I agree.
However, the CRA required loans in red-lined areas, and NINJA loans were done in an attempt to placate those who insisted on such laws. In effect, banks were required to make such loans. (Not saying that they did not embrace the practice.)
Those loans were bundled with more solid loans, and sold. The result was the housing bubble.
I have little doubt that as housing prices increased, scoundrels took out home equity loans against their now-inflated homes' values and walked with the cash, just onw scam of many which have wounded our economy.
Someday someone will open the can of worms crated by the cabals involving the banks, the builders and the appraisers, which also helped fuel this fire.
Sorry, but this red line argument is a red herring, always was. You don’t blow up the housing market and the larger economy with failed loans in depressed inner cities... That argument is a red herring.
The fact was that flat out GREED is what lead to the bust. The reality was, there were buyers willing to buy Mortgage Back Securities, and there was a complete run on them... Koreans weren’t buying up these things because the FED was incentivising red line district loans. The simple fact was there was so much demand for these things, that banks and everyone else in the system were willing to keep financing anyone just to keep feeding the pig.
There were more buyers for these securities than there were any sort of reasonable supply, so everyone and I do mean everyone was doing everything they could to invent supply. They had no qualms giving loans they knew could never be repaid and didn’t care, and no the overwhelming majority were not in red line districts, because you don’t have brand new 800k homes in red line districts to finance.
The housing bust was not a result of redline policies, that’s a nice conservative talking head talking point/spin, but its not remotely the cause of it. When you have people making 50k a year, buying 600k homes, or 100k a year buying 1 Million dollar homes you aren’t selling homes to folks who are either destitute or are in red lined areas.
What you had happen is the banks would finance ANYONE, no credit check, no income verification, no debt to income, no anything... they would finance ANYONE for anything. This did 2 things, first it cause housing prices to go up astronomically because it didn’t matter the price, there was nothing to pressure it back down. Buy a house today, it was worth 100k more in 12 months, in many markets.. banks lazy, people took risks they never should have thinking they could win the gravy train... etc etc etc. 2nd it cause more people to buy beyond their means because who cares, i twill be worth 100k more in a year, and I can sell it and make 100k, I can strap myself for a year for that kind of profit...
GREED cause the housing crisis, not red line loans. This idiotic talking point has to end, you don’t destroy a housing market because you made some loans in questionable areas, you destroy the housing market by overfinancing everyone.
The cause of the housing bust cannot be laid at the feet of government, it can be laid squarely at the feet of those that government spent billions bailing out... the Banking industry.