GOP trying to put the blame for the financial crisis on poor people...

[GTKeeper]

Originally posted by: JS80
If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

I think right at #2 / #1 would be these 'bank like' institutions like countrywide giving people loans in the first place. Doing a REALLY piss ass poor job of confirming income/credit etc. You don't give a car to someone without a license.

 

[beyoku]

I would also like to add MANY of those black and Latino people that got those loans shouldn't have and actually had good credit. I dont know any BANK that would knowingly lend 200k to a anyone that only made 25k per year. I recently purchase my home in 2004 and it was not a simple process. At that time I only made like 38k and I BARELY qualified for a 120k house with mid 700 credit score. I had zero debt so I was able to buy and afford but it took about a WEEK of negotiating with BOA against a Arm loan or a Interest only loan or any of those other BS loans when i had a credit score of about 760.

A lot of people were railroaded into such loans. And anyone that was given a outrageous mortgage that they couldn't afford was simply a sign of greed on the part of those who were getting such HUGE commissions. SO while the housing market was one issue the mortgage backed securities were another. The whole swaps thing is like a gamble on a gamble on a gamble. Its like a pyramid scheme but UPSIDE DOWN. Once that capstone broke everything came tumbling down. And at the top of the tumbledown is a 531 TRILLION bubble. This bubble STILL hasn't gone 'POP'

 

[midway]

More lies by the right as they attempt to spin their way out of the fact that supply-side economics has buried the American economy.

http://www.mcclatchydc.com/251/story/53802.html

some quotes:

Federal Reserve Board data show that:

* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks ? not Fannie and Freddie ? dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

 

[JS80]

Originally posted by: shira

Originally posted by: JS80
If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

As I've written in several other posts, blaming the financial crisis on sub-prime loans is nonsense. The amount of loss attributable to sub-prime loans is minuscule compared with the overall losses associated with the crisis. And today in the Washington Post, Robert Samuelson confirms this:

Text

snip

Blaming the crisis on sub-prime mortgages (and therefore poor folk, F/F, and mortgage lenders) is just scapegoating at its worst. Sub-prime mortgages were just one relatively small aspect of a much larger issue: global malfeasance in the granting and using of credit throughout the financial markets.

It's not the subprime per say, but it's the easy credit that spilled over to prime in order to give easy credit to subprime. In order to give easy credit to subprime, you have to lower interest rates. You can't just lower it for subprime. So in doing so you create easy credit to prime (and ALL credit markets). Then comes securitization and revolving of the money. So technically you can blame subprime.

 

[JS80]

Originally posted by: GTKeeper

Originally posted by: JS80
If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

I think right at #2 / #1 would be these 'bank like' institutions like countrywide giving people loans in the first place. Doing a REALLY piss ass poor job of confirming income/credit etc. You don't give a car to someone without a license.

No but it was government sponsorship of mortgage securitization that influenced banks to give money away. Couple that with shady mortgage sheisters selling this crap you create a monster.

 

[JS80]

Originally posted by: beyoku
I would also like to add MANY of those black and Latino people that got those loans shouldn't have and actually had good credit. I dont know any BANK that would knowingly lend 200k to a anyone that only made 25k per year. I recently purchase my home in 2004 and it was not a simple process. At that time I only made like 38k and I BARELY qualified for a 120k house with mid 700 credit score. I had zero debt so I was able to buy and afford but it took about a WEEK of negotiating with BOA against a Arm loan or a Interest only loan or any of those other BS loans when i had a credit score of about 760.

A lot of people were railroaded into such loans. And anyone that was given a outrageous mortgage that they couldn't afford was simply a sign of greed on the part of those who were getting such HUGE commissions. SO while the housing market was one issue the mortgage backed securities were another. The whole swaps thing is like a gamble on a gamble on a gamble. Its like a pyramid scheme but UPSIDE DOWN. Once that capstone broke everything came tumbling down. And at the top of the tumbledown is a 531 TRILLION bubble. This bubble STILL hasn't gone 'POP'

Brick and mortar banks DID NOT lend the money. It was the fly by night mortgage sales LLCs that did this. Banks usually were holders of the MBS or was the warehouse lender.

 

[beyoku]

Mark Zandi of Moody's Economy.com estimates that all U.S. mortgage losses will ultimately reach $650 billion [Note: This is the total expected loss due to ALL mortgages, not just sub-primes, which are a small percentage of total mortgages - Shira]. But that hefty amount pales against the value of all financial assets -- stocks, bonds, bank loans. For the United States, these totaled almost $60 trillion at the end of 2007; for the world, the comparable figure exceeded $250 trillion.

And this is it folks - Sub Prime mortgage is an issue but its not THE issue. It could maybe be the straw that broke the camel's ( or Work mule, Oxen, Bull etc for political correctness) back.

All securites in the US are worth about 60 Trillion.
Everything (securities) in the world combined is about 250 Trillion.
The swaps and derivatives market is "worth" 530 TRILLION.

"The swap market is bigger than all ?real? wealth in the known universe. "
You have to understand what these derivatives are to see how this is much of the problem. The people on the TOP will ALWAYS attempt to blame some poor dummies for the problem.

 

[BurnItDwn]

I blame the poor.
Damn them for not having enough money. If they were all millionaires, then the government would collect more taxes from them, and then they wouldn't be such a drain on society!

 

[blackangst1]

Originally posted by: loki8481
poor people shouldn't have been "buying" houses that they couldn't afford. bankers shouldn't have been lending them the money. the government shouldn't have been encouraging banks to lend them the money.

there's plenty of blame for everyone, but ultimately, it was the defaulters choice to take loans they had no hope of repaying and often without actually reading what they were signing.

:thumbsup:

 

[Stuxnet]

Originally posted by: BurnItDwn
I blame the poor.
Damn them for not having enough money. If they were all millionaires, then the government would collect more taxes from them, and then they wouldn't be such a drain on society!

You've really thought this through, haven't you?

 

[BurnItDwn]

Originally posted by: jbourne77

Originally posted by: BurnItDwn
I blame the poor.
Damn them for not having enough money. If they were all millionaires, then the government would collect more taxes from them, and then they wouldn't be such a drain on society!

You've really thought this through, haven't you?

I was just trying to be as ridiculous as the GOP.

 

[shira]

Originally posted by: JS80

Originally posted by: shira

Originally posted by: JS80
If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

As I've written in several other posts, blaming the financial crisis on sub-prime loans is nonsense. The amount of loss attributable to sub-prime loans is minuscule compared with the overall losses associated with the crisis. And today in the Washington Post, Robert Samuelson confirms this:

Text

snip

Blaming the crisis on sub-prime mortgages (and therefore poor folk, F/F, and mortgage lenders) is just scapegoating at its worst. Sub-prime mortgages were just one relatively small aspect of a much larger issue: global malfeasance in the granting and using of credit throughout the financial markets.

It's not the subprime per say, but it's the easy credit that spilled over to prime in order to give easy credit to subprime. In order to give easy credit to subprime, you have to lower interest rates. You can't just lower it for subprime. So in doing so you create easy credit to prime (and ALL credit markets). Then comes securitization and revolving of the money. So technically you can blame subprime.

You're confusing cause and effect. You're saying that the initial objective was to grant more sub-prime loans, and that because of that objective interest rates were lowered, which spilled over into the rest of the global financial system.

That's utter nonsense. Interest rates in the U.S. were lowered (from 6.5% to 1% in the two-year period from 2001- to 2003) by Alan Greenspan in response to the dot-com bubble and 9/11, NOT in response to some desire to facilitate sub-prime mortgages. Those lowered interest rates helped create - among many other things - the housing bubble. And poor people - just like the rest of us - wanted a piece of the action.

Fannie, Freddie, and the CRA all contributed to the sub-prime problem, but saying sub-prime was the "original sin" is just absurd. The sub-prime problem was one relatively small piece of a much larger set of reckless behaviors in the financial sector.

 

[Stuxnet]

Originally posted by: BurnItDwn

Originally posted by: jbourne77

Originally posted by: BurnItDwn
I blame the poor.
Damn them for not having enough money. If they were all millionaires, then the government would collect more taxes from them, and then they wouldn't be such a drain on society!

You've really thought this through, haven't you?

I was just trying to be as ridiculous as the GOP.

... right...

 

[eleison]

Originally posted by: jbourne77

Originally posted by: BurnItDwn

Originally posted by: jbourne77

Originally posted by: BurnItDwn
I blame the poor.
Damn them for not having enough money. If they were all millionaires, then the government would collect more taxes from them, and then they wouldn't be such a drain on society!

You've really thought this through, haven't you?

I was just trying to be as ridiculous as the GOP.

... right...

People stop fighting. With the bailout and everything, I know a solution. Just print more money. We'll all be millionaires!!!

 

[JS80]

Originally posted by: shira

Originally posted by: JS80

Originally posted by: shira

Originally posted by: JS80
If the question is, what was the "root" of the cause, I'd say the first is government sponsorship of homeownership (fannie, freddie, mortgage interest tax deduction, low interest rates) and a tie for second - poor people and speculators. Third would be the dirty salesmen who sold the mortgages.

As I've written in several other posts, blaming the financial crisis on sub-prime loans is nonsense. The amount of loss attributable to sub-prime loans is minuscule compared with the overall losses associated with the crisis. And today in the Washington Post, Robert Samuelson confirms this:

Text

snip

Blaming the crisis on sub-prime mortgages (and therefore poor folk, F/F, and mortgage lenders) is just scapegoating at its worst. Sub-prime mortgages were just one relatively small aspect of a much larger issue: global malfeasance in the granting and using of credit throughout the financial markets.

It's not the subprime per say, but it's the easy credit that spilled over to prime in order to give easy credit to subprime. In order to give easy credit to subprime, you have to lower interest rates. You can't just lower it for subprime. So in doing so you create easy credit to prime (and ALL credit markets). Then comes securitization and revolving of the money. So technically you can blame subprime.

You're confusing cause and effect. You're saying that the initial objective was to grant more sub-prime loans, and that because of that objective interest rates were lowered, which spilled over into the rest of the global financial system.

That's utter nonsense. Interest rates in the U.S. were lowered (from 6.5% to 1% in the two-year period from 2001- to 2003) by Alan Greenspan in response to the dot-com bubble and 9/11, NOT in response to some desire to facilitate sub-prime mortgages. Those lowered interest rates helped create - among many other things - the housing bubble. And poor people - just like the rest of us - wanted a piece of the action.

Fannie, Freddie, and the CRA all contributed to the sub-prime problem, but saying sub-prime was the "original sin" is just absurd. The sub-prime problem was one relatively small piece of a much larger set of reckless behaviors in the financial sector.

Fine, reword to "loosening standards" to help subprime spilled over to prime.

 

[chess9]

Kudlow is a big part of the problem. He was pushing many of these derivatives and wild investments. He's the LAST person who should be opening his mouth, but why should anyone be surprised that a right winger is so fucking dumb?

The derivative and option market was at least 20 times bigger than the mortgage market, and maybe 30 times bigger. It's THAT market that caused this problem. How do you think those investment bankers got $50 million dollar bonuses? From mortgage loans to poor people? Right...and most of you will believe it, which is the really scary part. No wonder the American people have the worst government among industrialized nations....

Most of you don't have a remote CLOO about these problems. Quit trying to sound like you actually understand. The Secretary of the Treasury doesn't understand, so how could you?

-Robert

 

[JS80]

Originally posted by: chess9
Kudlow is a big part of the problem. He was pushing many of these derivatives and wild investments. He's the LAST person who should be opening his mouth, but why should anyone be surprised that a right winger is so fucking dumb?

The derivative and option market was at least 20 times bigger than the mortgage market, and maybe 30 times bigger. It's THAT market that caused this problem. How do you think those investment bankers got $50 million dollar bonuses? From mortgage loans to poor people? Right...and most of you will believe it, which is the really scary part. No wonder the American people have the worst government among industrialized nations....

Most of you don't have a remote CLOO about these problems. Quit trying to sound like you actually understand. The Secretary of the Treasury doesn't understand, so how could you?

-Robert

lol why are you pretending like you know how the derivatives work? or rather how anything works? Your post proves your ignorance.

 

[Stuxnet]

Originally posted by: chess9
why should anyone be surprised that a right winger is so fucking dumb?

I love this place.

 

[heyheybooboo]

Originally posted by: midway
More lies by the right as they attempt to spin their way out of the fact that supply-side economics has buried the American economy.

http://www.mcclatchydc.com/251/story/53802.html

some quotes:

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks ? not Fannie and Freddie ? dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

I take a McClatchy newspaper and caught that this weekend.

The issue is FM/FM securitized asset-backed paper and is obligated for payments due on the MBSs that fail. "Credit enhancement" (it's not as bad as it sounds) by way of traunches and over-collateralization were effectively a surety that investors will receive the payments associated with the securities. But the bottom line is FM/FM are on the 'hook'.

The originators were able to remove loans from their books resulting in lower regulatory and capital reserve requirements, and through the use of the securitization process were able to provide even more credit. Sounds like a great plan, huh?

The purpose of all this from the institutions' standpoint was to unlock the value of their loans (or 'illiquid assets') in the short term. FM/FM were the black hole of securitization for all loans (or more than 2/3s of 'em, anyway), not just sub-prime.

IIRC efforts were made in 2003 to require assigning liability to the purchaser of the loans (and possibly some other regulatory 'stops') but all that pretty much went nowhere. Not sure exactly what McCain's proposal was and any potential impact it may have had on all this ... some folks definitely saw it coming 5 or 6 years ago.

 

[Vic]

Originally posted by: HomerJS
I was watching the Morning Joe show when Larry Kudlow started this next Republican talking point, poor people are to blame for this crisis. This line has been spreading and will continue, even harder in the swing states.

Article

Another article on this ridiculous right-wing smear tactic - Text

Private sector loans, not Fannie or Freddie, triggered crisis

By David Goldstein and Kevin G. Hall | McClatchy Newspapers

WASHINGTON ? As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.

Federal Reserve Board data show that:

* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.

* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.

* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.

Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.

"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.

Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.

It's a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more.

This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.

To be sure, encouraging lower-income Americans to become homeowners gave unsophisticated borrowers and unscrupulous lenders and mortgage brokers more chances to turn dreams of homeownership in nightmares.

But these loans, and those to low- and moderate-income families represent a small portion of overall lending. And at the height of the housing boom in 2005 and 2006, Republicans and their party's standard bearer, President Bush, didn't criticize any sort of lending, frequently boasting that they were presiding over the highest-ever rates of U.S. homeownership.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks ? not Fannie and Freddie ? dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

In 1999, the year many critics charge that the Clinton administration pressured Fannie and Freddie, the private sector sold into the secondary market just 18 percent of all mortgages.

Fueled by low interest rates and cheap credit, home prices between 2001 and 2007 galloped beyond anything ever seen, and that fueled demand for mortgage-backed securities, the technical term for mortgages that are sold to a company, usually an investment bank, which then pools and sells them into the secondary mortgage market.

About 70 percent of all U.S. mortgages are in this secondary mortgage market, according to the Federal Reserve.

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

Congress created the CRA in 1977 to reverse years of redlining and other restrictive banking practices that locked the poor, and especially minorities, out of homeownership and the tax breaks and wealth creation it affords. The CRA requires federally regulated and insured financial institutions to show that they're lending and investing in their communities.

Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac ? who in turn pressured banks and other lenders ? to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans.

These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans.

In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today's problems.

"Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans," she said. "The CRA has increased the volume of responsible lending to low- and moderate-income households."

In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he wrote, "that this new lending is good business."

 

[heyheybooboo]

Originally posted by: blackangst1

Originally posted by: loki8481
poor people shouldn't have been "buying" houses that they couldn't afford. bankers shouldn't have been lending them the money. the government shouldn't have been encouraging banks to lend them the money.

there's plenty of blame for everyone, but ultimately, it was the defaulters choice to take loans they had no hope of repaying and often without actually reading what they were signing.

:thumbsup:

Failure, in your case, fits.

 

[Vic]

For the "it's all Clinton's fault" crowd - Bush's "America's Homeownership Challenge 2002"

White House.gov - Fact Sheet: President Bush Calls for Expanding Opportunities to Homeownership June 17, 2002

Fact Sheet: President Bush Calls for Expanding Opportunities to Homeownership

# Today, President Bush announced a new goal to help increase the number of minority homeowners by at least 5.5 million before the end of the decade. The President's aggressive housing agenda will help dismantle the barriers to homeownership by providing down payment assistance, increasing the supply of affordable homes, increasing support for self-help homeownership programs, and simplifying the home buying process & increasing education. The President also issued "America's Homeownership Challenge" to the real estate and mortgage finance industries to join in his effort to increase the number of minority homeowners by taking concrete steps to tear down the barriers to homeownership that face minority families.

Background on the President's Homeownership Agenda

Buying a home is the biggest single investment most people will make in their lives. Homeownership is a cornerstone of America's healthy, vibrant communities, and benefits individual families by helping them build stability and long term financial security. But sadly, homeownership is out of reach for many Americans -- especially for minority families. For millions of these families, homeownership is a distant, unreachable dream.

President Bush has a comprehensive agenda to help increase the number of minority homeowners by at least 5.5 million before the end of the decade.

While the overall homeownership rate has reached an all time high of nearly 68 percent, the statistics show a clear and persistent homeownership gap:

* Despite increases in minority homeownership during the decade of the 1990s, large persistent gaps between non-Hispanic whites and minorities remain and have narrowed only slightly;

* According to HUD, in 1994 the minority homeownership rate was 26.8 percent below the rate for white households;

* The African-American homeownership rate was 27.5 percentage points below the white rate, and the Hispanic rate was 28.8 percentage points below the white rate;

* The second quarter Census data for 2002 shows that non-Hispanic whites have a 74.3% homeownership rate, while African-Americans have a 48% rate and Hispanics a 47.6% rate; and

* Asian-Americans and other races have a 53.7% homeownership rate.

A new report from the Department of Housing and Urban Development (HUD) -- which analyzed the most recent homeownership data from the U.S. Census Bureau -- highlights the many barriers that prevent minority families from owning their own home. The barriers include:

* A lack of inventory of affordable single-family housing available for sale in many areas where a majority of residents are minority families;

* A need for down payment assistance, which affects minority families to a greater extent than non-Hispanic whites because they have less accumulated wealth that can be used to help children with down payments;

* A lack of access to affordable mortgage credit;

* A lack of understanding of the homebuying process;

* Weak credit histories, often arising from a poor understanding of financial matters and where financial counseling is required;

* A lack of information about available homeownership programs in the community; and

* Language difficulties or cultural differences.

It doesn't have to be this way. The President's agenda will help tear down the barriers to homeownership that stand in the way of our nation's African-American, Hispanic and other minority families by:

# Providing Downpayment Assistance. The single biggest barrier to homeownership is accumulating funds for a down payment. The President has proposed $200 million annually for the American Dream Downpayment Fund to help roughly 40,000 families a year with their down payment and closing costs.

# Increasing the Supply of Affordable Homes. The President wants to dramatically increase the supply of homes available to low and moderate income families. The President has proposed the Single-Family Affordable Housing Tax Credit, which will provide approximately $2.4 billion to encourage the production of 200,000 affordable homes for sale to low and moderate income families.

# Increasing Support for Self-Help Homeownership Programs. The President's budget triples funding for organizations, such as Habitat for Humanity, that help families help themselves become homeowners through sweat equity and volunteerism in their communities.

# Simplifying the Home Buying Process & Increasing Education. When buying a home today a buyer faces a confusing and complicated process. The President and HUD want to empower homebuyers by simplifying the home buying process so consumers can better understand and benefit from cost savings. The President also wants to expand financial education efforts so that families can understand what they need to do to become homeowners.

The President also believes that government alone can't close America's homeownership gap. It is critical that our government challenge the private sector to take concrete steps to tear down the barriers to homeownership that face minority families. The President is issuing "America's Homeownership Challenge" to the real estate and mortgage finance industries to join in his effort to increase the number of minority homeowners by 5.5 million families by the end of the decade. Many organizations have already responded to the President's challenge by committing to:

# Substantially increase by at least $440 billion, the financial commitment made by the government sponsored enterprises involved in the secondary mortgage market, specifically targeted toward the minority market;

# Launching twenty-five different local initiatives across the nation, geared toward eliminating the specific homeownership barriers faced by minority families in those communities;

# Raising $750 million in below-market-rate investments by 2007, which will work in collaboration with local homeownership initiatives and be targeted to heavily minority program areas;

# Pursuing strategic partnerships in 20 top housing markets between homebuilders, lenders, local officials, and community leaders to develop approaches that address the local challenges to building homes for minority families living in urban centers;

# Establishing faith-based housing partnerships between the participants and at least 100 churches, mosques, synagogues, and other faith-based institutions;

# Aggressively developing new mortgage products so that conventional market alternatives are available to combat the predatory loan products that are disproportionately targeted to minorities;

# Creating new mortgage products to meet the unique needs of recent immigrants;

# Dramatically expanding financial education efforts for minorities, providing financial counseling to at least 380,000 minority families, and taking measures at the local level to reduce predatory lending; and

# Establishing multilingual, consumer-oriented internet Web sites designed to help minorities overcome barriers to homeownership, including creation of a central data bank of affordable housing programs made available to real estate agents when working with clients.

For more information on the President's initiatives please visit www.whitehouse.gov.

 

[Vic]

Originally posted by: JS80
Fine, reword to "loosening standards" to help subprime spilled over to prime.

Nope, that was done by executive order, when Bush required last year that Fannie/Freddie and FHA help bailout the imploding subprime market. I love the question at the end BTW.

August 31, 2007, Bush shoves the burden of the imploding toxic subprime markets off on Fannie/Freddie and FHA Text

President Bush Discusses Homeownership Financing
Rose Garden
August 31, 2007
11:05 A.M. EDT

THE PRESIDENT: Good morning. Thank you for joining me. Secretary Paulson and Secretary Jackson gave me an update on the strong fundamentals of our nation's economy. Economic growth is healthy, and just yesterday we learned that our economy grew at a strong rate of 4 percent in the second quarter of this year. Wages are rising, unemployment is low, exports are up, and steady job creation continues.

We also had a good discussion about the situation in America's financial markets. The markets are in a period of transition, as participants reassess and re-price risk. This process has been unfolding for some time, and it's going to take more time to fully play out. As it does, America's overall economy will remain strong enough to weather any turbulence.

One area that has shown particular strain is the mortgage market, especially what's known as the sub-prime sector of the mortgage market. This market has seen tremendous innovation in recent years, as new lending products make credit available to more people. For the most part, this has been a positive development, and the reason why is millions of families have taken out mortgages to buy their homes, and American homeownership is at a near all-time high.

Unfortunately, there's also been some excesses in the lending industry. One of the most troubling developments has been the increase in adjustable rate mortgages that start out with a very low interest rate and then reset to a higher rate after a few years. This has led some homeowners to take out loans larger than they could afford based on overly-optimistic assumptions about the future performance of the housing market. Others may have been confused by the terms of their loan, or misled by irresponsible lenders. Whatever the reason they chose this kind of mortgage, some borrowers are now unable to make their monthly payments, or facing foreclosure.

Complicating the situation for borrowers is the nature of today's mortgage market. In many cases, the neighborhood banker who issued a family's mortgage does not own that mortgage for long. Instead, mortgages are sold as securities on the global market. And that makes it harder for the lender and borrower to renegotiate.

The recent disturbances in the sub-prime mortgage industry are modest -- they're modest in relation to the size of our economy. But if you're a family -- if your family is one of those having trouble making the monthly payments, this problem doesn't seem modest at all. I understand these concerns, and therefore, I've made this a top priority to help our homeowners navigate these financial challenges, so that many families as possible can stay in their homes. That's what we've been working on, a plan to help homeowners.

We've got a role, the government has got a role to play -- but it is limited. A federal bailout of lenders would only encourage a recurrence of the problem. It's not the government's job to bail out speculators, or those who made the decision to buy a home they knew they could never afford. Yet there are many American homeowners who could get through this difficult time with a little flexibility from their lenders, or a little help from their government. So I strongly urge lenders to work with homeowners to adjust their mortgages. I believe lenders have a responsibility to help these good people to renegotiate so they can stay in their home. And today I'm going to outline a variety of steps at the federal level to help American families keep their homes.

First, we're going to work to modernize and improve the Federal Housing Administration -- that's known as the FHA. The FHA is a government agency that provides mortgage insurance to borrowers through a network of private sector lenders. Sixteen months ago I sent Congress an FHA modernization bill that would help more homeowners qualify for this insurance by lowering down-payment requirements, by increasing loan limits and providing more flexibility in pricing. These reforms would allow the FHA to reach families that need help, those with low incomes and less-than-perfect credit records or little savings.

Last year the House passed this bill with more than 400 votes. Unfortunately, Congress hasn't acted this year. It would be a good task for Congress to come and get FHA modernization done so that we can help these people refinance their homes, so more people can stay in their homes. I look forward to signing a bill as quickly as possible.

In the coming days, the FHA will launch a new program called FHA-Secure. This program will allow American homeowners who have got good credit history but cannot afford their current payments to refinance into FHA-insured mortgages. This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes. In other words, we're going to start reaching out and making sure people know that this option is available to them so they can stay in their homes.

Second, I'm going to work with Congress to temporarily reform a key housing provision of the federal tax code, which will make it easier for homeowners to refinance their mortgages during this time of market stress. Under current law, homeowners who are unable to meet their mortgage payments can face an unexpected tax bill. For example, let's say the value of your house declines by $20,000 and your adjustable rate mortgage payments have grown to a level you cannot afford. If the bank modifies your mortgage and forgives $20,000 of your loan, the tax code treats that $20,000 as taxable income. When your home is losing value and your family is under financial stress, the last thing you need to do is to be hit with higher taxes.

So I believe we need to change the code to make it easier for people to refinance their homes and stay in their homes. And to this end, I've called Senator Debbie Stabenow of Michigan and told her that she's on to a good idea with the bill that she and George Voinovich have submitted to the Senate. The House has got Rob Andrews of New Jersey and Ron Lewis of Kentucky introducing legislation that is a positive step toward changing the tax code so people aren't penalized when they refinance their homes. With a few changes in the Senate version and the House version, this administration can support these bills, and we look forward to working with them -- the senators and the members of the House -- to pass common-sense legislation to help us address this issue.

Third, my administration will launch a new foreclosure avoidance initiative to help struggling homeowners find a way to refinance. Secretary Jackson and Secretary Paulson are going to reach out to a wide variety of groups that offer foreclosure counseling and refinancing for American homeowners. These groups include community organizations like NeighborWorks and mortgage lenders and loan services, and the FHA, as well as government-sponsored enterprises like Fannie Mae and Freddie Mac. These organizations exist to help people refinance, and we expect them to do that.

See, it's easy for me to stand up here and talk about refinancing -- some people don't even know what I'm talking about. And we need to have a focused effort to help people understand the mortgage financing options available to them, or to identify homeowners before they face hardships and help them understand what's possible.

Finally, the federal government is taking a variety of actions to make the mortgage industry more transparent, more reliable and more fair, so we can reduce the likelihood that these kind of lending problems won't happen again. Federal banking regulators are improving disclosure requirements to ensure that lenders provide homeowners with complete and accurate and understandable information about their mortgages, including the possibility that their monthly payments could rise dramatically. In other words, we believe that if the consumer is better informed, these kind of problems won't arise -- are less likely to arise in the first place. Banking regulators are also strengthening lending standards to help ensure that borrowers are not approved for mortgages larger than they can handle.

This administration will soon issue regulations that require mortgage brokers to fully disclose their fees and closing costs. We're pursuing wrongdoing and fraud in the mortgage industry through the Department of Housing and Urban Development, the Department of Justice, the Federal Trade Commission, and other agencies. In other words, if you've been cheating somebody we're going to find you and hold you to account. And we'll continue to do our part to help improve all aspects of the mortgage marketplace that is really important to this economy of ours.

With all the steps I've outlined today we will deliver help and hope to American families who need it. We'll help guard against future problems in the housing sector. We'll reaffirm the vital place of homeownership in our nation. When more families own their own homes, neighborhoods are more vibrant and communities are stronger, and more people have a stake in the future of this country.

Owning a home has always been at the center of the American Dream. Together with the United States Congress I will continue working to help make that dream a reality for more of our citizens. Thank you.

Q: Sir, what about the hedge funds and banks that are overexposed on the sub-prime market? That's a bigger problem. Have you got a plan?

THE PRESIDENT: Thank you.

 

[Stuxnet]

Originally posted by: heyheybooboo
some folks definitely saw it coming 5 or 6 years ago.

There were folks who saw it coming 15 years ago.

 

[eleison]

Originally posted by: jbourne77

Originally posted by: heyheybooboo
some folks definitely saw it coming 5 or 6 years ago.

There were folks who saw it coming 15 years ago.

Yea, and from what it seems, most democrats poo-poohed these folks away by saying, "why are you trying to keep low income families from buying homes..."