On 12/21/2012 7:00 AM, Tegger wrote:
"Bob F" wrote in :



Some years ago, anyone could get some kind of "special" loan. Lenders
didn't care if you could pay it off.



They were FORCED to do that by the laws and regulations of the time (The
Community Reinvestment Act among them). There were penalties for failing to
write enough loans for the "underprivileged" . There were some four or five
pieces of legislation that basically required lenders to ignore borrowers'
abilities to pay back the loans.


That's why I refer to them as "Affirmative Action Loans". Government
pushed the banking industry into putting the unqualified into loans they
couldn't handle. O_o

Those "teaser"rates that got so many in trouble were a desperate attempt by
banks to comply with regulations and keep the loans flowing, even as the
supply of borrowers was drying up.

Towards the very end, banks were even told to ignore any failure of
potential borrowers to show any proof of income.



They were just selling off the
junk loans in collateralized packages, and thereby had no risk.




Those loans were largely being bought by Fannie Mae, which was under
specific Congressional and presidential orders to purchase anything the
banks offered, regardless of the underlying soundness of those loans.
Others were being insured by the FHA, which was under similar orders.



I have a longtime friend who was in that industry before it collapsed. O_o

TDD