Oops, Obama was the catalyst that started the subprime mortgage crisis, imagine that, more liberal failure ruining American lives. As few as 19 of those 186 clients still own homes with clean credit ratings, following a decade in which Obama and other progressives pushed banks to provide mortgages to poor African Americans. Read more: http://dailycaller.com/2012/09/03/w...-to-chicagos-african-americans/#ixzz25PQL8BVf
The Housing Bubble was a disaster created by Democrats. They actually expected banks to just eat the loses. That banks passed the risk on to the stock market.
You mean the money we gave them, they're now forced to use it, for the purpose of why we gave out the loan in the first place.
Actually, banks were never pushed to make loans to unqualified borrowers. The only way that they could get in trouble is by discriminating against minorities. That's what the lawsuit was about. Many of the mortgages made since 1990 have gone into foreclosure.
To add some detail. In the beginning, they actually pushed it on to Fannie and Freddie, as that was part of the scam done by Clinton. You banks make the sub-primes you would not otherwise make, and FF will underwrite those loans. FF grew 5-fold under Clinton, to where at the end of his Administration, they were on the hook for half of all residential mortgages in America. I do not believe that the lender banks would have settled without the agreement by government to essentially take on the risk from them. The moral hazard in housing was now born. With the bubble, and all making a fortune selling and flipping, banks then moved to get back their slice from FF, doing things such as no-money-down loans. Being even more reckless than FF, as with uber-inflation, they thought even a bad loan could not lose. They didn't "lose" until well into 2007. Regardless, FF lost market share 2002-2004. So FF (and its bonus making Democrat executives) got their own lending rules relaxed so that they could be equally reckless, with government money, and they regained market share back to about 50%. That investment houses were able to get in on it is a moot point IMMHO. The banks were going to make as many loans as possible, as there was so much money being made with inflation in housing. It is why FF changed their own rules. Too much money being made, and they did not want to lose out.
Yup. I'm familiar with it, are you? I realize that you consume news from right wing sources, but, you must surely have wondered how a law passed in the 70s could possibly take 40 years to manifest problems. The only thing that the Community Reinvestment Act does is define (redlining would be an example) certain practices regarded as discriminatory. There is no law on the books, and never has been, that requires banks to lend to unqualified borrowers. I have spent the last three decades working as an originator.
Which misses the point. Likely deliberate obfuscation. The CRI was used as a basis for the Feds, during the Clinton Administration, to sue banks for "discriminatory" lending. The settlement was for the banks to make the sub-primes, and that FF would underwrite. And the bubble was born.
Wrong. There has never been a law on the books that required banks to make loans to unqualified borrowers.
You should know that every time a mortgage changes hands, money is made. Money is made when the loan is made; it's made when sold to Wall Street and money is made from servicing the loan. The subprime boom in lending occurred after the banks were deregulated. Wall Street bought these loans and fueled the sub prime crisis. Fannie and Freddie's mission is to buy mortgage loans so that banks would have plenty of money for people to buy homes. Fanny and Freddy were not buying these loans because they did not meet their standards. Because these 2 agencies weren't buying many mortgages, Congress got involved in 2006 and changed the guidelines. I rather think that the subsequent recession would have been far less dire. Thank you GOP.
Come on, they aren't stupid. They wouldn't directly do that. But, they made it clear that the banks had to loan money to people unlikely to be able to keep paying the mortgages. This reminds me of mandatory school testing programs. The gov't sets a standard, and other people are expected to make it work in the real world.
This goes as far as Peanut Head Carters Community Reinvestment Act.If you want to go way back,maybe even as far as FDR. The Democrats reckless push to give loans to unqualified applicants that were most likely to fail paying them resulted in a housing crisis.Suing banks for discriminatory lending to get more blacks and hispanics into new homes .But yet the Democrats will continue to lie to the public by claiming it happened due to Republican policies. What a mountain of horse crap.I hope Romney and Ryan confront Obama and Biden about this during the debates.
Not a law, but through law suits, forcing banks to loosen their requirements. I own multiple properties, and I have always been self employed, and for the last 30 years, the lending requirements changed from wanting everything since you were born, to wanting nothing but my signature. Obama's lawsuit was instrumental in banks loosening their requirement. Banks used to take up to a year to pass off a mortgage loan, then they got to turning them within a week
To settle subprime foreclosure shenanigans... Bank of America to pay Fannie Mae billions to settle mortgage claims 7 January 2013 - The bank is also the subject of a civil lawsuit brought by federal prosecutors
You are right. The qualifications were Have a good job, sizeable downpayment, good credit and low debt -or- Have 2 nickels, want a house because you "deserve it", and be a minority. The CRI didn't force banks to lend to unqualified borrowers, it just added new ways to "qualify"
Goldman Sachs, Morgan Stanley, other banks may join subprime settlement... More banks may join Fed-led settlement Thu, Jan 10, 2013 - Goldman Sachs Group Inc, Morgan Stanley and two other banks may agree as soon as this week to settle claims over botched foreclosures in an accord similar to one reached with 10 other loan servicers, two people briefed on the discussions said.
Byas said he had a Citibank mortgage on his property in Austin, a West Side Chicago neighborhood, but was rejected when he sought a mortgage to buy a house in the troubled Maywood district. Chicago had been redlining people for years and years [and] you knew this kind of crap happened, said Dale Freeman, an operations manager at the Federal Reserve Bank of Chicago. He quickly got a loan from another bank to buy a house in the wealthy South Side neighborhood of Hyde Park, where he and his family still live. Read more: http://dailycaller.com/2012/09/03/w...-to-chicagos-african-americans/#ixzz2Hhl3cFNJ Redlining at its most obvj - - - Updated - - - Byas said he had a Citibank mortgage on his property in Austin, a West Side Chicago neighborhood, but was rejected when he sought a mortgage to buy a house in the troubled Maywood district. Chicago had been redlining people for years and years [and] you knew this kind of crap happened, said Dale Freeman, an operations manager at the Federal Reserve Bank of Chicago. He quickly got a loan from another bank to buy a house in the wealthy South Side neighborhood of Hyde Park, where he and his family still live. Read more: http://dailycaller.com/2012/09/03/with-landmark-lawsuit-barack-obama-pushed-banks-to-give-subprime-loans-to-chicagos-african-americans/#ixzz2Hhl3cFNJ Redlining at its most obvious....of course righties are outraged this practice was curbed. Sounds like the lawsuit had nothing to do with subprime loans ...hack bs from Tucker's tabloid
[video=youtube;7nTBkHIFkKc]http://www.youtube.com/watch?v=7nTBkHIFkKc[/video] [video=youtube;FTKLIKrCzno]http://www.youtube.com/watch?v=FTKLIKrCzno[/video]
New Study Finds CRA 'Clearly' Did Lead To Risky Lending Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession. But a new study by the respected National Bureau of Economic Research finds, "Yes, it did. We find that adherence to that act led to riskier lending by banks." Added NBER: "There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts," or predominantly low-income and minority areas. To satisfy CRA examiners, "flexible" lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found. The strongest link between CRA lending and defaults took place in the runup to the crisis 2004 to 2006 when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street. CRA regulations are at the core of Fannie's and Freddie's so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie. It passed a law requiring the government-backed agencies to "assist insured depository institutions to meet their obligations under the (CRA)." The goal was to help banks meet lending quotas by buying their CRA loans. But they had to loosen underwriting standards to do it. And that's what they did. "We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities." She described "CRA-friendly products" as mortgages with less than "3% down" and "flexible underwriting." From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features. Lenders not subject to the CRA, such as subprime giant Countrywide Financial, still fell under its spell. Regulated by HUD, Countrywide and other lenders agreed to sign contracts with the government supporting such lending under threat of being brought under CRA rules. "Countrywide can potentially help you meet your CRA goals by offering both whole loan and mortgage-backed securities that are eligible for CRA credit," the lender advertised to banks. Housing analysts say the CRA is the central thread running through the subprime scandal from banks and subprime lenders to Fannie and Freddie to even Wall Street firms that took most of the heat for the crisis. Obama officials, who are cracking the CRA whip anew against banks, insist the law played no role in the mortgage meltdown. Read More At IBD: http://news.investors.com/ibd-edito...t-act-cra-mortgage-defaults.htm#ixzz2HhvvS4wx
Study Says Community Reinvestment Act Induced Banks To Take Bad Risks J.D. Tuccille|Dec. 21, 2012 6:37 pm CRA Shakedown'twas Wall Street greed what done it, some folks say, when it comes to explaining the spectacular housing meltdown of recent years, which had its roots in a great many astonishingly risky loans. Other folks suggest that the federal government just may have played something of a role in inducing, even strong-arming, banks to take risks they otherwise would have avoided. Specifically, the Community Reinvestment Act and related policy pressures are pointed to as culprits, part of a government effort to extend home-ownership in lower-income neighborhoods. Now comes a new study from the National Bureau of Economic Research that says, quite bluntly. that the CRA played a major role. In the academic world, mealy-mouthed delivery of even powerful conclusions is the norm, so it's refreshing to see authors Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru answer the title's question, "Did the Community Reinvestment Act (CRA) Lead to Risky Lending?," with the clear, "Yes, it did. ... We find that adherence to the act led to riskier lending by banks." The full abstract reads: Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming. Investors Business Daily does a very nice job of summarizing the nature of the pressure brought on lenders (that's IBD's most excellent graphic, above): "We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities." She described "CRA-friendly products" as mortgages with less than "3% down" and "flexible underwriting." From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features. Note that the authors of the study caution that their work here may actually understate the impact of the CRA. How? Because the study assumes that the major impact of CRA took place when banks were undergoing examination regarding their compliance with CRA goals. If banks found it difficult to shift gears in preparation for such exams, they may have altered their overall behavior to satisfy politicians and regulators. Or, as the authors put it in their conclusion, "If adjustment costs in lending behavior are large and banks can’t easily tilt their loan portfolio toward greater CRA compliance, the full impact of the CRA is potentially much greater than that estimated by the change in lending behavior around CRA exams." The housing meltdown and the Great Recession. Something else for which you can thank the feds.
There is no law on the books and never has been that requires lenders to make loans to unqualified buyers. The CRA addresses the practice of redlining and nothing else. The "landmark" lawsuit resulted in a separate business being formed funded by the lenders involved in this lawsuit. These parties agreed that .01% of their mortgage portfolios would fund the program. Although the underwriting standards were different, loans were only made to qualified buyers. Even if every single mortgage made under this program had gone into foreclosure, the effect would have been negligible. This program had nothing to do with the mortgage meltdown. The National Bureau of Economic Research, Inc. is not a respected institution. Rather it's a partisan hack group. Conservatives fund many such groups. The massive amount of bad loans made was the result of deregulation of the financial sector and nothing else.
