Roots of rotten mortgages

Pittsburgh Tribune-Review ^ | September 29, 2008 | Ralph R. Reiland

[Schnucki]

The roots of today's mortgage-based financial crisis can be traced back to the Community Reinvestment Act (CRA), which Jimmy Carter signed in 1977. Seeking to address complaints from anti-poverty activists and housing advocates about banks allegedly discriminating against minority borrowers and "redlining" inner-city neighborhoods, the CRA decreed that banks had "an affirmative obligation" to meet the credit needs of victims of discrimination in borrowing.

To add a government stick to the process, the CRA decreed that federal banking regulators would consider how well banks were doing in meeting the goal of more multiculturalism in loaning when considering requests by banks to open new branches or to merge.

A good "CRA rating" was earned by way of increasing loans in poor neighborhoods. Conversely, lenders with low ratings could be fined.

The Fed, for instance, warned banks that failure to comply with government guidelines regarding the delivery of "equal credit" could subject them to "civil liability for actual or punitive damages in individual or class actions, with liability for punitive damages being as much as $10,000 in individual actions and the lesser of $500,000 or 1 percent of the creditor's net worth in class actions."

However well-intentioned in terms of delivering "economic justice," this push for more government-directed social engineering produced a widespread weakening of long-established industry standards for credit worthiness.

Led by Congressional Democrats, this policy of replacing private and decentralized decision-making with a system of centrally-delivered rewards and punishments was basically a one-party effort. Republicans, it seems, were more aware of the unintended consequences that flow from government interference in the market.

As Investor's Business Daily recently put it, succinctly and correctly: "Over the past 30 years, Democrats, along with a handful of Republicans, have demonized lenders as racist and passed regulation after regulation pressuring them to make more loans

[Schnucki]

"By intervening -- even just threatening to intervene -- in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers," reported Husock. "A radical group called ACORN Housing has a $760 million commitment from The Bank of New York."

[2ndDivisionVet]

Seeking to address complaints from anti-poverty activists and housing advocates about banks allegedly discriminating against minority borrowers and "redlining" inner-city neighborhoods, the CRA decreed that banks had "an affirmative obligation" to meet the credit needs of victims of discrimination in borrowing.

Anotherwords COMMUNITY ACTIVISTS like Saul Alinsky, Barack Obama and Bill Ayers!!

[nuconvert]

Bump

[BooksForTheRight.com]

The massive transfer of money from the “haves” to the “have nots” failed, and now the “haves” will be asked to come up with the tax money to pay for the fix.

[scooby321]

we need anfround swell on this.

[BipolarBob]

we need anfround swell on this.

I couldn't have said it better myself. Well . . . if I tried . .

[Carley]

Roots in Carter, watered and fed by democrats from that day forward.

Lied lied and lied to is what we got from the dems, every single day.

[syriacus]

I’m glad to see the truth is starting to come out.

[rockinqsranch]

http://www.freerepublic.com/focus/news/2083123/posts?page=50

http://findarticles.com/p/articles/mi_m1282/is_n25_v45/ai_14779796

http://www.freerepublic.com/focus/f-news/1965239/posts
http://www.ibdeditorials.com/IBDArticles.aspx?id=306978378974502
http://www.ibdeditorials.com/IBDArticles.aspx?id=307149667289804&kw=cra
http://www.freerepublic.com/focus/f-news/2088795/posts

I’ve added this article to my collection.

[bronxboy]

while part of the problem, there is plenty of blame to go around. what about the derivatives? also the margins of 30 to 1. i do not feel bad for the bankers, my grand kids will be paying for this fiasco.

[syriacus]

By intervening -- even just threatening to intervene -- in the CRA review process, left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers," reported Husock. "A radical group called ACORN Housing has a $760 million commitment from The Bank of New York."

If the MSM were unbiased, it would be interviewing Husock.

He is terrific.

I read his book America’s Trillion-Dollar Housing Mistake The Failure of American Housing Policy last year.

It's extremely well written, well-organized, informative, and hard-to-put-down.

Amazingly, it doesn't take long to read.

[southernindymom]

I work in a mtg dept @ a Credit Union. We sell to Freddie Mac and we used to have to do manual underwriting. My boss is very conservative and would deny loans. Then we had to go to Loan Prospector, a computer generated underwriting system with Freddie Mac. The concept was to streamline underwriting and give the member a faster yes or no answer to their application. Basically in about 5 minutes, after the loan application is downloaded to LP, you get an ACCEPT or CAUTION. While there are limits to LTV and TLTV %’s, regardless, if LP came back with an ACCEPT, we HAD to give the person the loan. Freddie was willing to buy it and we could not deny the loan. Now we did verify employment/income/reserves and the like, but the feedback would at times say you didn’t have to. My boss always required it, but we do still have a few that have gone bad. There are alot delinquent though, getting worse each month. We were amazed at some of the loans that went through, ones that never would have been approved the old way. But if he would have denied the loan and it was an ACCEPT, the Credit Union could get into trouble, being accused of profiling or the like.

[XR7]

left-wing nonprofit groups have been able to gain control over eye-popping pools of bank capital, which they in turn parcel out to individual low-income mortgage seekers," reported Husock. "A radical group called ACORN Housing has a $760 million commitment from The Bank of New York.

Can you believe an anti-American, Marxist group, the likes of A.C.O.R.N. has been able to fleece the US Treasury this way?!! And, we are going to let all the low-lifes that let this happen walk away with their forunes intact by indebting our children? When do we, as a nation, say enough is enough? Will John McCain? Is he really a "maverick"? Or will he go along with all of the rest of the crowd and embrace expediency over principle?

WaMu CEO Alan Fishman Gets $18 Million Golden Parachute

Alan H. Fishman, the CEO of Washington Mutual, will likely be unemployed after only a few weeks on the job. But don't cry for Fishman. He's set to walk away with about $18 million in bonuses after his three week stint at the failed savings and loan giant. His "golden parachute" is raising eyebrows, particularly because of his short tenure at WaMu. Washington Mutual was the nation's largest savings and loan. It was taken over Thursday night by federal bank regulators and then sold to JP Morgan Chase for $1.9 billion. This, as lawmakers continued to work on a $700 billion bailout for bad debt in the financial industry. According to the Securities and Exchange Commission, Washington Mutual gave Fishman a $7.5 million bonus when it hired him on Sept. 8, and guaranteed him $11.6 million in severance if he was terminated, the so-called "golden parachute" that has created controversy when failed executives walk with huge rewards. Fishman also was eligible for annual bonuses of up to 365 percent of his annual base pay of $1 million

http://www.associatedcontent.com/article/1066149/wamu_ceo_alan_fishman_gets_18_million.html

[syriacus]

[unspun]

http://www.youtube.com/user/TheMouthPeace

[Ulysse]

Barney FRANK(Rep.D)immediatly launched the accusation of racism against E.CANTOR in a debate yestrday on CNN trying to make him shut up about those roots of the mortgage mess.

Then CANTOR seemed intimidated and stopped on that issue

[nmh]

bump!

[KSCITYBOY]

btt

[Retch_Sweeney]

Pretty much sums it up for me, we need anfround swell on this....as I can't grasp the idea that mortgages are even a part of this mess. Or even the idea that there is a $700 billion housing market. What are the yearly figures on housing? And if the figure covers a number of years, surely this was a dam designed to fail. What company in their right mind would allow those kind of dollar amounts to accumulate with little to nothing on the plus side to offset them? It boggles the mind.

[syriacus]

http://www.youtube.com/user/TheMouthPeace

I’ve seen that video. Watching it is time well spent.