An interesting book has been published titled "Reckless Endangerment" that explores the public policy sources for the punishing prime mortgage crisis that has screwed up our economy. See the review in the link below for more details. basically, it sounds like the crisis was caused by liberal idiots trying to revise the prudent rules of managing lending risk to pursue a quixotic liberal cause of good-doing.
"Special care should be taken to ensure that standards are appropriate to the economic culture of urban, lower-income, and nontraditional consumers. Lack of credit history should not be seen as a negative factor." We're talking about lending tens of thousands of dollars if not hundreds of thousands of dollars here people. You need to be thinking about the prospects of the borrower paying the money back. Oh well. No problem. We'll just have the government pay for any defaulted loans. Its for a good cause!
I saw a review of that book last week. Haven't had a chance to get the book yet, but, I think you're preaching to the choir here (for the most part). Most of us have recognized, from the jump, what caused the mortgage crisis. Of course there are a couple of liberal idiots who frequent the place who will say "it was all the fault of those greedy bankers."
It's a little more complicated than what is depicted in the book. Home values were growing by leaps and bounds every year and many lenders could have cared less that a home owner defaulted.
Predatory lenders were going out on the street and looking for folks to sell homes to. Those lenders often had home buyers lie on their mortgage applications. Folks were encouraged to get home equity loans.
All 50 states were trying to control predatory lending and they appealed to the Bush white house. Surprise, the Bush white house came down squarely on the side of the predatory lenders. When this was made public by the NY attorney general, the Bush bunch brought him up on federal charges for visiting a prostitute.
It's a little more complicated than what is depicted in the book. Home values were growing by leaps and bounds every year and many lenders could have cared less that a home owner defaulted.
Predatory lenders were going out on the street and looking for folks to sell homes to. Those lenders often had home buyers lie on their mortgage applications. Folks were encouraged to get home equity loans.
All 50 states were trying to control predatory lending and they appealed to the Bush white house. Surprise, the Bush white house came down squarely on the side of the predatory lenders. When this was made public by the NY attorney general, the Bush bunch brought him up on federal charges for visiting a prostitute.
You post this crap without any basis to go on falcon. You keep blaming the so called predatory lending. Let's set things straight, consumers sign the paper work, appraisers a praise properties, anything under what 20% down must buy insurance, local areas set building restrictions, government sponsored entities Fannie and Freddie bought the loans( run by liberal crooks as we have found out) and Bush argued many times to rein them in all the while the ticket fixer, gay prostitute runner, Barney's Frank blocked anything from being done while saying there was no cause to be alarmed.
Yep, clearly the predatory lenders and Bush were working hand and hand.
Alsatian, thanks for the book info, I've had Thomas Sowell's book on breaking down the crisis my list and haven't started it yet.
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I saw a review of that book last week. Haven't had a chance to get the book yet, but, I think you're preaching to the choir here (for the most part). Most of us have recognized, from the jump, what caused the mortgage crisis. Of course there are a couple of liberal idiots who frequent the place who will say "it was all the fault of those greedy bankers."
Seems to me the banks do as they please within regulation. I don't think they were forced to give out loans, they did because it was profitable to do so. I'm pretty sure there are many democrats in banking who fall into the greedy category.
It wasn't lending that brought the house down, banks seem to be doing just fine today. Bank of America comes to mind when I think of greedy banks.
It wasn't all the fault of banks, but they are part of the problem although as things pan out I don't see to many players looking like it was a problem at all. The markets are right were they was just before whatever happened happened. As usual government has grown.
Mortgage processing outsourcing can help to reduce the time and costs associated with loan processing time. The lenders, the secondary markets and the private companies each have their own set of underwriting guidelines and costs, some of which can be unwieldy or too restrictive for borrowers.
I gotta agree with the entire premise, and with FM as well. Liberal idiots attempted a la-la-land solution to the problem of 'have nots' being unable to spend money they do not have. Ever see a 35k tin-knocker driving a Ferrari Testarosa ? Well, he bought something he could not afford, and it was this same drunken spending that defined this market.
Was there greed ? Of course there was. But when it all comes down to 'brass tacks', it's the consumer who signs on the dotted line. When I bought my home here in NJ, I was pre-qualified by the mortgage company for a 1.5 million dollar loan. I looked at my wife and she looked at me and we both asked the guy if he was smokin' crack. We took far, far less. We KNEW what we had, what we could afford and what we would NOT do. In contrast, my idiot scumbag lib sister in law was beside herself, telling us to go back and TAKE the 1.5mm and do what we want with the extra...and I believe a lot of the defaulters did the same thing. The price of housing was going up...the demand was so high that new homes were fought over by multiple bidders, with the mortgage going to the highest bidder. A large portion of the homes were held for a few months and then 'flipped' for whatever can be gotten over the original purchase price. When the bottom fell out, these speculators got hammered big-time. The ones who took the full pre-authorization amount got into trouble as well. It's no wonder there are so many schmucks scrapin' bottom. Couple that with the loss of jobs (that had been going on since 2000 and before), and as people's jobs migrated to Bangalore, they were unable to meet their financial commitments. Domino theory. BUT it was more along the lines of lenders doing what was legal (all of a sudden libs are going to put a moral judgement on things ? They never did before....) and found ways to make money. The people who bought the homes signed and signed and signed. They took more than they needed for the mortgages, they were taking home equity loans to be able to apply upgrades to the new homes AFTER they were assessed for local property taxes... it was greed all right, but not so much on the part of the lenders who were forced to operate legally and who were heavily regulated by the government. Things were so wild at that time, the lenders had all they could do to keep up with the demand.
I don't think they were forced to give out loans, they did because it was profitable to do so.
Nodog: Bill Clinton rewrote the Community Reinvestment ACT (CRA) requiring banks to make loans to less than ideal applicants or "sub-prime." Fannie and Freddie were then required to back those loans in case of a default.
When the economy went south and those "sub-prime" borrowers started losing their jobs, became unable to keep up with the payments, etc., Fannie and Freddie had to make up the difference.
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Quote:
Originally Posted by RobertSubnet
Nodog: Bill Clinton rewrote the Community Reinvestment ACT (CRA) requiring banks to make loans to less than ideal applicants or "sub-prime." Fannie and Freddie were then required to back those loans in case of a default.
When the economy went south and those "sub-prime" borrowers started losing their jobs, became unable to keep up with the payments, etc., Fannie and Freddie had to make up the difference.
Yup, I remember saying ,”this is going to nip us in the butt”. When everyone started screaming foul about deregulation, I was screaming foul over regulations stating a certain percent of loans had to be sub-prime. So to be honest, regulations are what got us into the mess. Not that I side with the predatory lenders, it’s just the fact they are out their, so when the door was open, they jumped. Clinton simply gave the predators the green light.
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I still have a problem with this term. A person is signing a *mortgage* for Pete's sake! This is one of life's biggest financial obligations. It is up to the borrower to make the determination if they can afford the loan...you know personal responsibility.
I understand people lost jobs and fell behind on loans they could otherwise keep up with. And no doubt there were people who got pushed in to financial situations they never should have been in by "predatory lenders." It just seems the term "predatory lender" is a shortcut that misses the real culprit. How about the term "incompetent government" instead?
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Source of prime mortgage crisis
