wingnuts. I have seen an honest inteligent conversation from people that would make me consider voting for a national republican candidate, if there was one that represented your part of the paty. I completely agree with the op. Usually when I read through most of these threads and here the whining it turns me off. So for those of you that were willing to let the crap go I praise you and hope you get your party back. It would be the best thing you can do for our country.
Gosh, Republicans are not all bitter christian wingnuts.
Gosh, Republicans are not all bitter christian wingnuts.
Brilliant of you to figure this out.
Crack open a book.
Its something that we all know but that is what you guys make yourselves look like here on cd.Same with Fox news and conservative radio is full of an old white guy ranting about the socialist liberal traitors. I'm sorry but thats the picture painted by those that have hijacked your party whether you like it or not.
First of all, the CRA did not specify a relaxation of loan requirements. What the CRA did do, was to eradicate red-lining by financial institution by requiring their loan criteria met those non-discriminatory standards. The CRA, was enacted in 1974 and was subsequently amended during Bush 41, Clinton and Bush 43 administrations.
CRA was never a loan originator but instead was a regulatory agency charged with insuring that participating banks adhered to the principle of making credit to low and middle income communities. LMI communities does not translate into poor credit risks, quite the contrary. One of the leading roles for CRA was the suppression of predatory lending. Despite this CRA participating banks did issue sub-prime loans, not from any pressure from CRA but simply taking advantage of the market of potential home buyers.
Although CRA-covered lenders originate the greatest number of loans in LMI
neighborhoods and to LMI borrowers, these lenders focus primarily on prime lending.
As a result, LMI borrowers with impaired credit often turn to non-bank lenders—some of
whom are predatory lenders—for subprime loans. Between 1993 and 1998, there was a
tremendous surge in lending to LMI borrowers. CRA-covered institutions accounted for
eighty-three percent of the growth in prime loans to these borrowers.52 In contrast, CRAcovered
institutions were responsible for only fifteen percent of the increase in subprime
loans during the same period.53
People were buying houses for 0% down, even rolling the closing costs into the mortgage loan. People were lied to about what they could afford.
That they were, but like most you seem to assume that these were a). low or minority home buyers, and b.) that these loans were fostered by Federal or GSE programs. In a study by ComplianceTech, reviewing the data from the Home Mortgage Disclosure Act should thoroughly dissuade anyone from this belief.
Middle- and upper-income borrowers accounted for more than two-thirds of high-rate mortgages issued in 2006,
55 percent of such loans went to white borrowers. During the period of 2004 to 2006, whites had more subprime rate loans than all minorities combined.
Of the 1.9 million subprime rate loans in 2006, upper-income borrowers had the highest share at 39.37 percent, followed by 27.55 percent for middle-income borrowers and 20.99 percent for moderate-income borrowers. Low-income borrowers had only 149,173, or 7.57 percent, of 2006 subprime rate loans.
I'm a democrat and I just wanted to say that this is the first thread showing that Republicans are not all bitter christian wingnuts. I have seen an honest inteligent conversation from people that would make me consider voting for a national republican candidate, if there was one that represented your part of the paty. I completely agree with the op. Usually when I read through most of these threads and here the whining it turns me off. So for those of you that were willing to let the crap go I praise you and hope you get your party back. It would be the best thing you can do for our country.
First of all, the CRA did not specify a relaxation of loan requirements. What the CRA did do, was to eradicate red-lining by financial institution by requiring their loan criteria met those non-discriminatory standards. The CRA, was enacted in 1974 and was subsequently amended during Bush 41, Clinton and Bush 43 administrations.
CRA was never a loan originator but instead was a regulatory agency charged with insuring that participating banks adhered to the principle of making credit to low and middle income communities. LMI communities does not translate into poor credit risks, quite the contrary. One of the leading roles for CRA was the suppression of predatory lending. Despite this CRA participating banks did issue sub-prime loans, not from any pressure from CRA but simply taking advantage of the market of potential home buyers.
Although CRA-covered lenders originate the greatest number of loans in LMI
neighborhoods and to LMI borrowers, these lenders focus primarily on prime lending.
As a result, LMI borrowers with impaired credit often turn to non-bank lenders—some of
whom are predatory lenders—for subprime loans. Between 1993 and 1998, there was a
tremendous surge in lending to LMI borrowers. CRA-covered institutions accounted for
eighty-three percent of the growth in prime loans to these borrowers.52 In contrast, CRAcovered
institutions were responsible for only fifteen percent of the increase in subprime
loans during the same period.53
http://lsr.nellco.org/cgi/viewcontent.cgi?article=1029&context=uconn/ucwps (broken link)
That they were, but like most you seem to assume that these were a). low or minority home buyers, and b.) that these loans were fostered by Federal or GSE programs. In a study by ComplianceTech, reviewing the data from the Home Mortgage Disclosure Act should thoroughly dissuade anyone from this belief.
Middle- and upper-income borrowers accounted for more than two-thirds of high-rate mortgages issued in 2006,
55 percent of such loans went to white borrowers. During the period of 2004 to 2006, whites had more subprime rate loans than all minorities combined.
Of the 1.9 million subprime rate loans in 2006, upper-income borrowers had the highest share at 39.37 percent, followed by 27.55 percent for middle-income borrowers and 20.99 percent for moderate-income borrowers. Low-income borrowers had only 149,173, or 7.57 percent, of 2006 subprime rate loans.
I'm talking about FOOLISH homebuyers - you know, stupid people who believe the 25-year old mortgage broker who tells them that, despite their AGI of $47,000, they really CAN afford to buy a $675,000 house. All they need is some "out of the box thinking" and "creative financing."
People have spent the last 10 years OVER SPENDING ON HOUSES. They've done it in every way imaginable, including no down payment mortgages, ARMs, Interest-Only Mortgages, Home Equity Loans, etc. Despite your insistence to the contrary, CRA has had EVERYTHING to do with this!
And now the chickens have come home to roost - to the tune of hundreds of billions of dollars nationally.
What, about that, do you find so hard to understand?
I'm sorry, but when you start your argument by raising the issue of the Community Redevelopment Agency, whose very job was to provide credit to underserved communities, I just naturally thought we down that well traveled low income home buyer road.
You can continue to cover your ears and scream "Lalalalalalala!" all you want. For DECADES the "rule of thumb" is that you need a 20% downpayment, a steady job and good credit, to buy a house. And guess what? For the most part, it worked!
Of course it worked. Only the wealthy could come up with the down payment. Everybody else rented.
Quote:
Originally Posted by Filet Mignon
Then we had the liberal-inspired Community Reinvestment Act -originally appearing in the mid-70s, and truly blossoming in the late 90s - that basically insisted that EVERYBODY needed to own their own home. And hundreds of millions of dollars were pumped into that program.
This is a joke, right? The CRA applied only to federally-insured deposit-taking banks and S&L's in low- and moderate-income neighborhoods. These were the people who had been red-lined out of qualifying for any type of standard credit based solely on their home address. Instead of banks, they had to go to places like Household Finance and Beneficial Finance to get their credit needs met on payday-lender type terms. CRA required banks to lend to them, and gee, nearly half of them were qualified for prime terms and most of the rest at Alt-A. The CRA loan portfolio, built up almost entirely between 1993 and 2000, has performed BETTER than industry averages.
Quote:
Originally Posted by Filet Mignon
People were buying houses for 0% down, even rolling the closing costs into the mortgage loan. People were lied to about what they could afford. The beast snowballed into a behemoth industry that was pushing stupid people to take 125% loan-to-value mortgages, interest-only loans, ARMS and Jumbo Loans became the NORM. The prices paid for houses became incredibly stupid, and the whole thing spun out of control.
Ah, now you're talking about the cowboy capitalists -- the private brokers and all but unregulated bank affiliates working hard to meet the unrelenting demand for primary paper to feed into the hopper of the slice-and-dice machines of the Wall Street investment banks who were reaping huge profits by spinning MBS's and a soup-to-nuts menu of derivatives off into the secondary markets. No connection to CRA (or liberals) there.
Quote:
Originally Posted by Filet Mignon
Stupid people were using Home Equity Lines of Credit to buy cars, take expensive vacations and build swimming pools.
Not so much the swimming pools, but people would have had to be insane not to have taken out a home equity line (Reagan forced that issue in 1986) and even more insane not to do at least one refi as market rates fell at least a percentage point below the rate they were currently paying. To not do so would have been walking away from free money. I don't know of any CFP who has ever advised clients to walk away from free money.
Quote:
Originally Posted by Filet Mignon
Then, suddenly, the mortgage market slowed down.
Slowed down? Is that like what an airplane does when it flies into the side of a mountain?
Quote:
Originally Posted by Filet Mignon
Any idiot can see that government policies helped get us into this mess, and only an idiot would be naive enough to think that government policies will get us OUT of them!
I know a good number of idiots, and what they tell me is that policy had nothing to do with it, that if the cowboy capitalists had given even a little thought to what they were doing, and if regulators had come to think for a moment that one of the things they are actually supposed to do is regulate, then none of this ever would have needed to happen. And when I ask the really smart people that I know, they say the very same thing. Then they tell me that because things were left to get so bad, only huge interventions can now have any offsetting effect at all, and by huge they mean of a level that nobody else but a government can afford...
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