House flippers triggered the housing market crash.....not poor subprime borrowers

[rightwinger]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

 

[rightwinger]

So why were relatively wealthier folks borrowing so much?

Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But an increasing share bought with the aim to “flip” the home a few months or years later for a tidy profit.

Clearly, richer borrowers were driving the trend. For instance, among prime borrowers, the growth in per capita mortgage balances held by investors was around 20 percentage points higher for those with the highest credit scores than those with the lowest.

Come 2007, investors accounted for 43% of the total mortgage balance for the top credit-score quartile. For the middle two quartiles, speculators were responsible for around 35% in 2007.

 

[martybegan]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

 

[Skull Pilot]

So why were relatively wealthier folks borrowing so much?

Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But an increasing share bought with the aim to “flip” the home a few months or years later for a tidy profit.

Clearly, richer borrowers were driving the trend. For instance, among prime borrowers, the growth in per capita mortgage balances held by investors was around 20 percentage points higher for those with the highest credit scores than those with the lowest.

Come 2007, investors accounted for 43% of the total mortgage balance for the top credit-score quartile. For the middle two quartiles, speculators were responsible for around 35% in 2007.

It was cheaper to borrow money because of the artificially low interest rates.

There were times when borrowers were basically getting money for free.

If interest rates had been allowed to rise as the demand for more lending increased we would not have had a bubble

 

[Mikeoxenormous]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

It was the subprime market that had those house flippers buying up properties by the dozens. When you could get a house in a 5 year ARM, pay almost nothing for a mortgage, then flip the house making 20 or 30 thousand dollars each time, it was a lucrative business, up to the 2007 debacle, that Barney Frank, Maxine Waters, and Chris Dodd could of avoided. But since many minorities had taken up the flipping business, it was a way to have the poor work themselves out of poverty, with the government blessings. I know, because in 2006 I was looking for a house, and when the 5 ARM was offered to me, I saw how it would of been ruinous to me to get locked into one. After 5 years if you aren't out of the house or refinanced it to a 30 year fix, your payments would go through the roof. When the flippers found out that the supply outweighed the demand for housing they couldn't get out of the ARMs and ended up losing more money than they made, causing them to WALK AWAY. You can thank Bill Clinton for the law that allowed subprime lending and those 3 democraps who could of stopped it in 2004.

 

[rightwinger]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

It was the subprime market that had those house flippers buying up properties by the dozens. When you could get a house in a 5 year ARM, pay almost nothing for a mortgage, then flip the house making 20 or 30 thousand dollars each time, it was a lucrative business, up to the 2007 debacle, that Barney Frank, Maxine Waters, and Chris Dodd could of avoided. But since many minorities had taken up the flipping business, it was a way to have the poor work themselves out of poverty, with the government blessings. I know, because in 2006 I was looking for a house, and when the 5 ARM was offered to me, I saw how it would of been ruinous to me to get locked into one. After 5 years if you aren't out of the house or refinanced it to a 30 year fix, your payments would go through the roof. When the flippers found out that the supply outweighed the demand for housing they couldn't get out of the ARMs and ended up losing more money than they made, causing them to WALK AWAY. You can thank Bill Clinton for the law that allowed subprime lending and those 3 democraps who could of stopped it in 2004.

Sorry....but the crash occurred in 2007
Democrats did not take Congress until January 2007

It was policies in the years leading up to the crash that caused it. Barney Frank, even though he is gay, had no power or authority to influence those policies

 

[rightwinger]

I live in a working class town with many small low cost houses

During the real estate boom, I did not see an influx of poor people buying houses in my town. What I did see was rampant speculation and houses going on the market, being quickly sold and then going on the market shortly thereafter

Poor people do not speculate on houses. If they buy, they intend to stay there

The value of my own house, after being stagnant for 15 years, more than doubled in value in two years for no reason. I was constantly getting calls asking if I wanted to sell or whether I wanted to refinance....those calls did not come from poor people

 

[Fenton Lum]

So why were relatively wealthier folks borrowing so much?

Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But an increasing share bought with the aim to “flip” the home a few months or years later for a tidy profit.

Clearly, richer borrowers were driving the trend. For instance, among prime borrowers, the growth in per capita mortgage balances held by investors was around 20 percentage points higher for those with the highest credit scores than those with the lowest.

Come 2007, investors accounted for 43% of the total mortgage balance for the top credit-score quartile. For the middle two quartiles, speculators were responsible for around 35% in 2007.

Privatized gains versus socialized losses for the Wall Street bankster class
Internalized profit versus externalized risk and expense for the "job creator" class
Socialism for the aristocracy versus laissez-faire capitalism for the masses

 

[MisterBeale]

So why were relatively wealthier folks borrowing so much?

Recall that back then the mantra was that housing prices would keep rising forever. Since owning a home is one of the best ways to build wealth in America, most of those with sterling credit already did. Low rates encouraged some of them to parlay their credit pedigree and growing existing home value into mortgages for additional homes. Some of these were long-term purchases (e.g. vacation homes, homes held for rental income). But an increasing share bought with the aim to “flip” the home a few months or years later for a tidy profit.

Clearly, richer borrowers were driving the trend. For instance, among prime borrowers, the growth in per capita mortgage balances held by investors was around 20 percentage points higher for those with the highest credit scores than those with the lowest.

Come 2007, investors accounted for 43% of the total mortgage balance for the top credit-score quartile. For the middle two quartiles, speculators were responsible for around 35% in 2007.

It was cheaper to borrow money because of the artificially low interest rates.

There were times when borrowers were basically getting money for free.

If interest rates had been allowed to rise as the demand for more lending increased we would not have had a bubble

Yeah, I'd have to say I agree. If I had to put the blame on one single entity, I would put it on the government giving the FED a monopoly power over money. The system is corrupt when the powerful have incentive to bilk the ignorant of them and their children's labor and savings.

And still it continues happening and the plebes don't revolt.

 

[rightwinger]

The real estate boom was a get rich quick scheme
Houses ALWAYS go up in value, no way you could lose. If you buy now, it will be worth $50,000 more in six months

So the house you bought for $150,000 is now worth $350,000. Why not refinance and take that extra $200,000 and buy and sell some properties? What do you have to lose?

It was not poor people buying and selling properties

 

[Picaro]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

Bond rating agencies, banks, pols, and many more contributed, yes. You can start with the Reagan era, and the habit of loosening of GAAP standards.

 

[Picaro]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

It was the subprime market that had those house flippers buying up properties by the dozens. When you could get a house in a 5 year ARM, pay almost nothing for a mortgage, then flip the house making 20 or 30 thousand dollars each time, it was a lucrative business, up to the 2007 debacle, that Barney Frank, Maxine Waters, and Chris Dodd could of avoided. But since many minorities had taken up the flipping business, it was a way to have the poor work themselves out of poverty, with the government blessings. I know, because in 2006 I was looking for a house, and when the 5 ARM was offered to me, I saw how it would of been ruinous to me to get locked into one. After 5 years if you aren't out of the house or refinanced it to a 30 year fix, your payments would go through the roof. When the flippers found out that the supply outweighed the demand for housing they couldn't get out of the ARMs and ended up losing more money than they made, causing them to WALK AWAY. You can thank Bill Clinton for the law that allowed subprime lending and those 3 democraps who could of stopped it in 2004.

Sorry....but the crash occurred in 2007
Democrats did not take Congress until January 2007

It was policies in the years leading up to the crash that caused it. Barney Frank, even though he is gay, had no power or authority to influence those policies

Well, you're wrong about good ole Barney; he did indeed have power, he just chose to pander to lobbyists, as did good ole Maxine Waters. They weren't teh only ones, of course, but they were players.

 

[martybegan]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

Bond rating agencies, banks, pols, and many more contributed, yes.

I'm not leaving out the sub-prime borrowers either. I'm sorry but most people will realize too good of a deal when they see it. However they, like most of the others involved didn't do anything illegal, they just are guilty of willful ignorance.

 

[Picaro]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

Bond rating agencies, banks, pols, and many more contributed, yes.

I'm not leaving out the sub-prime borrowers either. I'm sorry but most people will realize too good of a deal when they see it. However they, like most of the others involved didn't do anything illegal, they just are guilty of willful ignorance.

Blame the lenders; govt. policy doesn't obligate anybody to be crooks, and don't obligate anybody to deliberately make bad loans or any other questionable act. the govt. didn't force anybody to be stupid and crooked. These private players own it all, including deliberately bundling bad loans with good ones until nobody could determine whether their portfolios were junk or gold.

 

[Mikeoxenormous]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

Bond rating agencies, banks, pols, and many more contributed, yes.

I'm not leaving out the sub-prime borrowers either. I'm sorry but most people will realize too good of a deal when they see it. However they, like most of the others involved didn't do anything illegal, they just are guilty of willful ignorance.

Blame the lenders; govt. policy doesn't obligate anybody to be crooks, and dodn't obligate anybody to deliberately make bad loans or any other questionable act. the govt. didn't force anybody to be stupid and crooked.

when Fannie Mae and Freddie Mac, took on the bogus subprime loans, package them with the blessing of the FED to be secure, of course banks and people are going to use them. It is the way of Liberals to give to people things that they aren't supposed to have. When people cant afford to own a house, you don't bend over backwards to put those people in a house. Liberal compassion ends up screwing over the country as we see over and over.

The role of Fannie Mae and Freddie Mac during the housing bubble - Market Realist

At the beginning of 2000, Fannie Mae unveiled the American Dream Commitment, which was a $2 trillion commitment to lend to underserved areas and to expand credit to non-traditional profiles. Since Fannie couldn’t securitize these loans, it had to place them on its balance sheet. It partnered with major lenders like Countrywide, Doral, and Bank of America and had an agreement: you originate subprime and Alt-A paper and we will commit to buy it. Basically, Fannie Mae was doing an end-around its charter. Instead of using its balance sheet as a tool to stabilize the real estate market, it was using it as a profit center.

 

[NYcarbineer]

[ it was a lucrative business, up to the 2007 debacle, that Barney Frank, Maxine Waters, and Chris Dodd could of avoided.

Democrats were the minority in Congress at the time dumbass.

 

[rightwinger]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

It was the subprime market that had those house flippers buying up properties by the dozens. When you could get a house in a 5 year ARM, pay almost nothing for a mortgage, then flip the house making 20 or 30 thousand dollars each time, it was a lucrative business, up to the 2007 debacle, that Barney Frank, Maxine Waters, and Chris Dodd could of avoided. But since many minorities had taken up the flipping business, it was a way to have the poor work themselves out of poverty, with the government blessings. I know, because in 2006 I was looking for a house, and when the 5 ARM was offered to me, I saw how it would of been ruinous to me to get locked into one. After 5 years if you aren't out of the house or refinanced it to a 30 year fix, your payments would go through the roof. When the flippers found out that the supply outweighed the demand for housing they couldn't get out of the ARMs and ended up losing more money than they made, causing them to WALK AWAY. You can thank Bill Clinton for the law that allowed subprime lending and those 3 democraps who could of stopped it in 2004.

Sorry....but the crash occurred in 2007
Democrats did not take Congress until January 2007

It was policies in the years leading up to the crash that caused it. Barney Frank, even though he is gay, had no power or authority to influence those policies

Well, you're wrong about good ole Barney; he did indeed have power, he just chose to pander to lobbyists, as did good ole Maxine Waters. They weren't teh only ones, of course, but they were players.

What power did a single Congressman from the minority party have?

 

[Manonthestreet]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

They defaulted when the music stopped and buyers disappeared. Handing out credit to people who borrowed too much fed that. Budddy had a friend who got o er 350 grand while only making 16.50 an hr.

 

[Mikeoxenormous]

[ it was a lucrative business, up to the 2007 debacle, that Barney Frank, Maxine Waters, and Chris Dodd could of avoided.

Democrats were the minority in Congress at the time dumbass.

and of course he doesn't put up anything to PROVE his point as typical of a liberal sociopath #10 Just because you say it doesn't make it true....

Nancy Patricia D'Alesandro Pelosi (/pəˈloʊsi/ ; born March 26, 1940) is the Minority Leader of the United States House of Representatives and served as the 60th Speaker of the United States House of Representatives from 2007 to 2011.
Nancy Pelosi - Wikipedia
en.wikipedia.org/wiki/Nancy_Pelosi

What part of 2007 didn't you understand, dumbass, opens his mouth inserts foot.

 

[martybegan]

As usual, you need to folow the money

House flippers triggered the US housing market crash, not poor subprime borrowers

Mounting evidence suggests that the notion that the 2007 crash happened because people with shoddy credit borrowed to buy houses they couldn’t afford is just plain wrong. The latest comes in a new NBER working paper arguing that it was wealthy or middle-class house-flipping speculators who blew up the bubble to cataclysmic proportions, and then wrecked local housing markets when they defaulted en masse.

Analyzing a huge data set of anonymous credit scores from Equifax, a credit reporting bureau, the economists found that the biggest growth of mortgage debt during the housing boom came from those with credit scores in the middle and top of the credit score distribution—and that these borrowers accounted for a disproportionate share of defaults.

As for those with low credit scores—the “subprime” borrowers who supposedly caused the crisis—their borrowing stayed virtually constant throughout the boom. And while it’s true that these types of borrowers usually default at relatively higher rates, they didn’t after the 2007 housing collapse.

Trying to fix the blame to one cause of a cascade failure like the MBS disaster of 2007-2008 ignores the fact that nothing that fails that big has one contributor. Most failures, like in airplane crashes are a series of failures and contributors.

There is plenty of blame to go around, and banks lending to sub-prime borrowers was a large contributing factor. Even if they didn't provide the numbers, they provided part of the panic when people with MBS's realized where the investments were coming from.

Bond rating agencies, banks, pols, and many more contributed, yes.

I'm not leaving out the sub-prime borrowers either. I'm sorry but most people will realize too good of a deal when they see it. However they, like most of the others involved didn't do anything illegal, they just are guilty of willful ignorance.

Blame the lenders; govt. policy doesn't obligate anybody to be crooks, and don't obligate anybody to deliberately make bad loans or any other questionable act. the govt. didn't force anybody to be stupid and crooked. These private players own it all, including deliberately bundling bad loans with good ones until nobody could determine whether their portfolios were junk or gold.

The government could have stepped in and tried to regulate CBO's, but they were making too much money as well, the feds from all the income taxes, and the states and local governments from both the sales taxes and the property taxes.

Everyone was making too much money to care, and no one got hurt until it all burst around us.