We're to blame

The government has never "forced lending institutions to make home mortgages to people with bad credit". The Community Reinvestment Act (which I'll assume your referring) and other red lining laws weren't passed to force banks to make loans to African-Americans and other minorities. They were there to make the rules consistent. Previous to the passage of the CRA, minorities were often required to have better credit, and make larger down payments to get loans equivalent to those awarded whites. Nothing in these laws required that banks lower their lending standards, only that they be fair, consistent, and operate in a "safe and secure" way. There was no evidence then, and no evidence now, that minorities with the same initial credit rating as whites tend to default on their loans at any greater rate. What does legislation passed 31 years ago have to do with problems today? Nothing.

Don't throw we in there. Some of us know how to live within means. That is why some of us can weather this so called bad economy.

no they just ran out of money.

Proud Liberal wrote:

The government has never "forced lending institutions to make home mortgages to people with bad credit". The Community Reinvestment Act (which I'll assume your referring) and other red lining laws weren't passed to force banks to make loans to African-Americans and other minorities. They were there to make the rules consistent. Previous to the passage of the CRA, minorities were often required to have better credit, and make larger down payments to get loans equivalent to those awarded whites. Nothing in these laws required that banks lower their lending standards, only that they be fair, consistent, and operate in a "safe and secure" way. There was no evidence then, and no evidence now, that minorities with the same initial credit rating as whites tend to default on their loans at any greater rate. What does legislation passed 31 years ago have to do with problems today? Nothing.

The Cato Institute has a well-referenced article on the Community Reinvestment Act that seems to refute the assertions made in this post.

It is counter-intuitive to think that banks would be disinclined to make loans to well-qualified applicants. The Community Reinvestment Act is to lending, what Affirmative Action is to employment.

TidewaterLibertarian wrote:

<quoted text>
The Cato Institute has a well-referenced article on the Community Reinvestment Act that seems to refute the assertions made in this post.
It is counter-intuitive to think that banks would be disinclined to make loans to well-qualified applicants. The Community Reinvestment Act is to lending, what Affirmative Action is to employment.

Ahh, but see that is the problem my friend. Too many times those of the "liberal" persuassion, refuse to let simple facts get in the way of their ranting and spewing. Someday, likely later than sooner, the American people will wake up and realize that liberalism doesn't work, and is just plain wrong!!! The entire premise of liberalism is just a thinly veiled cloak of deceit that is designed to enslave the average American to those in power (aka the check writers) and to ensure that the these same liberals can maintain thier power. Again, someday the American people will wake up and realize just what the cancer that is liberalism has truly done to our country. FYI, it a'int good people!!

Proud Liberal wrote:

The government has never "forced lending institutions to make home mortgages to people with bad credit". The Community Reinvestment Act (which I'll assume your referring) and other red lining laws weren't passed to force banks to make loans to African-Americans and other minorities. They were there to make the rules consistent. Previous to the passage of the CRA, minorities were often required to have better credit, and make larger down payments to get loans equivalent to those awarded whites. Nothing in these laws required that banks lower their lending standards, only that they be fair, consistent, and operate in a "safe and secure" way. There was no evidence then, and no evidence now, that minorities with the same initial credit rating as whites tend to default on their loans at any greater rate. What does legislation passed 31 years ago have to do with problems today? Nothing.

You're way off base. The CRA mandated that mortgagers regard the income of welfare recipients as ample security for a home loan... not a good idea when first implemented, nor will it ever be a good idea. Yes, what happened 31 years ago has much to do with what is occurring now; just as a 70-year history of Welfare does.

Proud Liberal wrote:

The government has never "forced lending institutions to make home mortgages to people with bad credit". The Community Reinvestment Act (which I'll assume your referring) and other red lining laws weren't passed to force banks to make loans to African-Americans and other minorities. They were there to make the rules consistent. Previous to the passage of the CRA, minorities were often required to have better credit, and make larger down payments to get loans equivalent to those awarded whites. Nothing in these laws required that banks lower their lending standards, only that they be fair, consistent, and operate in a "safe and secure" way. There was no evidence then, and no evidence now, that minorities with the same initial credit rating as whites tend to default on their loans at any greater rate. What does legislation passed 31 years ago have to do with problems today? Nothing.

The urban renewal act Bill's baby did require banks to give loans to credits and his NINJR (no income no job required) policy which is part of his urban renewal act.Couple that with ACORN PROTESTING BANKS AND EVEN PROTESTING IN FRONT OF BANK MANAGER'S HOMES PUTTING THEIR FAMILIES AT RISK demanding that they give more loans to minorities.And you have the underlying case of the entire economic crisis.It was like a snowball effect.

Giving loans to those with no credit, no job, and no downpayment caused this mess.
No amount of propaganda can change this fact.

Telmark wrote:

Giving loans to those with no credit, no job, and no downpayment caused this mess.
No amount of propaganda can change this fact.

The Brookings Instituion says it was about 5% of the problem, but, I'm sure you know better.

Total BS what that Proud Liberal wrote. The democrats actually mandated that the banks had to include - get this - WELFARE income as income to be used in determining loan applications. Unbelievable. NO welfare recipient has any right to buy a house. Period, end of story. We did get ourselves into this mess if by "we" you mean Bill Clinton and the Democrats!

Part Two: The Federal Reserve.
At the beginning of and crucial to the subprime lending spree, the Federal Reserve lowered interest rates to facilitate lending. The banks could lend to one another with greater ease and to consumers with greater ease. The Federal Reserve also injected more money into the market, which creates the illusion of greater wealth. With the influx of new money individuals and organizations had more buying power. Money and credit were easier to come by and people took advantage of the "prosperity" to invest in many things, including the booming housing market. The housing bubble, like all artificial bubbles (the Savings and Loan bubble, the Dot Com bubble, et cetera), was designed to enrich the few at the expense of the many. When the bubble burst (as they all do), the topmost earners benefited from the millions invested and got to keep their profits. The people who lost were those who couldn't afford the houses, the men and women in the mid to lower levels of the financial institutions who lost their jobs and/or piled up debt of their own thinking the boom would continue, the shareholders of the institutions, the institutions the Federal Reserve wanted to see fail (smaller banks, Bear Sterns, et cetera), and ordinary taxpayers, who lose future purchasing power because of
a) the bail outs they are being forced to finance (just as we did for the S&L boom-bust) and
b) the inflation that always results from the Federal Reserve's printing of new dollars.

Not only are we paying for the financiers' bail outs in the present, we will be paying for them in the future as the value of the dollar depreciates through the inflationary actions of the Federal Reserve.

Administration officials in our Federal government, many of our Congresspersons, and the Federal Reserve are redistributing our wealth and devaluing our money by bailing out select financiers against the wishes of United States citizens. Until we, the citizens of this country, intervene on our own behalf, they will continue to undermine our financial future. I suggest that we vote out the Congresspersons who voted for the bail outs and replace them with intelligent men and women who will uphold their Constitutional oaths. Regarding the privately owned Federal Reserve, I suggest we petition our Representatives to support legislation removing it in order to strengthen our economy by returning to a non-inflationary monetary policy. Congresspersons supporting such financial reform rather than bail outs for financiers deserve our votes. Those who vote to fund select financiers with billions of dollars of our tax money should be given the opportunity to find new jobs. I'm sure their friends in the banking industry can find a place for them after they've been so helpful.

Best regards,

Charles

P. S. The legislation currently sitting in the House of Representatives awaiting our petition may be read here:

"Federal Reserve Board Abolition Act": http://justgetthere.us/blog/archives/H.R.-275...

"Honest money Act": http://justgetthere.us/blog/archives/H.R.-275...

You may find your Congressperson by using this link:
http://www.visi.com/juan/congress/

-C

Walther wrote:

Total BS what that Proud Liberal wrote. The democrats actually mandated that the banks had to include - get this - WELFARE income as income to be used in determining loan applications. Unbelievable. NO welfare recipient has any right to buy a house. Period, end of story. We did get ourselves into this mess if by "we" you mean Bill Clinton and the Democrats!

Ahhh!!! The chiming in of the un-informed. Once again the plethora of false information spewed by the king of the ill informed.
Yea and buy the way the voices in you head don't count.

Jeeesss!!!!!

Eugene Sharpe wrote:

<quoted text>
Ahhh!!! The chiming in of the un-informed. Once again the plethora of false information spewed by the king of the ill informed.
Yea and buy the way the voices in you head don't count.
Jeeesss!!!!!

If someone were interested in your point (as I am), they would have a difficult time finding it.

TidewaterLibertarian wrote:

<quoted text>
If someone were interested in your point (as I am), they would have a difficult time finding it.

I took his point to be that Walther has no creditability and he wants him to shut his pie hole.

Lefty wrote:

<quoted text> I took his point to be that Walther has no creditability and he wants him to shut his pie hole.

ok. Thanks!

Lefty wrote:

<quoted text> I took his point to be that Walther has no creditability and he wants him to shut his pie hole.

Bingo

Lefty wrote:

<quoted text>
The Brookings Instituion says it was about 5% of the problem, but, I'm sure you know better.

I'm glad that you mentioned this due to the fact that the U.S. forclosure rate is currently running at about 5%. Unfortunately, those that let the MSM do their thinking for them remain unaware of this fact.

Again, giving credit cards and home loans to those with no job and bad credit (so that they could run out and buy fancy cars and houses) was a bad idea from the start.

The bottom line here is that I, like most Americans, know better than to buy what we can't afford.

"Then the government forced lending institutions to make home mortgages to people with bad credit. Then more responsible homeowners saw the sweetheart deals and decided they could buy a home twice as valuable as what they were living in. Home prices were on the way up, and no end was in sight. They thought they couldn't lose. Wrong. These people were now living in homes that were worth less than they owed on them. Big trouble for the homeowner, bank, mortgage giants, the government and now the taxpayer."

Who's to blame?

Yes, there are people barely making minimum wage that knowingly tried to play the system and start out buying a $500K home.

However, the bigger picture is that the property assessors, home builders and real estate agents artificially inflated these house prices to 2-3 times their actual worth. The average, median-income earning family can no longer afford the average single-family house.
Then, the mortgage companies came along and offered exotic mortgages to make the average family believe that they can comfortably afford a house priced twice as much as their budget allows.

Something is seriously wrong with the system when the average two-income family cannot afford a basic 3BR 2BA house outside of a crime-ridden neighborhood.

So, actually, the hard-working middle-class family, the majority and the heart and soul of every community, is the victim.

Jeebuss wrote:

The average, median-income earning family can no longer afford the average single-family house.

I don't think it's true that "the average, median-income earning family can no longer afford the average single-family house," and I would be curious as to your source on this.

I know lots of people who are "average" with "median incomes" who are buying homes. They have modest cars and seem to be managing their money well, but they have average jobs with average incomes.

Have you seen any said houses under $200K?

How can a family, just starting out, afford that?
Even with a 10% down payment ($20K in this case), the mortgage would most likely be over $1,100 per month!

The average income is probably about $4000/month (net), which means over 25% goes to mortgage only.