PI,
redlining IS AGAINST THE LAW....it is discrimination.
NOT in this article you gave as a link, NOT in any ACT or law were banks required to service people with bad credit. this is not redlining....redlining is giving NO ONE in a specific area, a loan....without cause.
the banks created these slick loans themselves and were NEVER MANDATED by any law or act or federal agency to create them or use them in any proportion to their business or in any manner....
end of story.
ROFLMNAO... "Red Lining" is a PC term used to force banks to advance loans to people without the means to service the mortgage... All a bank had to do to be accussed of 'red lining' was to turn down a fair percentage of applicants within a given area and someone would accuse them of this nefarious "Red Lining."
Banks created the relevant loans in order to meet the demands of the ideological left, that they make loans to under-qualified applicants to purchase properties which they were not well positioned to service.
Janet Reno flat out told the mortgage industry that if they did not make loans to the poor people in those areas which were determined to be 'red lined' that she would prosecute their ass... as a means of taking away the Banks sound basis for NOT loaning those people money... that they would be stuck with large quantities of property that they could not sell and that such would cause them to inevitably fail... The ideological left established that Fanny and Freddy would guarantee these liabilities and they would do this by bundling these securitized mortgages in packages and selling them as mortgage backed securitie; which they THE DEMOCRAT SPONSORED GSE Fanny and Freddy summarily used to as a means to cook the books in what can only be defined as FRAUD. Fraud was clear to some in the late 1990s and which was being addressed by many Republicans, including Goerge Bush and even McCain early in the first term of the Bush administration; and which the U-tube sources spoke to in incontestable, play by play, C-Span video detail...
Banks are in the business of making money and they do that by charging fees for their services and interests on debt... Once the Feds guaranteed the low rent notes, it was only a function of providing a system by which the unqualified could qualify and it was at that point which the system began to fail...
it had to fail;
there was no other alternative BUT for it to fail... and such is the case with ALL leftist notions and this
without exception.
So enough of the crap that "Banks and Mortgage Companies were greedy and decided to screw themselves by giving away money that they knew they could never get BACK! That was brought to us by the idiocy which believes that the US Federal Government can pay for EVERYTHING; that there is no end to the resources and means of GOVERNMENT; you're local Democrat, sponsored by the ideological left.
It should be noted that a MORTGAGE REQUIRES THAT SOMEONE GETS PAID UPON THE SALE OF A PROPERTY... Lets say that the Mortgage is for a $200,000 home with no money being put down by the buyer; upon closing the sale, the bank writes a CHECK GIVING THE SELLER THE $200,000.00 . Now kids, the bank HAS GIVEN TWO HUNDRED GRAND <OUT> before the first monthly installment is made and will now begin to receive payments, of, lets call it $1500 a month; of which 99.9% is interests at the outset and slowly turns to principle over time, with the very last few payments at the end of the term paying mostly principle. However THE BANK HAS PAID OUT >100 times the amount of that monthly installment. So, lets say they get 30 or so payments when the mortgagee defaults... that's a gross of $45,000... setting aside the actuarial projection of the return they were anticipating on that mortgage over the full contracted term, they are left with a mortgage which has COST THEM $155,000 in CASH... And this is BEFORE the costs of servicing the reposession; maintaining and insuring the defaulted property; property which they CAN'T SELL because NO ONE with the means to buy it WANTS IT!
Now how exactly does THAT equate to greed? It was the BANK that paid out the 100% of the principle OFF THE TOP in most of these loans. They are the ones that are exposed to
ALL OF THE LIABILITY! Their money is GONE ...
The incentive came in the form of the US Government's gaurantee and the agency that they assigned to support that obligation (Freddy and Fanny) FAILED.
The responsibility for this fiasco is 100% that of the ideological left; unless of course we are willin to take that to the next logical step wherein it is the fault of all of us, becausethose of us that knew better did not slap a coup on the Clinton Admin when it was clear that they were going to ruin this nation with their insipid "Progressive" economics.
Which I suppose is unavoidable... but perhaps we'll know next time; after the US governmet finally fails and the inevitable civil war rinses any scent of the ideological left from the continent.
