Who's to blame?
http://www.dailyfinance.com/story/credit/whos-to-blame-for-the-mortgage-mess-banks-not-homeowners/19803636/?icid=maing|main5|dl12|sec1_lnk3|37976_aim

http://realestate.aol.com/blog/2011/01/18/why-canada-doesnt-have-a-foreclosure-problem/?icid=maing|main5|dl12|sec3_lnk1|37976_aim

Whoever took "the market" out of the equation is to blame.

If you can't put down 20%, don't have a good credit record, and don't have skin in the game, I don't care if you're black, white, hispanic, catholic, muslim, gay, male, female, straight, rich, or poor.

You have no reason to be granted a mortgage and all the schemes hatched to circumvent creditworthiness like liar and NINJA loans and 45 year mortgages need to go away. And, if people now scream because credit is much tougher to get and they perceive housing "unfairness", too bad.

Many european financial institutions have suffered from the USA Sub-Prime mortgage situation.

yes thats because they foolishly invested in the american homeloan ponzi scheme.

Please note that the US Gov't paid AIG's outstanding insurance obligations doller for dollar. When AIG went belly up the gov't handed them cash and they immediately sent it to English German and other european banks that invested here.

Heres the fun part with AIG. The Gov't gave American banks loans for CYA purposes then bailed out AIG which in turn paid those banks their insurance money. So the American banks not only got incredibly low interest loans they also go their money in total for their insurance markers at AIG. talk about a banking Coup

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

Wake up. The left caused the entire housing crisis problem to begin with. They pushed "fairness" through GSEs, not sound lending.
More social engineering that failed us all.


http://www.youtube.com/watch?v=_MGT_cSi7Rs


http://www.youtube.com/watch?v=Tip4ia3qJAY

The crisis actually was caused in an attempt to combine the bad debt, and pass it off on others that were unsuspecting.

The foreclosures themselves could have been absorbed. Combining them and selling them off to unsuspecting investors was the beginning of the end. Fraud and corruption is what allowed people to get into homes they could not afford, not the government programs themselves.

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Janice

The crisis actually was caused in an attempt to combine the bad debt, and pass it off on others that were unsuspecting.

The foreclosures themselves could have been absorbed. Combining them and selling them off to unsuspecting investors was the beginning of the end. Fraud and corruption is what allowed people to get into homes they could not afford, not the government programs themselves.

The Community Reinvestment Act. Jimmy Carter era legislation that William Clinton screwed with to require liars loans.

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"liar loans" have never been legal, nor wise, nor were they mandated anywhere.

Low % down has been avaiable to those financially qualified, and there is some extra risk involved. Falsifying values of the homes, or the ability to pay of the creditor (which is what created the "liar loan") was not.

The fact so many BAD loans, known bad loans, were combined and sold off as REIT(Real Estate Investment Trust) instruments is what caused the crumble by putting all of the impact together. That is what pulled the mat out from under us, not by treating those of modest means with basic dignity.

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Janice

I was asked to pursue a liar loan. I knew from the start the loan numbers didn't add up and that in 2-3 years I would be on the street looking to rent some place. The large majority of these loan generation companies folded and disappeared. They made loans then immediately sold them to these so called mortgage banks who failed to check out anything on the loans, assuming that the loans were 100% valid. The reality is that if they'd have checking into even 5% of the loans as they bought them they'd have easily seen that most of the loans purchased weren't worth the fake paper they were written on.
You really can't blame this on anyone else than greedy people



you'll notice that tline pretty much stays straight until 1999.

so tell me how Carter is to blame when nothing happened until 1999 is there some 20 year window that caused these loans to erupt. or was it the guy at the office looking to make a bigger bonus by making more loans.

If you recall the bubble fed on itself. Everyone wanted a piece of the action.

I don't recall any legislation that Clinton would have signed that could have caused such an abrupt bubble.

It is also know that banks were creating new " investment Items". this is of course the toxic assets that were all know and love. At the time they looked great on paper and were very well insured for a very nominal price from AIG. How could anyone see the problem with one company holding nearly all the insurance notes for the toxic assets. Could this be another lesson about Monopolies

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

We're talking about NO-DOC or stated-income loans that led to subprime lending.

We're talking about people LYING about their income on mortgage applications. IOW, mortgage fraud.

"A review of 100 stated income loans by one lender found that a shocking 90% of the applications overstated income by 5% or more and almost 60% overstated income by more than 50%." Mortgage Bankers Association of America

As I stated previously the guys I ran into intentionally wrote the wrong info down to make me look like a better risk. I doubt the people trying to get loans were all complicit unless you think that word got out that you could just write anything down and they make your new house appear. Thats a bit far fetched.

What has been found to be true is in the desire to earn more money loans were being put through that should never have been considered.

http://georgewbush-whitehouse.archives.gov/news/releases/2002/06/20020617.htmlthis made things much worse in 2002. Wanna talk about bad ideas. Just read the list and ask yourself, what could have possibly gone wrong?

demanding fannie mae to sell $440 billion in homes and giving construction companies $2.4 billion to make it happen.

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

As I stated previously the guys I ran into intentionally wrote the wrong info down to make me look like a better risk. I doubt the people trying to get loans were all complicit unless you think that word got out that you could just write anything down and they make your new house appear. Thats a bit far fetched.

What has been found to be true is in the desire to earn more money loans were being put through that should never have been considered.

http://georgewbush-whitehouse.archives.gov/news/releases/2002/06/20020617.htmlthis made things much worse in 2002. Wanna talk about bad ideas. Just read the list and ask yourself, what could have possibly gone wrong?

demanding fannie mae to sell $440 billion in homes and giving construction companies $2.4 billion to make it happen.

Yup, very bad policy by a neocon. More social engineering which has proven to be a very bad thing. It's why we have to kill it in it's tracks.

Exactly what was happening - FRAUD: http://www.fincen.gov/news_room/rp/files/MortgageLoanFraudSARAssessment.pdf

Don't get me wrong I applaud his efforts to get housing in minority neighborhoods. Unfortunately, a great deal of the folks they were signing up for loans were just not qualified to get loans let alone be able to make the payments.

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In a rich man's house there is no place to spit but his face.
Diogenes Of Sinope

"liar loans" have never been legal, nor wise, nor were they mandated anywhere.

You have been seriously misinformed. The CRA mandated liar loans or bank closure.

The CRA required a bank to loan $ for $ into the ghetto to loan outside the ghetto. If it didn't loan a $ inside the ghetto it couldn't loan a $ outside the ghetto. Now under the Carter law the bank could self certify that there were no good applicants in the ghetto and then lend outside the ghetto. Clinton changed that and allowed ACORN to sue the bank to prove there were no good applicants, because some idiot was screaming redlining. Suddenly liar loans had to be accepted or the bank was out of business, or spend thousands of dollars per loan application to investigate and then again on lawyers in court to prove it bad. Bear Sterns came along and said for a fee we will write an insurance policy, securitized credit swap, for that loan and then you can unload that loan on Fannie or Freddie. As long as the bubble built everything was fine. But all ponzi schemes come to an end.

This is what happens when you attempt social engineering via legislation. Don't ever forget it.

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Correct. One other thing the government threatened to do was pull a bank's FDIC Insurance Charter if they didn't lend to the subprime.

This is all documented. Liberals are just stubborn and believe in fair housing over sound lending. They don't care about the bad consequences of social engineering.

you'll notice that tline pretty much stays straight until 1999.

so tell me how Carter is to blame when nothing happened until 1999 is there some 20 year window that caused these loans to erupt.

I don't recall any legislation that Clinton would have signed that could have caused such an abrupt bubble.

A very minor change in the CRA was all it took. Instead of the bank saying bad loan application the bank had to prove in court the application was bad because now ACORN was allowed to sue them to prove it. Just too expensive to do that for every application the bank got.

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Oh dear! This is pretty damning - Clinton appoints Andrew Cuomo as HUD Secretary in 1993 and guess what he says...

http://www.youtube.com/watch?v=PFlYmLAMbrw

Ouch, that's gonna leave a mark!

Fascinating. Difficulty balancing loans MADE the frauds happen.

That is really.. really.. wow.

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Janice

Fascinating. Difficulty balancing loans MADE the frauds happen.

That is really.. really.. wow.

Yep.

Say you are C bank and you need to loan out $0.5B. You have GMAC on the line and they need $0.25B to pay off their dealers for the month's car sales. Now you have this nasty CRA that says to lend GMAC that $0.25B you have to lend $0.25B in the ghetto. Remember it is $1 for $1. You damn well know the ghetto isn't worth $0.25B. However Bear Stearns can to a securitize it with a credit default swap for the cost of a few days interest and package $0.25B worth of ghetto loans into something that you can turn around and sell for Fannie or Freddie as they are required to buy. Do you do it? For a couple weeks you have to carry the ghetto loan but after that it is off your books and on the public's at Fannie or Freddie, but you get to keep the GMAC commercial paper and the interest they pay. Do you do it? Before you answer remember your legal fiduciary duty to the share holders to make as much money as you can any way you can. Do you do it? While you are thinking about it Wind Rock calls and wants a loan for $0.1B to build a plant. If you do a hurry up sale of those ghetto loans say for $0.24B to Fannie or Freddie you have $0.24B back in the to lend out pile and can help Wind Rock just as soon as you can get papers in for another $0.1B in ghetto loans! Suddenly it is all about how fast you can get liar loan paper in from the ghetto to keep the business afloat.

When you try and bend the rules of capitalism they push back in strange ways and tend to blow up.

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