Is he clueless or just retarded. The MAIN culprit of the mortgage meltdown was Clinton's (with Dodds and Franks help) revival of the community investment act. It required banks to lend a certain percent off their portfolio to lower income people. It forced the banks hand and forced them into the 100% finance and stated income programs.
You would think this fool would learn from recent history, but then again he is a fool.
You would think this fool would learn from recent history, but then again he is a fool.
Obama Has Learned Nothing From The Mortgage Meltdown Mess | Fox News
Obama Has Learned Nothing From the Mortgage Meltdown Mess
Read more: Obama Has Learned Nothing From The Mortgage Meltdown Mess | Fox News
Just days before Christmas, the Obama administration gave Bank of America a big lump of coal, levying a hefty $335 million dollar fine on the company for discriminating against minorities in its lending practices.
Supposedly Countrywide, a mortgage company bought by Bank of America in 2008, had not given out enough low interest rate loans to minorities from 2004 to 2008.
What the large fine reveals is that President Obama hasnt learned anything from the recent financial crisis.
What the president sees as discrimination in awarding a mortgage, lenders saw as wise business decisions.
If a borrower cant afford a down payment, Obama appears to view charging a higher interest rate as discrimination. Lenders also think that they shouldnt treat borrowers whose sole source of income is welfare or unemployment insurance, the same as those applicants who have a job. But Obama, again, appears to view this as discrimination.
There is obviously a problem with no down payments: if the price of the house falls so that it is worth less than the loan, people will default and walk away. Similarly, when unemployment insurance or welfare runs out, borrowers might find they cant keep paying their mortgage.
The Equal Credit Opportunity Act the Obama administration used to impose this fine was exactly what helped cause the mortgage crisis by forcing lenders to make risky loans that they didnt want to make.
Yet, just last month, Obama put the blame for these risky loans going bad on banks for their breathtaking greed that plunged our economy and the world into a crisis.
Its hard to believe that Countrywide, a leading lender of subprime mortgages, wasnt already doing too much to make these risky loans. Indeed, it was the poster child for doing what the government wanted.
In 2002, Countrywide had adopted its No Income/No Asset Documentation Program. Borrowers could get a loan with just 5 percent down. The big government mortgage bundlers, Fannie Mae and Freddie Mac, bought these mortgages and encouraged Countrywide to expand the program. By the first half of 2006, almost two-thirds of Countrywides subprime loans had absolutely no down payment.
Certainly President Obama push to encourage banks to make risky loans isnt unique -- in truth, he is just doing what Presidents Clinton and Bush also did.
Starting with the Clinton administration and continuing through the administration of George W. Bush, if lenders didnt give out loans under these conditions to minorities, it was viewed as evidence of discrimination. The motive for encouraging risky loans was a noble one: to increase home ownership. It was meant to help people who couldnt, under the previous standards, afford a home mortgage.
But with hindsight of the disaster these regulations created, Obama has no excuse. These regulations should be scraped and the last thing that should be happening is for banks to feel pressure to make more such risky loans.
Obamas actions show that we have never left the world where the Federal Reserve and other government agencies told mortgage lenders: discrimination may be observed when a lenders underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lowerincome minority applicants.
This is a world where the Federal Reserve told banks that the outdated criteria included:
Credit History: Lack of credit history should not be seen as a negative factor.... In reviewing past credit problems, lenders should be willing to consider extenuating circumstances. For lowerincome applicants in particular, unforeseen expenses can have a disproportionate effect on an otherwise positive credit record. In these instances, paying off past bad debts or establishing a regular repayment schedule with creditors may demonstrate a willingness and ability to resolve debts.... Down Payment and Closing Costs: Accumulating enough savings to cover the various costs associated with a mortgage loan is often a significant barrier to homeownership by lower-income applicants. Lenders may wish to allow gifts, grants, or loans from relatives, nonprofit organizations, or municipal agencies to cover part of these costs. . . . Sources of Income: In addition to primary employment income, Fannie Mae and Freddie Mac will accept the following as valid income sources: overtime and parttime work, second jobs (including seasonal work), retirement and Social Security income, alimony, child support, Veterans Administration (VA) benefits, welfare payments, and unemployment benefits.
Is this really how we want mortgage lending to operate?