Thank you LB, well said - mortgages are my livelihood, I work for a large bank, we make loans to all kinds of people with programs we know will help them succeed at homeownership. The brokers of this world were just in it to make a buck selling easy money for fast profits for themselves - they didn't give a rat's a** about their client. Greed ruled the day, no one was paying attention so they figured "Hey, why not?"Lightning Bolt wrote:That could almost pass as a chapter of the story, but it leaves out the crucial final act of the play:12vmanRick wrote:This crisis was caused by political correctness being forced on the mortgage lending industry in the Clinton era.
Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."
Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.
Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named "Caylee."
Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.
When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.
In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."
Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.
A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.
From the early part of this decade, Republicans pushed with their congressional majorities to further deregulate the banking systems.
Home ownership was a highly prioritized plank of the Bush administration, and with further lowered lending rates, (remember the refinance rush?)
mortgages were written for practically anyone, and it has been well-documented now that proof of income was not even a prerequisite.
Mortgage defaults were not simply a result of minorities being overrated, as is claimed in the clearly racist story above.
They were both the faults of lending institutions (and their brokers)
and by seemingly opportunistic buyers who somehow felt that the investment would be almost immediately rewarded by rapidly increased value.
Being in denial of this past decade of outright corporate and personal greed only highlights sheer incompetence towards the matter,
and allowing posts that look as if they are lifted from white supremecist writings should not be tolerated here.
I am so angry I'm shaking.
I don't think a post has ever made me so furious.
