HERE'S TO ALL YOU AMERICANS.
Posted on 01/22/2016 8:42:52 AM PST by SeekAndFind
Remember a few years ago, when the American housing market collapsed as a direct result of government policies that—in the name of racial justice—pressured banks to approve mortgage loans for massive numbers of underqualified nonwhite applicants? Remember how that collapse set in motion the financial crisis that then-presidential candidate Barack Obama repeatedly called “the worst economy since the Great Depression� And remember how Obama—who had long been a leading proponent of precisely the policies that had triggered the crisis—cast himself as the savior who was going to restore fiscal sanity and untangle the whole big mess?
Well, now Savior Obama and his White House are excitedly introducing Americans to their latest brainchild, the "HomeReady" mortgage program—offered through Fannie Mae and designed to help borrowers in “low-income†and “high-minority†census tracts. “For the first time," boasts Fannie Mae, “income from a non-borrower household member [e.g., a roommate or family member] can be considered to determine an applicable debt-to-income ratio for the loan." And if those combined incomes aren't enough to qualify an applicant for a mortgage loan, HomeReady comes with additional built-in “flexibilities†like “allowing income from non-occupant borrowers, such as parents." In other words, just keep rounding up everyone you know, until you can scrape together a 3% down payment and show a combined income that's high enough to qualify for an individual loan. This makes the slipshod lending standards that caused the crisis of 2008 look exacting by comparison.
What about minority applicants with bad credit? No problem there, either! As Investor's Business Daily notes, “You can qualify with a FICO credit score as low as 620, which is subprime." In fact, even the term “subprime loanâ€â€”meaning a loan that has a high interest rate and less favorable terms in order to compensate the lender for the high credit risk incurred—has received a thorough makeover from Obama & Company. From now on, such transactions are going to be called "alternative loans." See? No more “subprime†crises—ever again! Ain't it grand?
The government policies that led to the housing market collapse of 2008 initially emerged in the mid-1970s, when Democrats in Congress began a campaign to help low-income minorities become homeowners. This led to the passage, in 1977, of the Community Reinvestment Act (CRA), a mandate for banks to make special efforts to seek out and lend to borrowers of meager means. Founded on the premise that government intervention is necessary to counteract the fundamentally racist and inequitable nature of American society and the free market, the CRA was eventually transformed from an outreach effort into a strict quota system by the Clinton administration. Under the new arrangement, if a bank failed to meet its quota for loans to low-income minorities, it ran the risk of getting a low CRA rating from the FDIC. This, in turn, could derail the bank's efforts to expand, relocate, merge, etc. From a practical standpoint, then, banks had no recourse but to drastically lower their standards on down-payments and underwriting, and to approve many loans even to borrowers with weak credit credentials. As Hoover Institution Fellow Thomas Sowell explains, this led to "skyrocketing rates of mortgage delinquencies and defaults," and the rest is history.
The CRA was by no means the only mechanism designed by government to impose race-based lending quotas on financial institutions. For instance, the Department of Housing and Urban Development (HUD) instituted rules encouraging lenders to dramatically hike their loan-approval rates for minority applicants and began bringing legal actions against mortgage bankers who failed to do so, regardless of the reason. Moreover, HUD pressured Fannie Mae and Freddie Mac, the two largest sources of housing finance in the United States, to earmark a steeply rising number of their own loans for low-income borrowers. Many of these were subprime mortgages.
Additional pressure was applied by community organizations like ACORN, which routinely and frivolously accused banks of engaging in racially discriminatory lending practices that violated the mandates of the CRA. These groups often sued banks to prevent them from expanding or merging as they wished. Barack Obama, ACORN's committed ally, was strongly in favor of this practice. In a 1994 class-action lawsuit against Citibank, Obama represented ACORN in demanding more favorable terms for subprime homebuyer mortgages. After four years of being dragged through the mud, a beleaguered Citibank—anxious to put an end to the incessant smears (charging racism) that Obama and his fellow litigators were hurling in its direction (to say nothing of its mounting legal bills)—agreed to settle the case.
Forbes magazine puts it bluntly: “Obama has been a staunch supporter of the CRA throughout his public life." In other words, he has long advocated the very policies that reduced the real-estate market to rubble. And now, because he is a socialist ideologue who reveres big-government interventionism and deplores the free market, he is actively pushing those very same practices again.
Obama claims, of course, to be motivated only by a desire to help downtrodden minorities get a fair shake. But in practice, his approach has served only to devastate those purported “beneficiaries." For example, by 2009, as a result of the government policies that had brought about the housing crisis, the median net worth of black and Hispanic households nationwide had declined by 53% and 66%, respectively—whereas white net worth had fallen by a mere 16%. These disparities, explains the Federal Reserve, were largely due to the fact that African Americans and Hispanics—“because of their comparatively poor credit ratingsâ€â€”were disproportionately represented among those who had fallen into the financial trap of the subprime mortgages encouraged by the CRA and similar government policies.
It's a story we've seen many times: Leftist masterminds come up with a scheme to bring “justice†to the downtrodden. But when the dust eventually settles, there is only misery all around.
Since liberals just blame Bush for the housing collapse, even though Bush warned about it beforehand, history must repeat itself. And again be forgotten again because the wrong people will get blamed.
If you go back to five years prior to the Wall Street collapse of 1929....there was a fairly decent collapse of the housing market (Florida, California) and numerous banks/private individuals went belly-up. Wall Street....managed to survive and carry on....at least till it collapsed in 1929....from other circumstances.
I enjoyed the movie ‘The Big Short’, but they blamed the entire problem on the banks. But the banks had no choice when the Government regulators required them to give around 45% of their mortgages as sub-prime. The movie could have made an important fiscal statement about the CRA, but just came out as bank bashing.
Thats an “inconvenient truth” that hollywood ignores.
The whole mess was caused by Dodd-Frank and the Community Reinvestment Act
The list, Ping
Let me know if you would like to be on or off the ping list
The Cuomos, Franks, Greenspans and Clintons of the world should be proud of their contributions in past disasters in the housing arena.. and how some didn’t learn their lesson then,, and now seek to rekindle the ‘magic’..
The main thing is they vote Democrat, so the more of them you can import the sooner you can make sure that no tax issue is ever defeated.
” But the banks had no choice when the Government regulators required them to give around 45% of their mortgages as sub-prime.”
Bush went to Congress three times to get them to do something but each time he was laughed and and publicly shamed for not wanting the poor to have a house to live in.
A fiscal disaster in 2008 due to excessive debt when mark to market showed those swimming naked when the tide went out.
This time, I think, it will not happen under Obama. Mark to market will be (has been) suspended and assets will not be allowed to depreciate.
deja vu
other posts here; search term is home ready
http://www.freerepublic.com/tag/homeready/index
Bkmk
Two words: Cloward-Piven!
Yup. Right on schedule. . September or October?
I remember the Carter admin when interest rates hit almost 20 percent. Values of homes went so high the finance companies were begging homeowners to refinance at a higher rate and take use the extra for spending purposes. We held.
Then came the fall and dozens of Savings and Loan companies went bankrupt while homeowners and farmers lost their homes.
Then in the 2000s I began to see the finance companies begging people to refinance and spend the extra cash! I told my wife this was going to end just like 1980. It did, this time it was the banks that took the hit while people lost their homes.
Steering is the right word. It is being consciously directed.- and the apparent end is desired. It is designed, I think, to crash after the Elections, and would seem to indicate that the Republicans might just be expected to win and Hussein is not confident that the the Democrats might not continue to control the Congress.
HERE'S TO ALL YOU AMERICANS.
You mean Gramm Leach Bliley, which was used both by investment banks and leftists to turn home mortgages into a speculative investment product.
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