This reverse red lining frove up the prices of slum type houses.
Banks were forced to lend in these areas and to weak applicants. The result is big mortgages on bad properties.
and, in the end, as always, we taxpayers pay
when this was going on in phx, i couldn’t believe it.
it was like an “orgy” with the speculators, real estate agents, and mortgage companies.
i thought it was nuts because houses that had been appreciating at 4% suddenly went up 40-100%. i believe about 40% of the buyers were investors “flushed with cash” (not their own) and most of them came from california.
they were buying houses right and left, forcing people who live here out of the market or into one of those ridiculous loans.
it was really simple. the wage market was not going to support the mortgages.
these people threw out the rule of thumb. no more than 3 x your annual salary for the cost of a house or no more than 30% of your net income for a monthly payment.
greedy people all around and those of us who weren’t greedy are having to pay the tab.