On Sep 24, 11:10*pm, wrote:
On Wed, 24 Sep 2008 21:03:36 -0500, "HeyBub"
wrote:

There is NO plan to restore Mac or Mae to the status quo. But you're right.
This *debacle has been building for a long time. Since 1977 to be exact when
the Carter administration supported the Community Reinvestment Act. This law
mandated that mortgage lenders meet government quotas for handing out bad
(i.e., subprime) loans. Failure to meet these quotas resulted in
"penalties," penalties sometimes so severe as to cause the lender to go out
of business.

Oh **** this tired old ****. How many times are we going to have to
respond to this bull****.



In recent times, these loans under the threat of the CRA expanded
dramatically.

Why? Because Bush amended it with the American Dream Downpayment Act
of 2003 that took away the level of down payment necessary and made
them less secure. It was a ****ing GOP measure that caused the
increase and sank the boat. The program ran for 25 years with no real
troubles until Bush turned it into a get rich measure for realtors and
lenders.


Now I believe there is plenty of blame to spread around for the
current crisis. And that blame goes to both parties, blind greed on
wall street, execs at Fannie and Freddie cooking the books to get tens
of million in bonuses, the borrowers, etc. However, the above
statement is totally inaccurate. The Act referred to above provided
assistance to first time home buyers in the form of helping with the
down-payment and/or closing costs. First time buyers who were at 80%
of the mean income level for the area or below, could get up to 6% of
the purchase price or $10,000 toward the purchase. That did not
take away or reduce the requirement for a down-payment to secure the
loan. It just meant part of the down-payment was coming from the
govt.

To try to turn that into something Bush did to make realtors and
lenders rich is preposterous. The measure was widely supported by
Dems too. In fact, the whole idea is exactly the kind of thing Dems
are always harping for, ie redistributing the wealth, giving
assistance to those with lower incomes, etc.

Also, a lot of these loans going bad were made to people who had
higher incomes and would never qualify for this program. Cases like
2 income families making $100K+ that chose to push their finances to
the limit and buy as big a house as they could, with an ARM set at a
below market teaser rate. Many of these people were barely able to
make the payment from the start and planned to just hold on to the
house for 3 years, then flip it for a profit. Problem is, some of
them fell on hard times, lost one income, etc, then had the ARM adjust
from 2% to a normal market rate of 6% and then had the house value
decline 30%+ as well.

If you want to look at root causes, I'd say allowing mortgages to be
made with artificially low intro rates so people could qualify is a
big one. It makes no sense to me, but lenders have been making these
loans for a long time, where people qualify based on their ability to
pay the initial and artificial low rate. In 3 to 5 years, the rate
gets adjusted up to the market rate, meaning the payment could
double. Obviously bad business.



In the past ten years or so, mortgages to less than
credit-worthy applicants increased from 20% of the market to 27% recently.

Last five years. 2003 to 2008.

Since 1995, and as recently as 2005, legislation has been introduced to
"reform" this crazy law. In every case it was blocked by Democratic
opposition.

The "reform" was taking it out of government supervision combining
them into an even bigger bureaucratic entity. . Sheesh.