TIME to kill the ALL Fannie's and Freddie's fault rumor!

[Care4all]

just heard on cnn that over the last 5 years, 3/4's of ALL of the subprime loans for homeowners were made by companies that were not covered by CrA rules on REDLINING the poor, with a goal to service more of the poor...

so all of this stuff about it being this 1977 act that forced lenders to servicing the poor and fannie set this off stuff, doesn't hold water....imo.

 

[WillowTree]

just heard on cnn that over the last 5 years, 3/4's of ALL of the subprime loans for homeowners were made by companies that were not covered by CPA rules on REDLINING the poor, with a goal to service more of the poor...

so all of this stuff about it being this 1977 act that forced lenders to servicing the poor and fannie set this off stuff, doesn't hold water....imo.

I think, if you had cared to listen is that what we said was that was the origin of the problem that snowballed into what you see today.

 

[Alpha1]

just heard on cnn that over the last 5 years, 3/4's of ALL of the subprime loans for homeowners were made by companies that were not covered by CrA rules on REDLINING the poor, with a goal to service more of the poor...

so all of this stuff about it being this 1977 act that forced lenders to servicing the poor and fannie set this off stuff, doesn't hold water....imo.

A 30 year old Act wasn't the direct problem ....
The banks were not REQUIRED to follow CRA guidelines directly...but were threatened to be labeled as racist banks if they didn't follow them voluntarily...that was a real threat....just being labeled as racist could kill their business....but you're right in saying they couldn't be forced to follow these guidelines

and,,,

In 2005 Barney Frank got a bill passed affecting FHA loans...so that the they could give loans at 125%...what did that mean in a practical sense..
Full cost of house is borrowed
Downpayment is borrowed
Closing cost is borrowed
Lawyers fees, etc. is borrowed....

So that a property could be purchased with absolutely no personal money being at risk...this along with non-existent borrower financial assets being required is problematic, no ?

 

[WestCoastTruth]

There is more than enough blame for everyone. Including those of us that took out bigger loans than we could comfortably afford, the banks, Wall Street and both parties.

The CRA however had a large part in creating the conditions that got us here.

Go to you tube and search in video for Burning Down The House: What Caused Our Economic Crisis V2

Or google The CRA Scam and its Defenders - Thomas J. DiLorenzo - Mises Institute

 

[dilloduck]

There is more than enough blame for everyone. Including those of us that took out bigger loans than we could comfortably afford, the banks, Wall Street and both parties.

The CRA however had a large part in creating the conditions that got us here.

Go to you tube and search in video for Burning Down The House: What Caused Our Economic Crisis V2

Or google The CRA Scam and its Defenders - Thomas J. DiLorenzo - Mises Institute

Doesn't much matter--if I wanted to get elected ( ) I would be busy providing a solution--a REAL solution. Trying to treat Americans like idiots isn't working so well.

 

[Chris]

The problem was that the mortgage companies could make bad loans with no risk, because they would sell the loan on the day after closing. That and the derivatives that allowed loaning out more money than you had, were the problem.

 

[Ravi]

just heard on cnn that over the last 5 years, 3/4's of ALL of the subprime loans for homeowners were made by companies that were not covered by CrA rules on REDLINING the poor, with a goal to service more of the poor...

so all of this stuff about it being this 1977 act that forced lenders to servicing the poor and fannie set this off stuff, doesn't hold water....imo.

No, of course it doesn't hold water. But that doesn't matter to people that want it to hold water. A lot of people in the country don't want to know the real reasons this happened and are quite happy to blame minorities.

 

[Care4all]

A 30 year old Act wasn't the direct problem ....
The banks were not REQUIRED to follow CRA guidelines directly...but were threatened to be labeled as racist banks if they didn't follow them voluntarily...that was a real threat....just being labeled as racist could kill their business....but you're right in saying they couldn't be forced to follow these guidelines

and,,,

In 2005 Barney Frank got a bill passed affecting FHA loans...so that the they could give loans at 125%...what did that mean in a practical sense..
Full cost of house is borrowed
Downpayment is borrowed
Closing cost is borrowed
Lawyers fees, etc. is borrowed....

So that a property could be purchased with absolutely no personal money being at risk...this along with non-existent borrower financial assets being required is problematic, no ?

alpha, NONE of the subprime loans issued WERE FHA mortgages....let that sink in for a bit....

NONE.

FHA Mortgages are NOT Subprime loans.....

your argument FALLS just on that point alone imo.

care

 

[Care4all]

alpha....fyi

FHA Loan Qualifying Summary
...............................................................................
FHA loans are the easiest type of real estate mortgage loan to qualify for. The FHA guidelines for loan qualification are the most flexible of all mortgage loans that require less than 5% down payment.

Following is the basic FHA loan qualification guidelines.

Two Years of steady employment, preferably with same employer.

Last two years Income should be the same or increasing.

Credit report should typically have less than two thirty day lates in last two years.

Bankruptcy's must be at least two years old, with good credit since.

Foreclosure's must be at least three years old, with good credit since.

Your new mortgage payment should be approximately 30% of your gross income.

These are some of the most basic of FHA guidelines for qualifying for a FHA loan. If you have answered yes to most of these statements, you probably qualify for a FHA mortgage loan.



fha loans ARE NOT subprime loans....

 

[HoleInTheVoid]

Serious question: All fingers from the beginning of the melt seem to point to Fannie and Freddie and the tranches they were selling.

How did they end up in the middle of all this?

 

[editec]

Serious question: All fingers from the beginning of the melt seem to point to Fannie and Freddie and the tranches they were selling.

How did they end up in the middle of all this?

they're not IN the middle of this.

they're just another player in this diaster.

they're AS GUILTY as the banks which have in no way shape of form any association with the government.

Fannie Mae was a PRIVATELY OWNED corporation and had been since 1968.

It is NOT a government owned corporation. It was a p[rivate corporation publiclly traded on the stock exchange. It's owers were its stockholders.

Why some of you keep denying this obvious fact simply mystifies me.

 

[Care4all]

Serious question: All fingers from the beginning of the melt seem to point to Fannie and Freddie and the tranches they were selling.

How did they end up in the middle of all this?

this might help:

It's Still Not CRA | New America Blogs


...Finally, it is nevertheless the case that CRA-covered lenders are not the source of the problem. One of CRA's major failings, in fact, is that it only applies to banks and thrifts. Remember all the investment banks who demanded product and then sliced and diced loans until it was impossible to understand their quality?They're not covered. Neither are the independent mortgage banks, the kinds of firms that have gone bankrupt or nearly so because of their abysmal lending practices, who regularly made about 50%-(75% for the last 5 years) of the high cost loans. Bank affiliates, another uncovered group, made about 12% of the high cost loans.

the entire article gives some perspective...

 

[HoleInTheVoid]

You also said they accounted for only 25% of the defaults.

What % of the laons written fall under CRA. In other words: if "less than" 25% of all mortgages written CRA loans are more likely to default, if "more than" CRA loans are safer.

 

[Care4all]

You also said they accounted for only 25% of the defaults.

What % of the laons written fall under CRA. In other words: if "less than" 25% of all mortgages written CRA loans are more likely to default, if "more than" CRA loans are safer.

no, fm/fm account for 25% of the ownership of subprime loans....75% of the subprime loans the last 5 years, were made by lenders not under CRA regulations, THEY were UNREGULATED lenders....selling these subprimes to anyone and everyone, even when the borrower could qualify for a prime loan, at a better price long term, than the subprime rates...they sold them a subprime, risky loan...

out of all subprime loans issued by the GSE's and those not covered by the CRA regulations, they are running a default rate of 25%....in total....I do not know the breakdown of those covered by CRA vs those not Regulated by it...but i am gonna try to google it and see what i can find out...

I did not know any of this just yesterday morning...learning more by the minute!

 

[Alpha1]

alpha....fyi

FHA Loan Qualifying Summary
...............................................................................
FHA loans are the easiest type of real estate mortgage loan to qualify for. The FHA guidelines for loan qualification are the most flexible of all mortgage loans that require less than 5% down payment.

Following is the basic FHA loan qualification guidelines.

Two Years of steady employment, preferably with same employer.

Last two years Income should be the same or increasing.

Credit report should typically have less than two thirty day lates in last two years.

Bankruptcy's must be at least two years old, with good credit since.

Foreclosure's must be at least three years old, with good credit since.

Your new mortgage payment should be approximately 30% of your gross income.

These are some of the most basic of FHA guidelines for qualifying for a FHA loan. If you have answered yes to most of these statements, you probably qualify for a FHA mortgage loan.



fha loans ARE NOT subprime loans....

Investor's Business Daily
BY DAVID HOGBERG

INVESTOR'S BUSINESS DAILY
9/16/2008

In the midst of a housing crisis with its roots in easy money, Democratic lawmakers want taxpayers to once again back loans to borrowers putting up no money of their own.....

critics say down payment assistance loans are far more likely to default, raising losses for the FHA — read taxpayers.

It comes on the heels of the Treasury's takeover of quasi-private mortgage finance giants Freddie Mac (FRE) and Fannie Mae. (FNM) Taxpayers may end up paying $200 billion for the emergency move.

Down payment assistance lets buyers unable to put sufficient money down to buy a house do so anyway. Seller-funded assistance often entails the seller giving the down payment to the buyer via a nonprofit, which earns a fee.

But buyers who don't put up any of their own money default more often. Further, sellers may inflate the price in such situations, knowing FHA insurance will cover the loan if the buyer defaults. The down payment essentially is added to the price the seller otherwise would accept, critics argue.

Fully 22% of FHA-backed seller-funded assistance mortgages that were three years old were delinquent, according to a 2007 Government Accountability Office study. The compares with 13% of nonseller assistance and 9% of those without assistance.


"The sellers and banks have an incentive to cheat since they know the taxpayers will be left holding the bag."

The FHA faces other problems as well. The housing bailout requires the agency to insure up to $300 billion in subprime loans to try and curb foreclosures.

To ease pressures on homeowners, the FHA will back loans only when lenders write down the principal to 90% of the current property value.

"Congress hopes the FHA will save the housing industry, but who's gonna' save the FHA?" asks Alex Pollack, a resident fellow at the conservative American Enterprise Institute and former president of the Federal Home Loan Bank of Chicago. "No one says it, but the FHA is the government's subprime lender."

 

[Care4all]

Investor's Business Daily
BY DAVID HOGBERG

INVESTOR'S BUSINESS DAILY
9/16/2008

In the midst of a housing crisis with its roots in easy money, Democratic lawmakers want taxpayers to once again back loans to borrowers putting up no money of their own.....

critics say down payment assistance loans are far more likely to default, raising losses for the FHA — read taxpayers.

It comes on the heels of the Treasury's takeover of quasi-private mortgage finance giants Freddie Mac (FRE) and Fannie Mae. (FNM) Taxpayers may end up paying $200 billion for the emergency move.

Down payment assistance lets buyers unable to put sufficient money down to buy a house do so anyway. Seller-funded assistance often entails the seller giving the down payment to the buyer via a nonprofit, which earns a fee.

But buyers who don't put up any of their own money default more often. Further, sellers may inflate the price in such situations, knowing FHA insurance will cover the loan if the buyer defaults. The down payment essentially is added to the price the seller otherwise would accept, critics argue.

Fully 22% of FHA-backed seller-funded assistance mortgages that were three years old were delinquent, according to a 2007 Government Accountability Office study. The compares with 13% of nonseller assistance and 9% of those without assistance.


"The sellers and banks have an incentive to cheat since they know the taxpayers will be left holding the bag."

The FHA faces other problems as well. The housing bailout requires the agency to insure up to $300 billion in subprime loans to try and curb foreclosures.

To ease pressures on homeowners, the FHA will back loans only when lenders write down the principal to 90% of the current property value.

"Congress hopes the FHA will save the housing industry, but who's gonna' save the FHA?" asks Alex Pollack, a resident fellow at the conservative American Enterprise Institute and former president of the Federal Home Loan Bank of Chicago. "No one says it, but the FHA is the government's subprime lender."

link doesn't work or get me to an article Alpha, is there more to the article? or got another link?

 

[Alpha1]

Investor's Business Daily: Push Is On To Undo New FHA Loan Rules


Try this one care.....

and I agree that this is not the total fault....but as I pointed out in another thread, ALL the banks were threatened with being labeled racist if they didn't conform with giving loans to people that would not qualify under the normal rules...and that thread worked to a large degree....even checking a borrowers credit rating was called racist....

 

[Care4all]

Investor's Business Daily: Push Is On To Undo New FHA Loan Rules


Try this one care.....

and I agree that this is not the total fault....but as I pointed out in another thread, ALL the banks were threatened with being labeled racist if they didn't conform with giving loans to people that would not qualify under the normal rules...and that thread worked to a large degree....even checking a borrowers credit rating was called racist....

I agree that maybe the banks and thrifts were intimidated by this law on discrimination, but this still does not explain the Lenders that were not banks and were not thrifts and that were not regulated at all by the CRA who also made these high risk loans available to anyone, to the tune of 75% of them....

also, on the article above it states that fha loans are not even in the count of subprime loans that are defaulting I think??? These are in addition to the other defaults, I think? I am a little confused on that, admittingly...

But what bothers me the most is the part where the article writer just accepts that the lenders CHEATED because they knew the gvt would bail them...is that really an excuse for the cheaters? They did it because they could make us tax payers foot the bill...THEY CHEATED because they COULD, is absolutely unacceptable to me as any excuse, don't ya think?

 

[Care4all]

also alpha, president Bush had an initiative also to put more people in to homes and President Bush is the one that went to the fha and had them remove the 5% down as a requirement...in order to reach his goal of 5.5 million people in to homes over the next decade....i think this was done in either 2003 or 2004?

let me try to find it....I don't believe congress was even involved with that...???

brb...with link in a minute...


care

 

[Ravi]

I agree that maybe the banks and thrifts were intimidated by this law on discrimination

There were no banks that were intimidated by this law.