Posted on 09/15/2008 3:41:17 PM PDT by Laissez-faire capitalist
With the collapse of Freddie Mac & Fannie Mae, we can see what happens when some people (be they black, white, hispanic, etc) who do not have a good credit rating, live in areas that are dangerous and/or clearly aren't able to make mortgage payments, but allowed to make mortgage payments anyway.
Democrats argued that it was bigotted and racist to not allow these people access to a quality home, so they pushed for making it possible, and now when we see what happens when you allow people who cannot afford mortgage payments to make morgage payments:e a tax-payr - funded bailout becomes necessary and Democrats are more than will to oblige and come in with a bailout of these and other sectors of the American economy.
Democrats castigated the old housing pratice as "redlining," calling it bigotry and racism.
When things fall apart in the housing industry, they want the gov't to come in and run it - and blame Republicans for the mess they created!!! Democrats want taxpayers to foot the bill for the mess they caused.
Conservatives are going to have to take things back to the way they used to be: If you can't afford a home, taxpayers aren't going to help you. Taxpayers aren't going to be forced to foot the bill when you can't make your payments, and they aren't going to do any more bailouts.
Conservatives are going to have to stand up to the Democrats, otherwise the auto industry will most likely be next. Didn't Pelosi say that she was willing to support a bailout of the auto industry? Conservatives need to take it back to where gov't does not run the housing industry, they don't run Fannie Mae or Freddie Mac, and they sure aren't going to run or bailout the auto industry.
Democrats though, will respond with charges of racism, bigotry, etc - the usual bull.
Conservatives must respond by saying that Americans are tired of Democrats engaging in race-baiting and phony outrage. They must respond by saying that Democrats don't care about the poor, they show - by their actions - that they want gov't to run the housing industry. Conservatives must respond by saying that Democrats must not expect taxpayers to foot the bill when people cannot afford to make payments and falter on them.
“Redlining was awful - glad it’s outlawed.”
It didn’t happen by drawing lines around areas.
It happened because at the time you had to have 20% down and be able to show you could makethe payments with what you made.
Those criteria drew the lines themselves.
That’s what has to return without deviation!
If loans are not made in some areas, are lenders acting irrationally. I have a hard time believing that redlining can exist in todays climate.The redlining I remember was the practice of systematically denying minorities the ability to buy in white neighborhoods. Real estate agent's would not take them to see houses there, mortgages would not be given to them to buy there, and if they got past all that utilities would not be turned on. It had nothing to do with income, only race.
Redlining of this sort was practiced almost universally in the South up to the early sixties. I can't personally say what it was like in the North since I didn't grow up there. Thank goodness we can agree that practice is gone for good.
The current problem with mortgages is different. Investors carelessly accumulated bonds that were poorly secured with these properties. The bondholders knew what the qualifying requirements for mortgages were before they bought the bonds. Homeowners who overbought get beaten up all the time about their failings but the bondholders are just as guilty if not more so. They could have taken their money elsewhere to less risky investments. Nobody held a gun to their head.
I tend to give a little more slack to the first time homeowners since they don't have the resources to do a full analysis of the risk. When I bought my first house I used the mortgage guidelines to help me choose wisely. It actually seemed like way more than I could afford at the time.
The banks that made these loans had entire departments analyzing the risk. Massive computer systems. They are in trouble now because they failed to understand the enormous risk they were taking. Yet the banks will get bailed out while the overwhelmed homeowner gets the boot. The only reason Lehman didn't get bailed out is that the Feds realized they would bankrupt the country if they bailed all the affected banks out.
It didn’t happen by drawing lines around areas.Sorry, I grew up in the South. It did happen by drawing a virtual red line around white neighborhoods and it was primarily based on race. A black millionaire had the same problem.It happened because at the time you had to have 20% down and be able to show you could makethe payments with what you made.
We shouldn't revise history like that.
And as I said above, the bondholders knew the down payment requirements, collateral requirements, and income requirements that would be used to loan the money out before they acquired the bonds. If they didn't like the risk they should have taken their money elsewhere. Overextended homeowners have some guilt here but banks and bondholders have much, much more.
Didn’t our favorite political heroes demand that banks loan virtually everyone money, so virtually everyone could afford a home?
Didn’t our favorite political heroes demand that banks loan virtually everyone money, so virtually everyone could afford a home?If bondholders thought that was an unreasonable requirement then they were free to take their capital elsewhere. The government did not force anyone to acquire these bonds. I'm sure there were attractive corporate bonds at the time.
It's a cop out to place the blame on the government in this case. Investors failed to protect their money and they deserve to eat their own losses. Unfortunately, all of us will pay the price for their foolishness now.
It's a real pig sty. Us workers have thrown plenty of bucks into the area with our taxes and a lot of other programs...and we're getting nothing back.
So much for socialism and trying to help people. They don't want the money...they want the cash and "life support".
Only 45% of the kids in our VERY expensive school system graduate. Disgusting!!
Thank you. There is so much more coming. This economy based on consumer and government debt is bound to fail.
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You need to define redlining very carefully.
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Yes, lest we lapse into Liberal-Think, which you elaborate quite well.
Hey, some sort of redlining needs to come back. Black folks with ability are moving into white neighborhoods. Welcome. They are escaping L.A. city. And we all know what kind of gangs operate there.
There are areas between L.A. and San Diego the police won't go into without a lot of backup. Blacks are a target in these places. I live in this state and know how it has deteriorated. Everybody knows this reality.
.50 and .60mm automatic weapons must be shown in these places in a different choice of vehicles.
It gets worse. 2 weeks ago the Mexican drug cartels OK'd the assasination of U.S. citizens in the U.S.
Think about the end result of that. There is less need for our military in Iraq. And those cartels are no match for a war-trained military that killed many thousands of terrorists.
In the old old days they would actually draw a line around certain neighborhoods and not make loans in those areas. That’s what I was talking about - and that’s wrong. If you’re talking about not making loans to people based on their credit histories - I agree with you.
Then after the anti-redlining legislation the same line was drawn but loan officers were told to make sure that a certain percentage of loans they made were inside those areas. Bank officers eager to be seen complying with the spirit of the new law gave instructions to their employees to see that those quotas were met. I know because a friend of mine worked as a loan officer and was gently and not so gently reminded to go out and make loans in those areas.
Privatize the profits and socialize the loses.
Then after the anti-redlining legislation the same line was drawn but loan officers were told to make sure that a certain percentage of loans they made were inside those areas. Bank officers eager to be seen complying with the spirit of the new law gave instructions to their employees to see that those quotas were met.This may be true, but what were the bondholders doing putting their money up in such a scheme. They knew what the loan qualifications were and what the risks were. If they weren't comfortable with the risk/reward ratio then they were free to take their money someplace better.
They were just planning on real estate going up forever. It didn't and they should have known housing prices were getting highly inflated.
The new free market.Exactly. They should let the investors who made these loans eat their losses. They earned them, fair and square.Privatize the profits and socialize the loses.
so you don’t think that the cmo models are flawed but rather that they were used inappropriately?
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