If you go to this story from the YEAR 2000, you will see everything in today's Journal Sentinal story was predicted with almost 100% accuracy 8 years ago.....
From the JS story...........•
1.Many of the house loans unraveled in a matter of months, a signal that they probably were doomed from the outset. The median length of time from the date of the loan to the filing of the foreclosure suit was 427 days.
2. A majority of borrowers had a troubled financial past before they received mortgages, with more than half being on the losing end of civil court cases involving repossessions, evictions, foreclosures or other financial matters. Nearly a quarter had filed for bankruptcy before receiving a mortgage.
3. Twelve borrowers had a criminal record before they received a mortgage. Half of those convictions were for financial crimes such as theft, food stamp fraud or forgery.
4 Absentee landlords snapped up many of the subprime loans that later went into default. About 40% of the loans were held by people who were sued for foreclosure involving other properties during the last two years. Some were hit with as many as a dozen foreclosures elsewhere in Milwaukee County.
From the story tillion $ shakedown.........http://www.city-journal.org/html/10_1_the_trillion_dollar.html
1.Bruce Marks says that he would consider a low foreclosure rate to be a problem. "If we had a foreclosure rate of 1 percent, that would just prove we were skimming," he says. Accordingly, in mid-1999, 8.2 percent of the mortgages NACA had arranged with the Fleet Bank were delinquent, compared with the national average of 1.9 percent. "Considering our clientele," Marks asserts, "nine out of ten would have to be considered a success."
2.This policy—"America's best mortgage program for working people," NACA calls it—is an experiment with extraordinarily high risks. There is no surer way to destabilize a neighborhood than for its new generation of home buyers to lack the means to pay their mortgages—which is likely to be the case for a significant percentage of those granted a no-down-payment mortgage based on their low-income classification rather than their good credit history. Even if such buyers do not lose their homes, they are a group more likely to defer maintenance on their properties, creating the problems that lead to streets going bad and neighborhoods going downhill. Stable or increasing property values grow out of the efforts of many; one unpainted house, one sagging porch, one abandoned property is a threat to the work of dozens, because such signs of neglect discourage prospective buyers.
Please read the entire lengthy article in city journal from the year 2000. The mortgage crisis we are facing right now is the direct result of liberal politics, race politics, and the use of the CRA to force banks to lend to unworthy buyers as a way of funneling money to liberal activist groups like ACORN/
Just another form of affirmative action.
1. I bet her credit was never that hot.
2. It is nuts that she had 1 house on $21,000 a year, let alone 8!.
3. She had a good ride and I bet she pocketed some money. There will be another program, bet on it.
Bankers went along with the Community Reinvestment Act, priming it greedy practices knowing that it was sure to fail. Lots of room for Republicans to stand up and share the blame here.
TANSTAAFL!
Great article. Thanks for posting...
I agree. Anthony Sanders of Arizona State University has a paper on his website that blames the debacle on the CRA and Democratic Congress’ unwillingness to stop the growth of the subprime market in the face of evidence of a pending collapse.
He pulled the copy from his website as of Friday evening. I emailed him asking where it was. He responded that he had to add some information about ACORN’s role in the subprime crisis. And that it would be reposed on Monday.
I thought the Community Reinvestment Act was established in 1977?
He made about $9 an hour as a strawberry picker and after the sub-prime negative amortization period ended and his loan suddenly went from hiving to pay $500 a month to having to pay $4000 a month, he couldn't make the payment and his house was about to be forclosed on.
The newspaper wrote the story giving it a spin of how unfair it was that this poor itinerant crop picker was losing his chance at the American Dream.
About the only saving grace is that when the dollar falls into the tank and we have runaway inflation, I should be able to pay off my mortgage pretty quickly when the minimum wage is raised to $100,000 an hour.
McCain has been talking about greed on Wall Street. I note in this article that the CEO of now ruined Washington Mutual (WaMU) was earning around $12 million, then he was cut to ONLY $5 million, now he is out on his butt. WaMu was selling at $40 a share, then dropped to $5. Greed has its own penalties.
Wanna buy a house in my old neighborhood? cheap?
well we still got a do nothing congress that wants failure in this country for some reason. How do we fix that?
So many culpapble parties in these schemes:
1. The buyers.
2. The lenders.
3. The appraisers (often times appraisals were inflated so they could borrow more.)
4. The government for knowing it was going on, and doing nothing to stop it.
5. The hedge funds and folks on Wall Street who bought and sold the mortgages.
6. The pushers of no money down schemes like was mentioned in this article. Infomercials that told people they could be millionaires w/no money down.
And, IMHO, there was a certain measure of greed in realtors that made commissions on overinflated properties. They weren’t doing anything illegal, but they fueled the furor. We thought about buying a second home a few years ago, right as the run up was starting, and the realtor was playing several buyers against each other, contributing to an almost hysterical pitch of “you’ve got to get in on this now,” thus jacking up the price till it was way above asking (we quit that game early on.)
Just my 2 cents.
Must read BTTT!
GOOD, GOOD, GOOD milwguy. We all have to keep hammering the point across that there was a beginning, a root cause and that was Democrats and the CRA Legislation that was rammed through Congress in spite of major controversy at the time, and signed into law by Jimmy Carter.
Many are targeting an array of irresponsible activities that occured that contributed to the demise of our Mortgage Industry, thus creating the Financial crisis.
To survive the CRA-Government forced “lending” (actually to survive Government sanctioning of throwing away millions of Bank/Lender dollars) to blatantly unqualified borrowers, the Banks/Lenders were compelled to “create” new profits to replace that which the Government coerced them to throw away. This is where the other activities (derivitives etc.) come in to play that so many are targeting as the reasons for the collapse.
It started with the Democrats, was protected by the Democrats as late as 2003 when President Bush attempted to cause reform, and today the Democrats “Don’t know What To Do”, so they are going to bail out, close down Congress and go hide.
THE FAULT IS FIRMLY IN THE CORNER OF THE DEMOCRATS FROM THE GIT-GO.
Bump