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Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession. But a new study by the respected National Bureau of Economic Research finds, "Yes, it did. We find that adherence to that act led to riskier lending by banks." Added NBER: "There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts," or predominantly low-income and minority areas. To satisfy CRA examiners,...

The mortgage crisis that brought the economy to its knees seven years ago was especially devastating for black communities, where homeowners who qualified for safe, traditional mortgages were often steered into ruinously priced loans that paid off handsomely for brokers and lenders while leaving borrowers vulnerable to foreclosure. The crisis left many middle-class minority communities strewn with abandoned houses, further widening the already huge wealth gap between African-Americans and whites. A study published this month in the journal Social Problems lays out how this happened in Baltimore in the run-up to the recession and comes at a time when the...

The claim that mortgage credit is very tight for all but pristine borrowers has been repeated so often by respected policymakers and economists that it is now taken as fact. This characterization of today's mortgage market, however, is misleading. The truth is that most people with a steady job and an average (or worse) credit score can get a mortgage. Many borrowers taking out home purchase loans these days have less than perfect credit. The federal government has been more than willing to guarantee higher-risk mortgages, and it's been doing a lot of business with lenders that originate the loans...

Although investors hang on every comment by Federal Reserve Chairwoman Janet Yellen to get insight on the direction of interest rates and what it means for the economy and asset prices, the real power to determine U.S. interest rates may be in the hands of China, according to Lombard Street Research. Facing an overvalued currency that is hurting corporate profits and slowing growth, China appears ready to dump its $1.3 trillion in U.S. Treasury bonds to drive U.S. interest rates up and strengthen the dollar... (snip) China tried to slow the fall of the dollar by increasing its holdings in...

WASHINGTON—The Obama administration and federal regulators are reversing course on some of the biggest postcrisis efforts to tighten mortgage-lending standards amid concern they could snuff out the fledgling housing rebound and dent the economic recovery. On Tuesday, Mel Watt, the newly installed overseer of Fannie Mae and Freddie Mac, said the mortgage giants should direct their focus toward making more credit available to homeowners, a U-turn from previous directives to pull back from the mortgage market. In coming weeks, six agencies, including Mr. Watt's, are expected to finalize new rules for mortgages that are packaged into securities by private investors....

(Reuters) - JPMorgan Chase & Co (JPM) Chief Executive Officer Jamie Dimon said on Thursday that government legal cases, including those over mortgage securities the company settled for more than $13 billion, were "unfair". Dimon, speaking on CNBC in a pre-recorded interview from Davos, Switzerland, said most of the government claims against the company were for dealings that took place at companies before JPMorgan bought them in the financial crisis. "I think a lot of it was unfair, but I am not going to go into the details," Dimon said in the television interview.

Need assistance from the FRpeer Nation out there. I have a dear friend whose son has lost his job and will have to relocate to take a new job. This person owns a home and has a family. The deal: the market here is in terrible condition and there is little if any hope of selling his home. He has considered walking away from the mortgage. Just pick up and tell the mortgage company what is going on and that he is simply leaving, here is the house, come and get it. Then rent on the other end. My friend...

Deutsche Bank Is About To Turn Into America's Public Enemy #1 Vince Veneziani Jun. 10, 2010, 8:46 AM If you've read Michael Lewis' "The Big Short," you know how well-entwined Deutsche Bank is in the subprime housing market. After all, CDO wunderkind Greg Lippmann decided he'd had enough and has since headed, with other ex-DB execs, to greener pastures. But CDOs aside, Deutsche Bank is about to get a lot of bad PR from its latest move here in the U.S. The German bank is beginning to evict people from their homes and start foreclosure proceedings on a boatload of...

McKinsey: You Won't Believe How Much Pain We're Still In For Gus Lubin Jan. 26, 2010, 11:46 AM A new report by McKinsey Global Institute says that globally we have avoided the necessary deleverage process. Governments like the U.S. have increased total leverage through deficit spending. Meanwhile, they boosted leverage in areas like housing through programs that promote spending. In other words, we have delayed the deleverage process until some time right around now. If we're lucky. Otherwise we're looking at this nasty option: McKinsey: We therefore see a risk that the mature economies may remain highly leveraged for a...

Millions of adjustable-rate mortgages are going to reset in the coming years, possibly to higher interest rates, creating the prospect of a new round of foreclosures.

"Payment-option ARMs are about to explode," Iowa Attorney General Tom Miller said, according to a Reuters report."need for immediate change in the loan modification process is particularly acute at this time because a very large number of payment-option ARMs in Arizona is scheduled to reset in the near future."

CNBC's Rick Santelli this morning at the Chicago Mercantile Exchange With tongue only partially in cheek, a CNBC analyst on the floor of the Chicago Mercantile Exchange this morning responded to President Obama's proposed $275 billion deficit-financed homeowner bailout plan and other massive spending measures with a call for a new "tea party." Rick Santelli, in a nearly three-minute rant that drew approving hoots and comments from nearby traders, said the Obama administration's promotion of bad behavior must be causing the founding fathers to roll over in their graves. "We're thinking of having a Chicago Tea Party in July," Santelli...

The recent compromise struck between the Treasury and Democrats in Congress on the fate of Fannie Mae and Freddie Mac, the government-sponsored mortgage guarantors, constitutes the worst of all possible worlds. The Treasury offered a blank cheque to come to the rescue, if necessary, but the managements of both companies were kept in place. They know that their survival depends on not drawing on that blank cheque. They will therefore do everything in their power to reduce the need for any new equity capital that would be dilutive. In short, as privately owned but undercapitalised financial institutions, the GSEs cannot...

President Obama yesterday announced his plan to prevent home foreclosures, saying he wanted to be "very clear about what this plan will not do: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans . . . And it will not reward folks who bought homes they knew from the beginning they would never be able to afford." We really do wish he were right. In fact, the details released yesterday suggest the President's plan will do all of the above. The plan will help some struggling homeowners. But by investing in failure, the...

WASHINGTON — When it comes to homeownership, Hispanics in New Jersey, single parents in California and senior citizens in Rhode Island all have something in common: More than a third have an unaffordable mortgage.

"No one had to borrow money from the bank," she explained. "They all had a lot of cash on hand." While mortgages and credit cards are becoming more popular in China, there is still a traditional principle in place which dictates that one should be able to pay with cash for something before they really need to buy it. Many Chinese people are able to pay for their houses with cash because in my observation, they are some of the best 'penny pinchers' in the world. And by that I am not suggesting that they are stingy. Years of hardship...

AS panicked politicians prepare to fork over $1 trillion in taxpayer funding to rescue Wall Street, they've fingered regulation, deregulation, Fannie Mae and Freddie Mac, the Community Reinvestment Act, Jimmy Carter, Bill Clinton, both Bushes, greedy banks, greedy borrowers, greedy short-sellers and minority-home-ownership promoters for blame. But there's one villain that has slipped notice: how illegal immigration, crime-enabling banks and open-borders Bush policies fueled the mortgage crisis. It's no coincidence that the areas hardest hit by the foreclosure wave - Loudoun County, Va., California's Inland Empire, Stockton and San Joaquin Valley, and Las Vegas and Phoenix - also happen to...

I thought that I would pose a few questions to the sharpest knives in the drawer, Freepers, and perhaps incite some discussion by those more knowledgeable than myself and in the process enlighten us all a bit. I have been employed in the residential mortgage business for the last 6 yrs. and may have a little better grasp of what is happening than the average guy on the street, though far from an expert.

By April, 2009, hundreds of thousands of option ARM mortgages will begin resetting, bringing on a fresh wave of foreclosures The American homeowner must feel like one of those characters in an old cartoon who has just been hit by a falling piano. After dusting himself off and touching the large bump on his head, he probably doesn't expect another piano to be dangling overhead. But he'd be wrong. But what's often funny in a cartoon is anything but in real life. With the subprime mortgage crisis already crippling the U.S. economy, some experts are warning that the next wave...

Excerpt - WASHINGTON -- The Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze interest rates on certain troubled subprime home loans, according to people familiar with the negotiations. An accord could reassure investors and strapped homeowners, both of whom are anxious as interest rates on more than two million adjustable mortgages are scheduled to jump over the next two years. It could also give a boost to the Bush administration, which is facing criticism for inaction amid the recent housing turmoil. The plan is being negotiated between regulators including the Treasury...