U.S. Is Set to Sue a Dozen Big Banks Over Mortgages

Ame®icano;4105177 said:
Ame®icano;4086254 said:
I don't need to dispute the truth. GSE repackaged loans were less likely to default.

Only thing is CRA was forcing banks to give bad loans while using GSE's to buy them out, covering up for it, then they were cooking books and lying that everything is OK.

Except....Loans issued by CRA-regulated institutions account for less than 20% of the defaulting subprimes.

The CRA can't force Ameriquest or nondepository branches of Countrywide to even comply with basic lending standards (nevermind the fact that no bank was ever forced to make a loan - in fact, the banks were begging the GSE's to allow them to make loans.)

You keep saying that banks were never forced into giving loans, when you know that's not true. In the post #67 KissMy provided a YouTube clip of Andrew Cuomo, Clinton's HUD Secretary talking about loan affirmative action, based on Clinton's CRA law changes. With that law government was forcing banks into giving loans and that IS a fact.

No, I keep saying banks weren't forced to give loans to unworthy borrowers because they weren't. The CRA dealt with the geography of loans, not individual loan standards. All loans issued by CRA-regulated institutions had to meet conforming requirements - which is why nondepository institutions gained such a huge share of the mortgage market, by offering mortgage options that did not conforming standards.
 
Being one of the most heavily regulated industries in the nation, they do.

Except the mortgage origination business is one of the least regulated industries in the country.

Bullshit. You obviously have never bought a house and gone to the two hour closing where you do nothing but have forms explained to you and then sign on the dotted line 5,000 times. Have any idea what drives the majority of that process? Regulations.

I've bought more than one house, and sat through more than one closing. You're not talking about the mortgage origination regulation - you're talking about real estate transaction regulations.

One is not like the other. That's why your lender is not at the table when you close - your agent and attorneys are.
 
Ame®icano;4105177 said:
Except....Loans issued by CRA-regulated institutions account for less than 20% of the defaulting subprimes.

The CRA can't force Ameriquest or nondepository branches of Countrywide to even comply with basic lending standards (nevermind the fact that no bank was ever forced to make a loan - in fact, the banks were begging the GSE's to allow them to make loans.)

You keep saying that banks were never forced into giving loans, when you know that's not true. In the post #67 KissMy provided a YouTube clip of Andrew Cuomo, Clinton's HUD Secretary talking about loan affirmative action, based on Clinton's CRA law changes. With that law government was forcing banks into giving loans and that IS a fact.

No, I keep saying banks weren't forced to give loans to unworthy borrowers because they weren't. The CRA dealt with the geography of loans, not individual loan standards. All loans issued by CRA-regulated institutions had to meet conforming requirements - which is why nondepository institutions gained such a huge share of the mortgage market, by offering mortgage options that did not conforming standards.

Did you watch the video clip? Have you heard Cuomo saying with that law 15000 families will get mortgages that without the law wouldn't qualify.

Let's look at it from different angle. Why Clinton admin decided to make changes in original CRA law of 1977? Maybe because banks were being responsible by not giving affordable mortgages to high risk borrowers? Since when is bank business of losing money on government social programs, that CRA is? Let's be honest and ask, is getting a loan a social program, or should loans be given to qualified borrowers for secured profit on investment? Before the CRA modification, banks were doing fine and without government involvement in banks business there would be no crisis and therefore no need to bail them out.
 
Ame®icano;4105479 said:
Ame®icano;4105177 said:
You keep saying that banks were never forced into giving loans, when you know that's not true. In the post #67 KissMy provided a YouTube clip of Andrew Cuomo, Clinton's HUD Secretary talking about loan affirmative action, based on Clinton's CRA law changes. With that law government was forcing banks into giving loans and that IS a fact.

No, I keep saying banks weren't forced to give loans to unworthy borrowers because they weren't. The CRA dealt with the geography of loans, not individual loan standards. All loans issued by CRA-regulated institutions had to meet conforming requirements - which is why nondepository institutions gained such a huge share of the mortgage market, by offering mortgage options that did not conforming standards.

Did you watch the video clip? Have you heard Cuomo saying with that law 15000 families will get mortgages that without the law wouldn't qualify.

Geography, not credit score.

Let's look at it from different angle. Why Clinton admin decided to make changes in original CRA law of 1977? Maybe because banks were being responsible by not giving affordable mortgages to high risk borrowers?
No, mortgage originators were already giving loans to high risk borrowers. They just weren't depository institutions.

Before the CRA modification, banks were doing fine and without government involvement in banks business there would be no crisis and therefore no need to bail them out.
You're kidding me, right? Right? Banks were "Doing fine"? So you can't recall any, say, major crises at depository institutions circa late 1980's early 1990's? You don't remember any bailouts? The RTC doesn't ring a bell?
 
Ame®icano;4086254 said:
So then, you can't dispute the facts? So you turn to an edited youtube video?

You can't dispute that the GSE's repackaged loans were less likely to default?
That the CRA-regulated banks were pushed out of the subprime market by the unregulated ones?

OK then.

I don't need to dispute the truth. GSE repackaged loans were less likely to default.

Only thing is CRA was forcing banks to give bad loans while using GSE's to buy them out, covering up for it, then they were cooking books and lying that everything is OK.

Except....Loans issued by CRA-regulated institutions account for less than 20% of the defaulting subprimes.

The CRA can't force Ameriquest or nondepository branches of Countrywide to even comply with basic lending standards (nevermind the fact that no bank was ever forced to make a loan - in fact, the banks were begging the GSE's to allow them to make loans.)

Countrywide? You brought up Jim Johnson and Chirs Dodd's favorite banker?
 
All the CRA does is require banks make loans in the communities they take deposits from. You don't want to make loans in poor neighborhoods? Fine - don't set your banks up in poor neighborhoods.

Just that simple. Its really just fair. For decades the banks were willing to take the hard earned cash of poor folks on deposit - but unwilling to loan it out to other poor folks. They would go into black neighborhoods, take all the available capital as deposits they could, and then loan the money outside the neighborhood - resulting in a net cashflow out of the neighborhood.
 
Ame®icano;4086254 said:
I don't need to dispute the truth. GSE repackaged loans were less likely to default.

Only thing is CRA was forcing banks to give bad loans while using GSE's to buy them out, covering up for it, then they were cooking books and lying that everything is OK.

Except....Loans issued by CRA-regulated institutions account for less than 20% of the defaulting subprimes.

The CRA can't force Ameriquest or nondepository branches of Countrywide to even comply with basic lending standards (nevermind the fact that no bank was ever forced to make a loan - in fact, the banks were begging the GSE's to allow them to make loans.)

Countrywide? You brought up Jim Johnson and Chirs Dodd's favorite banker?

yes! Imagine that, corrupt bankers and corrupt politicians (...but I repeat myself...) scratching each others' backs!
 
All the CRA does is require banks make loans in the communities they take deposits from. You don't want to make loans in poor neighborhoods? Fine - don't set your banks up in poor neighborhoods.

Just that simple. Its really just fair. For decades the banks were willing to take the hard earned cash of poor folks on deposit - but unwilling to loan it out to other poor folks. They would go into black neighborhoods, take all the available capital as deposits they could, and then loan the money outside the neighborhood - resulting in a net cashflow out of the neighborhood.

You are a brainwashed idiot. The depositors & were paid interest on their deposits from the good credit borrowers. That is a net cash-flow in to the neighborhood.

There is an obvious problem lending to subprime borrowers regardless of neighborhood.
 
All the CRA does is require banks make loans in the communities they take deposits from. You don't want to make loans in poor neighborhoods? Fine - don't set your banks up in poor neighborhoods.

Just that simple. Its really just fair. For decades the banks were willing to take the hard earned cash of poor folks on deposit - but unwilling to loan it out to other poor folks. They would go into black neighborhoods, take all the available capital as deposits they could, and then loan the money outside the neighborhood - resulting in a net cashflow out of the neighborhood.

You are a brainwashed idiot. The depositors & were paid interest on their deposits from the good credit borrowers. That is a net cash-flow in to the neighborhood.

I don't think you understand how banking works. When you give a bank money for deposit - they lend most of it out. It isn't there anymore. If they lend it to someone outside your neighborhood - that's a cash flow out.

There is an obvious problem lending to subprime borrowers regardless of neighborhood.

Most of the sub-prime junk was owned by banks the CRA didn't apply to.

And yes - you're right, some of those loans should have just never been made. Interest only loans, balloon notes, variable interest rate loans, no money down loans, 40 year loans - all things that have legitimate purposes (except no money down loans for houses) - but which were being abused severely.

I think I read that in the 50's, the average down payment was between 20% and 30% and the average term between 15 and 20 years. And people actually paid off their mortgages - they didn't build up equity and then cash it out with a refinance or heloc. I have friends who expect to never not have to pay a note. They build equity and then cash it out when they need it, as if its free money. One of the greatest assets you can have in retirement is a home that is paid for.
 
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Geography, not credit score.

Again, banks are in business of landing money for profit, not for social engineering. You said geography... fine. What's the most important thing that drive the property value? Location.

That's where redlining term came from. Red-lin-ing (noun) - a discriminatory practice by which banks, insurance companies, etc., refuse or limit loans, mortgages, insurance, etc., within specific geographic areas, especially inner-city neighborhoods. Dictionary.com

The original Democrats CRA law of 1977 was pretty much ignored by the banks, that's why you can't see so many foreclosures from that time, and real estate price was pretty much stable. I said banks were doing fine, since there were no significant amount or risky loans. Then another Democrat came into office and forced banks to actually follow the CRA, offer the risky loans in bad neighborhoods and real FDIC audits, when? Oh, 1995.

Now back to redlining and its definition that refers to investing money in an area, not to individual discrimination, but to Democrats everything is about racism and and they are trying to push it into everything they can. Btw, redlining is not illegal under Fair Housing Act, nor the 14th amendment and that is what bothers Democrats, they simply can't stand it.

So what's to solution? Well, there are several... Fannie & Freddy, another two institutions created by Democrats (btw both unconstitutional) were financing their operations with what? Answer, mortgage backed securities. From Fannie Mae website:

Fannie Mae operates in the U.S. secondary mortgage market. Rather than making home loans directly to consumers, we work with mortgage bankers, brokers and other primary mortgage market partners to help ensure they have funds to lend to home buyers at affordable rates. We fund our mortgage investments primarily by issuing debt securities in the domestic and international capital markets. Fannie Mae

So, there you have major players, Fannie & Freddie, Democrats and tool to get it done in a way of New CRA law and later in 2000 Affordable Housing Goals directive. You can add to it a muscle in form or community organizations aka ACORN. Bubble is created by Clinton and CRA enforcement by adding more liquidity to a market, meaning that Fannie & Freddie greatly increased their previously low/moderate holdings to high/very high. Democrats did exactly the same thing with federal student loan guarantees that started in 1965 and constantly expanded them in number of programs over years that caused cost of education to skyrocket. That bubble will also burst, just give it a time.
 
Except....Loans issued by CRA-regulated institutions account for less than 20% of the defaulting subprimes.

The CRA can't force Ameriquest or nondepository branches of Countrywide to even comply with basic lending standards (nevermind the fact that no bank was ever forced to make a loan - in fact, the banks were begging the GSE's to allow them to make loans.)

Countrywide? You brought up Jim Johnson and Chirs Dodd's favorite banker?

yes! Imagine that, corrupt bankers and corrupt politicians (...but I repeat myself...) scratching each others' backs!

I'll give you that one. :clap2:
 
The Government forced banks to make subprime loans and paid them off via making taxpayers take on the risk. And now the Government is trying to pin all the blame on the banks.

For a good history of this mess, I highly recommend Morgensen & Rosner's "Reckless Endangerment". The role of Fannie Mae is especially egregious.
 
All the CRA does is require banks make loans in the communities they take deposits from. You don't want to make loans in poor neighborhoods? Fine - don't set your banks up in poor neighborhoods.

Just that simple. Its really just fair. For decades the banks were willing to take the hard earned cash of poor folks on deposit - but unwilling to loan it out to other poor folks. They would go into black neighborhoods, take all the available capital as deposits they could, and then loan the money outside the neighborhood - resulting in a net cashflow out of the neighborhood.

Nobody force poor people to put money in the bank. How much money poor people put in the banks anyways?
 
Ame®icano;4111165 said:
All the CRA does is require banks make loans in the communities they take deposits from. You don't want to make loans in poor neighborhoods? Fine - don't set your banks up in poor neighborhoods.

Just that simple. Its really just fair. For decades the banks were willing to take the hard earned cash of poor folks on deposit - but unwilling to loan it out to other poor folks. They would go into black neighborhoods, take all the available capital as deposits they could, and then loan the money outside the neighborhood - resulting in a net cashflow out of the neighborhood.

Nobody force poor people to put money in the bank.
No one is forcing banks to do business in poor neighborhoods. Its quite simple. You don't want to make loans to folks in inner city Chicago, don't set up a bank branch in inner city Chicago.
How much money poor people put in the banks anyways?
Enough for the banks to want to take their deposits.

Here's a map that one bank used to tell them where to not make loans:

Home_Owners%27_Loan_Corporation_Philadelphia_redlining_map.jpg


They refuse to make the loans based on where you live - not your ability to pay. Poor and lower middle class people who have steady incomes and good credit histories should be able to get loans when they can afford the payments they will have to make on the loan. And that is all the CRA requires. It was the banks who decided to give people bigger loans than they could afford.
 
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Ame®icano;4111165 said:
All the CRA does is require banks make loans in the communities they take deposits from. You don't want to make loans in poor neighborhoods? Fine - don't set your banks up in poor neighborhoods.

Just that simple. Its really just fair. For decades the banks were willing to take the hard earned cash of poor folks on deposit - but unwilling to loan it out to other poor folks. They would go into black neighborhoods, take all the available capital as deposits they could, and then loan the money outside the neighborhood - resulting in a net cashflow out of the neighborhood.

Nobody force poor people to put money in the bank.
No one is forcing banks to do business in poor neighborhoods. Its quite simple. You don't want to make loans to folks in inner city Chicago, don't set up a bank branch in inner city Chicago.
How much money poor people put in the banks anyways?
Enough for the banks to want to take their deposits.

Here's a map that one bank used to tell them where to not make loans:

Home_Owners%27_Loan_Corporation_Philadelphia_redlining_map.jpg


They refuse to make the loans based on where you live - not your ability to pay. Poor and lower middle class people who have steady incomes and good credit histories should be able to get loans when they can afford the payments they will have to make on the loan. And that is all the CRA requires. It was the banks who decided to give people bigger loans than they could afford.

I like your post, and you actually talking about the same thing. I wrote earlier and I'll repeat: The top thing that establish the value of real-estate is location and your map shows it. Why would banks loan in hazardous neighborhoods (on map shown in red)? Would you personally invest in drug and murder infested shitholes with high arson rates where value would most likely drop and where you would not make profit but lose the money? Clinton forced banks to do just that... you guys are saying he didn't force them. OK, can you answer what happen when banks couldn't show that they complying with CRA requirements (you know, risky loans in real bad neighborhoods) in real FDIC audits?

Btw, can you show me where does it says redlining is illegal?
 
Ame®icano;4111829 said:
I like your post, and you actually talking about the same thing. I wrote earlier and I'll repeat: The top thing that establish the value of real-estate is location and your map shows it.
That's why to buy a house in a poorer neighborhood requires a smaller loan. I fail to see your point. Banks don't generally make money off the value of people's homes - at least - they prefer to not have to foreclose - they make their money off the interest

Why would banks loan in hazardous neighborhoods (on map shown in red)?
Because their are people in that neighborhood who have steady incomes and good credit and want to buy houses priced within their means.
Would you personally invest in drug and murder infested shitholes with high arson rates where value would most likely drop and where you would not make profit but lose the money?Clinton forced banks to do just that... you guys are saying he didn't force them. OK, can you answer what happen when banks couldn't show that they complying with CRA requirements (you know, risky loans in real bad neighborhoods) in real FDIC audits?

Clinton? The CRA has been around since 1977! And most of the bad loans were made by banks not subject to CRA audits. But that's a fact that escapes you
 
That's why to buy a house in a poorer neighborhood requires a smaller loan. I fail to see your point. Banks don't generally make money off the value of people's homes - at least - they prefer to not have to foreclose - they make their money off the interest

Only if payments are made.

Because their are people in that neighborhood who have steady incomes and good credit and want to buy houses priced within their means.

If those people were the problem, why then change the law and lower the requirements? Maybe because banks were looking for qualified people to grant CRA loans, but ran out of credit worthy borrowers? Clinton's quota (affirmative action banking) forced banks to lower their standards because there were no enough qualified borrowers.

Clinton? The CRA has been around since 1977! And most of the bad loans were made by banks not subject to CRA audits. But that's a fact that escapes you

Yeah, Clinton. I'm not talking about original CRA of 1977, but about regulatory changes of 1995. Not that hard to find!. And yes, most of bad loans started by non depository institutions. What escapes you is basic market rule that adding more liquidity to a market without equally increasing production (real value), creates bubble.

Beside CRA changes, under Clinton's (Affordable Housing Goals) directive, Fannie & Freddie manipulated the market to greatly increase their low to moderate mortgage holdings, not talking about CRA loans, just low to moderate mortgages adding much more liquidity to the bottom of the market resulted in inflation on higher levels of the market. Got it?
 
Ame®icano;4111138 said:
Geography, not credit score.

Again, banks are in business of landing money for profit, not for social engineering. You said geography... fine. What's the most important thing that drive the property value? Location.
But creditworthiness is not related to geography.

That's where redlining term came from. Red-lin-ing (noun) - a discriminatory practice by which banks, insurance companies, etc., refuse or limit loans, mortgages, insurance, etc., within specific geographic areas, especially inner-city neighborhoods. Dictionary.com

and it's why redlining was outlawed - because the ability of a person to repay a loan is not determined by the location of his or her residence.

The original Democrats CRA law of 1977 was pretty much ignored by the banks, that's why you can't see so many foreclosures from that time, and real estate price was pretty much stable.
Except they weren't - there was a massive real estate bubble in the 1980's.

I said banks were doing fine, since there were no significant amount or risky loans. Then another Democrat came into office and forced banks to actually follow the CRA, offer the risky loans in bad neighborhoods and real FDIC audits, when? Oh, 1995.

So you don't think the real estate banking crisis of the late 1980's was serious? Whatever else those institutions were in the late 1980's, they weren't "fine". That's why hundreds collapsed and the government had to step in, bail them out and create the Resolution Trust Corporation to spend down the debt.

It's hard to have a serious conversation about real estate and mortgage financial instability with someone who thinks that mortgage institutions and banks were "fine" during the previous crisis.
 

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