The Forum Site - Join the conversation
Forums:
Politics

So ONE sub-prime disaster wasn't enough

Reply to Topic
AuthorMessage
Pages: 1 2 3 · >>
ThePainefulTruth On May 06, 2013
Verum est Deus


Deleted



Peoria, Arizona
#1New Post! Jun 18, 2011 @ 09:35:48
Dodd and Frank are at it again

"Affordable Housing" is the catchphrase being used again to justify sub-prime loans to almost anyone, regardless of ability to pay. Pushing these absurd loans that were bundled and sold to the taxpayers via Fannie Mae and Freddie Mac, is coming around again.

"The complex and convoluted Dodd-Frank structure is not the answer, but underwriting standards are necessary to protect the taxpayers and the economy, and no one in this coalition wants to impose them. History, after all, should tell us something. The same arguments were made to Congress in the late 1980s and early 1990s, when Fannie Mae and Freddie Mac, following the command in their government charters that they buy only loans that would be acceptable to institutional investors, were imposing tough underwriting standards on the loans they would buy and securitize. The standard downpayment then was 20 percent, and it yielded a home ownership rate of about 64 percent, where it had been for roughly 30 years.

"But Congress ultimately heeded the same calls we are hearing today: the standards are too tough; there are groups who cannot get mortgage credit and buy homes; and the familiar language of entitlement - it's a "civil rights" issue that some people cannot buy a home because they don't have sufficient savings. In 1992, Congress required Fannie and Freddie to abandon their underwriting standards and instead - for at least 30 percent of the loans they acquired - to buy only "affordable housing" mortgages, without regard to their quality."
boxerdc On December 18, 2012

Deleted



,
#2New Post! Jun 18, 2011 @ 13:50:02
I love the way you pick two quotes from the piece that are totally out of context to show that you either don't understand how to read, or that you're deliberately trying to make people believe what is not true.

I'm going with the former, based on your history here.

But either way, Dodd and Frank have put into place measures that protect the tax payer and the economy, and they're not "at anything".

Sorry.. you lose again. Perhaps you can find a fourth grader to read the opinion piece and explain it to you.

and, BTW, your link is broken.

Thepainfulone is at it again
Richard142 On February 15, 2015




Greater London, United Kingdom
#3New Post! Jun 18, 2011 @ 14:38:06
I think we all agree that there is a bank led financial cricis. Lets not be too snide with each other. Too many inocent families are suffering. Even if the bankers and their lobby groups don't care about 'ordinary' people lets not follow their example.
ThePainefulTruth On May 06, 2013
Verum est Deus


Deleted



Peoria, Arizona
#4New Post! Jun 19, 2011 @ 09:30:06
(The link in the OP is corrupted so here it is again--can't edit the post)

Dodd & Frank not out of Context

You'd say the whole article was out of context if I'd posted it. So here, let you Soros lackeys read it for you. I've got your "out of context" right here!

What part of "Are we going to have to watch this movie again" or the title of the column, don't you understand?:


June 8, 2011
An "Unusual" Mortgage Coalition Reassembles
By Peter Wallison

Recent media reports have remarked on the development of an unusual coalition - lenders, consumer groups and low-income housing advocates - formed to oppose the requirements for a high quality mortgage originally proposed by the federal bank and securities regulators under the Dodd-Frank Act. The principal issue seems to be the 20 percent downpayment requirement for a low-risk mortgage. Members of the coalition were quoted as saying that this would freeze many buyers out of the housing market.

"We still need to be able to make affordable mortgages that don't just go to the wealthy," David Stevens, head of the Mortgage Bankers Association, told the New York Times. "These rules will so significantly deter the ability of first-time buyers to break into the market that we will see a real decline in home ownership," said a representative of La Raza, the Hispanic advocacy organization, also in the Times. And John Taylor, the head of the National Community Reinvestment Coalition, told Bloomberg "This is a civil rights issue. It falls around people of color. It's a class issue."

Although not quoted in these articles, these groups have been joined by the homebuilders, the realtors and the large banks, also seeking the preservation of government backing and lower underwriting standards for mortgages. This isn't a new or unusual coalition in housing finance; it's the same grouping that has consistently garnered the taxpayers' largesse in the past.

Are we going to have to watch this movie again? The arguments are the same as they were in the late 1980s, and will lead to the same place: government policies that will lower mortgage standards so that nearly everyone will qualify. Some in this coalition will get the low lending standards they want, others will get the government backing they think they need. The taxpayers once again get it in the neck.

The complex and convoluted Dodd-Frank structure is not the answer, but underwriting standards are necessary to protect the taxpayers and the economy, and no one in this coalition wants to impose them. History, after all, should tell us something. The same arguments were made to Congress in the late 1980s and early 1990s, when Fannie Mae and Freddie Mac, following the command in their government charters that they buy only loans that would be acceptable to institutional investors, were imposing tough underwriting standards on the loans they would buy and securitize. The standard downpayment then was 20 percent, and it yielded a home ownership rate of about 64 percent, where it had been for roughly 30 years.

But Congress ultimately heeded the same calls we are hearing today: the standards are too tough; there are groups who cannot get mortgage credit and buy homes; and the familiar language of entitlement - it's a "civil rights" issue that some people cannot buy a home because they don't have sufficient savings. In 1992, Congress required Fannie and Freddie to abandon their underwriting standards and instead - for at least 30 percent of the loans they acquired - to buy only "affordable housing" mortgages, without regard to their quality.

What was an "affordable housing" mortgage? A loan to a borrower who was at or below the median income where he or she lived. Once those income requirements were laid on, the Department of Housing and Urban Development began to enlarge the goals, so that by 2000, the end of the Clinton administration, 50 percent of all mortgages acquired by Fannie and Freddie had to be made to people who were at or below that income level, and this quota was pushed even further by HUD during the George W. Bush administration that followed.

Of course, it's perfectly possible to find some prime mortgages among people who are below the median income, but when huge government-backed organizations like Fannie and Freddie are directed to find below-medium-income borrowers for more than 50 percent of all the loans they buy each year, it's inevitable that they will have to drop their underwriting standards. That's what they did, that's why they are now insolvent, and that's why their regulator has estimated that their losses - eventually to be paid by the taxpayers - could approach $400 billion.

Research by my AEI colleague Edward Pinto, and included in my dissent from the majority report of the Financial Crisis Inquiry Commission, showed the result of these government policies. By 2008, Fannie and Freddie were exposed to the credit risk of 12 million subprime and other high risk mortgages; government policies were directly responsible for an additional 7.2 million similar mortgages held by government agencies or organizations following the directives of government; and including these 19.2 million loans, almost half of all U.S. mortgages - 27 million loans - were subprime or similarly weak and high risk (for example, mortgages with low or no downpayments).

The huge number of defaults among these mortgages, beginning in 2007, drove down housing prices, caused the insolvency and instability of many financial institutions, and sparked the prolonged recession and housing price collapse we are now experiencing. Even Congressman Barney Frank (D-MA), a long-time advocate of increased affordable housing and a congressional protector of Fannie and Freddie admitted in 2010 that "[I]t was a great mistake to push lower-income people into housing they couldn't afford and couldn't really handle once they had it."

The government policies that poured money into affordable housing mortgages did in fact increase home ownership. The rate in the U.S. rose from 64 percent in 1995 to more than 69 percent in 2004. But at what cost - huge taxpayer losses, an economic recession, high unemployment, and the destruction of housing values for most homeowners in the U.S. That's what the advocates for easier housing credit are ignoring when, once again, they argue that traditional underwriting standards for mortgages are too tough. And what about homeownership rates that had peaked in 2004? They are once again returning to the historic rate of 64 percent that was achieved with a 20 percent downpayment requirement.

We will never be free of the threat of another mortgage-led financial collapse until we make it impossible for people to use the government for their own ends. And that can only happen when we take the government out of the business of backing mortgages.


Peter J. Wallison is the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute. He was general counsel of the Treasury and White House counsel in the Reagan administration and a member of the Financial Crisis Inquiry Commission.
LovetheProcess On October 19, 2015




Plymouth, Massachusetts
#5New Post! Jun 19, 2011 @ 09:47:11
where would the 400billion go if it isn't into getting people who otherwise can't afford it into a home? Should we spend it on golden toilets and wars? Fight to stop spending money in areas that are truly unnecessary before we make it time to cut healthcare and housing, teachers and cops. Mr. Wallace believes the market fell and job loss is to blame for our current problems but maybe we should look back further and deeper into that statement before we call it our truth.
ThePainefulTruth On May 06, 2013
Verum est Deus


Deleted



Peoria, Arizona
#6New Post! Jun 19, 2011 @ 10:07:24
For some reason the link keeps getting corrupted soon after I can no longer edit a post. Here it is again.
Dodd & Frank at it again.

@LovetheProcess Said

where would the 400billion go if it isn't into getting people who otherwise can't afford it into a home? Should we spend it on golden toilets and wars? Fight to stop spending money in areas that are truly unnecessary before we make it time to cut healthcare and housing, teachers and cops. Mr. Wallace believes the market fell and job loss is to blame for our current problems but maybe we should look back further and deeper into that statement before we call it our truth.



The Truth is called the "Community Reinvestment Act" which Carter got passed back in the 70s and snowballed from there, in some part due to Republicans as well. Nobody foresaw the scale of the thing which pushed real estate values way down when they'd never been down before except during the Depression.

"Should we spend it on golden toilets". That's exactly what caused the sub-prime crisis, extravagant houses being mortgaged to people who didn't have a down payment for even a modest house, and often not even a job--the banks were prohibited from checking. We could have put 90% of our budget into free mortgages instead of defense and other such "unnecessary" expenses and the disaster would have been proportionately greater. It's a Ponzi scheme just like Social Security, Medicare and other less visible government programs--less visible for now, which is what sub-primes mortgages were at one time.
Electric_Banana On February 05, 2024




, New Zealand
#7New Post! Jun 19, 2011 @ 10:21:01
@ThePainefulTruth Said

Dodd and Frank are at it again

"Affordable Housing" is the catchphrase being used again to justify sub-prime loans to almost anyone, regardless of ability to pay. Pushing these absurd loans that were bundled and sold to the taxpayers via Fannie Mae and Freddie Mac, is coming around again.

"The complex and convoluted Dodd-Frank structure is not the answer, but underwriting standards are necessary to protect the taxpayers and the economy, and no one in this coalition wants to impose them. History, after all, should tell us something. The same arguments were made to Congress in the late 1980s and early 1990s, when Fannie Mae and Freddie Mac, following the command in their government charters that they buy only loans that would be acceptable to institutional investors, were imposing tough underwriting standards on the loans they would buy and securitize. The standard downpayment then was 20 percent, and it yielded a home ownership rate of about 64 percent, where it had been for roughly 30 years.

"But Congress ultimately heeded the same calls we are hearing today: the standards are too tough; there are groups who cannot get mortgage credit and buy homes; and the familiar language of entitlement - it's a "civil rights" issue that some people cannot buy a home because they don't have sufficient savings. In 1992, Congress required Fannie and Freddie to abandon their underwriting standards and instead - for at least 30 percent of the loans they acquired - to buy only "affordable housing" mortgages, without regard to their quality."



Why give a homeless many shelter when he can't afford to pay for it?

If he could afford to pay for it, he wouldn't be homeless.

It isn't a matter of "Who is going to have to pay for this" it should be a matter of everyone chipping in so this homeless man isn't left to die out in the rain.

Most of US funding has gone towards tanks though. Perhaps they could give the homeless tanks to sleep in.
ThePainefulTruth On May 06, 2013
Verum est Deus


Deleted



Peoria, Arizona
#8New Post! Jun 19, 2011 @ 10:24:45
@Electric_Banana Said

Why give a homeless many shelter when he can't afford to pay for it?

If he could afford to pay for it, he wouldn't be homeless.

It isn't a matter of "Who is going to have to pay for this" it should be a matter of everyone chipping in so this homeless man isn't left to die out in the rain.

Most of US funding has gone towards tanks though. Perhaps they could give the homeless tanks to sleep in.


90% of the homeless are voluntarily so, many for drug, psychiatric problems or other anti-social reasons, most of which we treat, but we don't force them into treatment unless they're criminal.

But what has that got to do with the issue at hand here.
LovetheProcess On October 19, 2015




Plymouth, Massachusetts
#9New Post! Jun 19, 2011 @ 10:30:09
@ThePainefulTruth Said


"Should we spend it on golden toilets". That's exactly what caused the sub-prime crisis,



Your right it was but I was referring to the one the government paid for!

I am not sure what you call extravagant but a 3bdrm one bath for a low income family of 4 doesn't seem to fit the bill, they weren't being give mansions they could not afford they were being given basic living quarters. And due to our cost of living many family's can not afford this on two minimum wage salaries. My parent got their home through one of those loans in 1988, 900sq feet 3bdrm one bath poor construction their home is 22yrs old and falling apart now, even with basic maintenance .
LovetheProcess On October 19, 2015




Plymouth, Massachusetts
#10New Post! Jun 19, 2011 @ 10:32:31
@ThePainefulTruth Said

90% of the homeless are voluntarily so, many for drug, psychiatric problems or other anti-social reasons, most of which we treat, but we don't force them into treatment unless they're criminal.

But what has that got to do with the issue at hand here.



Where do u get these statistics LOL

I am really interested in knowing...
Electric_Banana On February 05, 2024




, New Zealand
#11New Post! Jun 19, 2011 @ 10:36:16
@ThePainefulTruth Said

90% of the homeless are voluntarily so, many for drug, psychiatric problems or other anti-social reasons, most of which we treat, but we don't force them into treatment unless they're criminal.

But what has that got to do with the issue at hand here.



I've had too much coffee. Sometimes I read threads and it's like I'm reading threads from an alternate dimension and then replying back in the thread in this dimension.

This goes way over my head. I know nothing about realty.
LovetheProcess On October 19, 2015




Plymouth, Massachusetts
#12New Post! Jun 19, 2011 @ 10:47:49
I studied the market for almost 5 yrs when I thought it was an answer to a question I had been asking myself. Some wonderful people work in reality, great concepts. But I don;t recall the market crash being the fault of poor people getting homes, nor do I recall poor people causing other people to lose their jobs, now I do recall the biggest payouts on wall street just before and during the so called market crash and I do recall new laws going into effect that gave tax breaks to companies who opened up U.S. Businesses over seas. I do believe that caused some job loses in large numbers. I also do not recall this 90% of homeless choice in anything I came across so please enlighten me.
Electric_Banana On February 05, 2024




, New Zealand
#13New Post! Jun 19, 2011 @ 10:50:31
@LovetheProcess Said

Some wonderful people work in reality


Reality sounds like a place full of opportunity. I can't find a job where I'm at.

Sorry..I'll leave the thread be now.
LovetheProcess On October 19, 2015




Plymouth, Massachusetts
#14New Post! Jun 19, 2011 @ 11:04:03
@Electric_Banana Said

Reality sounds like a place full of opportunity. I can't find a job where I'm at.

Sorry..I'll leave the thread be now.



If you proclaim it to be true , then it is true for you
shinobinoz On May 28, 2017
Stnd w Standing Rock





Wichita, Kansas
#15New Post! Jun 19, 2011 @ 18:14:57
@ThePainefulTruth Said

For some reason the link keeps getting corrupted soon after I can no longer edit a post. Here it is again.
Dodd & Frank at it again.




The Truth is called the "Community Reinvestment Act" which Carter got passed back in the 70s and snowballed from there, in some part due to Republicans as well. Nobody foresaw the scale of the thing which pushed real estate values way down when they'd never been down before except during the Depression.

"Should we spend it on golden toilets". That's exactly what caused the sub-prime crisis, extravagant houses being mortgaged to people who didn't have a down payment for even a modest house, and often not even a job--the banks were prohibited from checking. We could have put 90% of our budget into free mortgages instead of defense and other such "unnecessary" expenses and the disaster would have been proportionately greater. It's a Ponzi scheme just like Social Security, Medicare and other less visible government programs--less visible for now, which is what sub-primes mortgages were at one time.


Fannie & Freddie are only the scapegoats here.
https://howdidthishappen.org/myths/
Reply to Topic<< Previous Topic | Next Topic >>
Pages: 1 2 3 · >>

1 browsing (0 members - 1 guest)

Quick Reply
Politics Forum - Some Rudeness Allowed

      
Subscribe to topic prefs

Similar Topics
    Forum Topic Last Post Replies Views
New posts   Business & Money
Sat May 22, 2010 @ 19:38
16 2442
New posts   Jokes & Humor
Fri Feb 12, 2010 @ 13:19
0 813
New posts   Rants & Raves
Thu Aug 27, 2009 @ 17:59
14 6334
New posts   Product Reviews
Wed Jul 22, 2009 @ 14:03
1 7106
New posts   US Elections
Fri Jul 24, 2020 @ 23:24
77 25057