How accurate do you think this view is? I'am familiar with the redlining issue. I wonder if it will come out that many of the foreclosures were the results of mortgage companies giving loans to people who were bad risks in order to correct past accusations of redlining?
Feeling guilty or compensating for redlining in the past had nothing to do with it. It all had to do with greedy speculation. http://hnn.us/articles/41986.html This excuse is just another example of the obscenely rich trying to foist the blame on the working poor.
Belive me redlining is from the way past. The big color in home loans is Green, we made money off of anybody we could. I'm out of that industry now though. The Community Reinvestment Act prevented banks from doing mergers unless they could demonstrate commitment to lending in certain zip codes. Those previoulsy underserved markets. Therefore the wholesalers would pay additional premium to brokers who could bring in these loans. The loans were doubly profitable for the mortgage broker. Brokers acted as "fixers" who could "sculpt" an application and shop it between big lenders to find a lender accepting of the particular aspects of the Applicant. I'm not so sure that the recent relaxed standards were related to past abuses of poorer communities. Mortgage lending changed in the early 90's with the advent of Automated Underwriting programs and credit scoring. The wave of bank mergers of the 90's changed the people in the industry. We had a big wave of Car Guys getting into the industry replacing staid old bankers with aggresive commision seeking deal makers. Emphasis changed from volume to margin. Many addditional private lenders came into the industry bringing in diferent lending programs. The thought that anybody was underserved anymore was laughable. It seemed 10% of the population was hawking diferent mortgages. I worked a downtown community lender near a stadium, our office was flooded with wholesale mortgage sales reps. each proffering diferent flavored offerings. The problen arose when the goverment lenders, the FNMA's & FHLMC's sought to keep up with the market and relaxed standards. Are these guys prudent lenders or are they a goverment program. The problem arises from the confusion. We could use a liquid and healthy Goverment program to help housing now, unfortunately when they should have been keepin thier powder dry duing the rush, they shot thier load and are now crippled with bad debt. The forclosures are the logical result of cyclical housing industry, we had a smaller episode in 1991/1993
That Jewish World Review piece is just amazing. Who are they trying to protect while spewing racist/ethnic stereotypes, and an outright fabrication of what actually happened.
I doubt that it was redlining. It was a speculative bubble. Mortgage lending was considered almost risk free, since property prices were rising so fast that even if the borrower defaulted, which few were doing, you could recover 100% plus all your costs due to collateral appreciation. The common belief was that the risks of subprime lending had been overstated and diversification would save you. Plus the boom in securitisation disconnected originators from the risks. Its what happens at the end of a long boom - profit margins keep getting driven down and investors compromise more and more to get that little bit of extra yield.
So why is the Jewish Review article blaming poor whites and blacks for the problem? What happened now is what happened when the Savings and Loans collapsed, yet we have done nothing to prevent the same thing from happening in the future. And Bush should understand the dynamics that have lead to it. Hell his brother got rich with the Savings and Loans. http://rationalrevolution.net/war/bush_family_and_the_s.htm Gas and fuel price escalation is just further exploitation of what Enron did to California. Has this administration not closed any of the holes?
And our patriotic admiral's son, had a hand in the Savings and Loan Scandals. He's been a Senator for how long? He hasn't closed the loopholes? One has to ask why? http://query.nytimes.com/gst/fullpage.html?res=950DE6DF1031F931A15751C1A96F948260 What about the Enron loophole? http://www.baltimorechronicle.com/2008/051908Leopold.shtml
Show me where government told them not to verify income or employment? That's not even good business practice. They assumed the risk voluntarily betting on an ever increasing market. Bad call. They should face up.
Looks like racial profiling to me What happens when anyone mentions jews, we are labeled as anti-semites. What happens when you pit Asians against poor/working whites and blacks? You didn't have to lend your money to anyone you didn't wish to, you were seeking profit. You have to accept your own risk. Show me where government forced your increased risk? Please, I'd love to see it. Aren't these free markets?
Can't we have one political thread with out the word "jew" in it ? Work from this Gardener - no mention of Jews. http://www.briangreene.com/bhg/2008/a-global-shock-to-the-system/
If a Mortgage Banker has tougher, more restrictive lending standards for a certain sub-group, than it does for everybody else; Then it would stand that members of this sub-group (Racial identity) would have to be more qualified to be approved for a loan than the general population at large. If the sub-group faced a higher bar, so to speak, then it would naturally follow that this sub-group would have a lower default rate than the population at large. I dont have any figures or links but the proof is in the default rates. If memory serves they are neither higher or lower than the average.
My best guess is that subprime borrowers split into two camps. On the one hand, there are the Noble Few, who took advantage of excess liquidity to get their feet onto the bottom rung of the property ladder. These are people who wanted very much to buy a house – not as an investment, so much as to own their own home. They locked in fixed rates, comfortable that they would be able to make their mortgage payments for the next 15 or 30 years: however long it took to buy the house outright. But the Noble Few were outnumbered by the Reckless Many, who had dollar signs dancing in front of their eyes and would read daily in the newspaper of the fortunes being made in the property market by people who followed the time-worn advice to "buy the biggest house you can afford". Maybe they were would-be flippers, who never intended to own their home for longer than the period of the initial teaser rate. Or they were people who wanted or needed cash, for a family emergency or just for a flat-screen TV, and they wanted to borrow that money at the lowest possible rate. Or they were suckers who were taken advantage of by unscrupulous mortgage brokers. Or they were simply financially naive, and determined that the cheapest mortgage they could get must be the best mortgage they could get. http://www.portfolio.com/views/blog...-day-fixed-vs-variable-subprime-default-rates
No matter.We the taxpayers will pick up the slack.As usual.The republicans are notoriously against oversight of any type of business.They fuck it up?Federal(mine and your)money will cover it.Gramm is a typical republican cocksucker.
No, hundreds of them are going bankrupt and shareholders are losing everything. And the shareholders of the ones that are still alive are losing too - Citibank shareholders alone have lost about $150 billion dollars.
