So ONE sub-prime disaster wasn't enough

You are correct. The fault lies in the selling & profiting of junk bonds- when that drove the prices of homes down- it wasn't the poor (who have about the same rates of default) but the wealthy investors and banks that caused this to tail spin into the ground.
Affordable (I'll repeat that part again- AFFORDABLE) home ownership for the middle class & poor is always a good thing. There were as many (more in my town of doo-daa) of the wealthier homes setting vacant that have been foreclosed on then the poorer neighborhoods.

Brought on by government pressure and regulations. And they're at it again (see my sig).



"Affordable", being used ironically and with contempt, meaning anyone can "buy" a house with a signature alone.



Because they were selling these "affordable" expensive houses with Jumbo loans to people who couldn't afford it. What part of nothing down don't you get. (Oh, I know YOU get it, you just hope you can slip one by on other people so they won't.)

Wrong!

Where do you find signature loans- or is that a fact you pulled from your you-know-what?

Nothing down is only a small player here.

There were the real reasons. The big reasons this blew up.
https://www.subprimeshakeout.com/

Though Fannie & Freddie got unwisely sucked into this bubble- it was not of their doing that it happened. Because of the sheer volume it did make things much worse.
Here is Fannie & Freddie doing some of the right things.
https://planning.unc.edu/quercia-fdic

https://www.anyloansolution.com/signature-loan.asp

My dad talked to me about this some time ago but I never did any research into it. I still haven't, this is just I remember of what he told me.

Somebody (I forget who) decided that homeownership was a right, not a privilege, so they were granting loans to people who didn't have the means to pay them back. Therefore, no great big surprise when those people eventually defaulted on their loans.

Too simple. It scape goats people who naturally would like to own. It gives a pass to the institutions that really caused the problems. The schemers and investors are more responsible than the ones who tried to make a go of it with falling housing prices, ballooning rates, & others hurt by the bubble they did not really cause.

I'm kind of missing your point here. Who are "the ones who tried to make a go of it with falling housing prices, ballooning rates, & others hurt by the bubble they did not really cause."

The people buying homes with loans they couldn't afford to repay?

Most of those would not have been hurt to the point of losing the battle of the budget if it were not for the economy. The inflated prices of houses quickly put them upside down- at no real fault of their own. The Government should have provided better insurance and directives to prevent predatory practices.

And keep in mind- that many many wealthy bought homes in large bundles only to declare bankruptcy- this compounded the problem. And the poorer families when given the opportunity had good rates of returning to solvency if they were given the chance (very very few were).

Again- you are simplifying this way too much and blaming people that had little control over the circumstances.

Okay first of all, was that a yes then? The people in the part I quoted are those who bought the homes? I'm not assigning blame, just trying to identify the party.

Second, I never said that my 'explanation' was correct. I said it was how much I remembered about something my dad said to me about that issue. This was years ago and that's what I remembered.

From what I can tell, there were a lot of people to blame in the whole situation. It was a series of people making bad decisions and they all impacted each other to make it a virtual avalanche.

But looking just from the buyer's point of view...why would you buy something that you couldn't afford without examining the fine print?
What happened in the paperwork that made these people unable to afford their property?

Your assertion they could not afford the home- is too simple. Many could, many had other events, economy, job lost, health bills, etc, etc. That did not have much to do with being able to afford the home when purchased. As I stated, had the banks worked with them- or given even a smidgen of the deal they gave investors who picked up the foreclosed property for cents on the dollar- they have a really good track record.

Which is like I'd said in my last post. It was a series of things but my "simple" explanation was the first clump of snow in the snowball.



It goes on to explain how everything else impacted this one little thing and made it a whole lot worse than it should have been.
The Subprime Fallout

"Almost 70 percent of Las Vegas-area homeowners with mortgages were underwater at the end of 2010, meaning they owed more than the value of the property, according to CoreLogic Inc. (CLGX), a Santa Ana, California-based real estate information company. Among cities with a population of more than 200,000, Las Vegas has led the nation in the pace of foreclosure actions since November 2009, with one of every 31 homes receiving a filing in the first quarter of this year, RealtyTrac Inc., an information provider in Irvine, California, reported April 14.
About 20 percent of Las Vegas homeowners seeking short sales owe at least $750,000, said Jamie Cogburn, a Las Vegas plaintiff’s attorney who said he has handled 350 such sales and is working on 200 more. One client is a doctor with a home now valued at about half of its $1 million mortgage, Cogburn said. The doctor earns enough to save for a 20 percent down payment on his next home within a few months at current prices, he said.
“People with a higher income can go buy another house,” Cogburn said in a telephone interview. “You’ve got to cut your losses at some point, just like with a stock.”
https://www.bloomberg.com/news/2011-04-26/wealthy-leaving-las-vegas-mansions-as-pain-of-foreclosure-crisis-spreads.html

"More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times. By contrast, about one in 12 mortgages below the million-dollar mark is delinquent."

The gap is larger for investment homes: "Where the original mortgage was more than $1 million it is now 23 percent. For cheaper investment homes, it is about 10 percent."
https://www.planetizen.com/node/45023

You really ought to at least make a small effort to look before you leap to keep from jumping on a pike butt first.

"In the years before the crisis, the behavior of lenders changed dramatically. Lenders offered more and more loans to higher-risk borrowers,[76] including undocumented immigrants.[77] Subprime mortgages amounted to $35 billion (5% of total originations) in 1994,[78] 9% in 1996,[79] $160 billion (13%) in 1999,[78] and $600 billion (20%) in 2006.[79][80][81] A study by the Federal Reserve found that the average difference between subprime and prime mortgage interest rates (the "subprime markup" ) declined significantly between 2001 and 2007. The combination of declining risk premia and credit standards is common to boom and bust credit cycles.[82]

"In addition to considering higher-risk borrowers, lenders have offered increasingly risky loan options and borrowing incentives. In 2005, the median down payment for first-time home buyers was 2%, with 43% of those buyers making no down payment whatsoever.[83]"--Wikipedia



If it had have been, we wouldn't be in the "affordable housing" mess we're in now.



"In 2006, the OFHEO announced a suit against (Clinton Fannie CEO appointee Franklin) Raines in order to recover some or all of the $90 million in payments made to Raines based on the overstated earnings,[6] initially estimated to be $9 billion but have been announced as 6.3 billion.[7]

"Civil charges were filed against Raines and two other former executives by the OFHEO in which the OFHEO sought $110 million in penalties and $115 million in returned bonuses from the three accused.[8] On April 18, 2008, the government announced a settlement with Raines together with J. Timothy Howard, Fannie's former chief financial officer, and Leanne G. Spencer, Fannie's former controller. The three executives agreed to pay fines totaling about $3 million, which will be paid by Fannie's insurance policies. Raines also agreed to donate the proceeds from the sale of $1.8 million of his Fannie stock and to give up stock options. The stock options however have no value. Raines also gave up an estimated $5.3 million of "other benefits" said to be related to his pension and forgone bonuses.[9]"--Wiki



They should never have touched those loans, and if they hadn't THEY NEVER WOULD HAVE BEEN WRITTEN!!! Not only were they pushing for sub-prime loans, they were buying them knowing they were next to worthless. But he got his cut. People ask how you make money writing bad loans, there you have it.

And check my signature link to see how they're trying to crank this s*** up again.

That was "previous years"- you said we were going to be making the same mistakes and I asked for proof.


Wrong. That is not the reason for mortgage problems. The facts do not bear that out.