Obama seeks to reduce government's role in mortgages

[her209]

Entitlement mentality took over and caused a crash.

Entitlement to easy money maybe.

Borrowers were overborrowing because they were able to thanks to interest-only loans, no-down mortgages, etc. AND because speculation that housing prices would continue going up so it didn't matter if they had a huge balloon payment in 3-5 years because they would have already sold their house and paid back the mortgage and pocketed the difference TAX FREE. In addition, borrowers would be able to deduct those large interest payments from their income taxes.

Real estate companies were upselling buyers on houses because they were making huge commissions to do so. They were able to convince many buyers to buy more than they afford because of the easy access to interest-only loans, no-down mortgages, etc., and told buyers that they could just sell their houses and make a profit because housing prices would continue to go up and if you waited, it may cost them more later.

Lenders were overlending because they could sell the mortgage to Fannie and Freddie but they were also issuing their mortgage back securities of their own. By pooling a large number of mortgages, they thought that it was impossible for a large number of borrowers to default. And it was OK if a borrower did default because they could turn around and sell the foreclosed house for more than what the defaulted borrower bought it for thanks to the hot housing market. A win-win scenario for them.

Mortgage back security buyers were willing to buy them because they were yielding a relatively high rate of return. And thanks to the mortgage pooling and tranching taking place, rating agencies bought into the lie and were rating them with the highest ratings. The problem was exacerbated when the junk bonds, i.e., the lowest traunches, were being bundled and traunched again and resold as AAA. Rinse repeat.

 

[CycloWizard]

You need to read a book, to get a better understanding than that simplistic one that just has a bit of truth to it. I can recommend books if you want.

As you may recall, I asked you for such books. The list you provided turned out to be mostly rubbish for explaining anything except your perspective. What is the point of reading material that only tells you what you want to hear, or selectively interpreting every event to suit your predetermined worldview? The Creationists do as much.

 

[epidemis]

Need cuts on medicaid and social security!

 

[Jhhnn]

The ownership society was ruined by too many people who wanted something for nothing. The lenders were happy to comply because the risk could ultimately be passed to the taxpayer. By the height of the market Fannie mae and Freddie Mac were purchasing over 40% of subprime mortgage back securities. Underwriting went to hell. Most of the pre-2005 subprime mortgages actually performed as expected. Entitlement mentality took over and caused a crash.

Not quite. Lenders were happy because risk was passed on to investors via securitization. the GSE's didn't buy the worst mortgage securities- those were sold to investors directly via Wall St.

The only reason that pre- 2005 adjustable rate subprime short term mortgages performed as expected is that buyers escaped into long term notes enabled by rising prices. Performance of long term subprime instruments has been as expected all along when the general downturn of the economy is taken into account. When interest rates rose & prices (expressed as monthly payments) became unsustainable, the whole ponzi scheme collapsed on itself.

The ownership society was a scam all along, part of the larger scam perpetrated by the true Bush constituency for the last 30 years. One of the things many people believe is that lenders won't lend them more than they can reasonably afford to repay, that lenders operate on conservative principles. That hasn't been true for some while, so the sharpies preyed on the hopes, dreams fears and aspirations of the pigeons once again, and have apparently convinced many of the remaining pigeons that it really was the pigeons' own fault...

Blaming the victims is peachy and all, but the sad truth is that we're all victims, anybody who didn't profit handsomely from the bubble. Just because one's ideology prevents them from seeing it that way doesn't mean it's not true.

 

[crownjules]

The ownership society was a scam all along, part of the larger scam perpetrated by the true Bush constituency for the last 30 years. One of the things many people believe is that lenders won't lend them more than they can reasonably afford to repay, that lenders operate on conservative principles. That hasn't been true for some while, so the sharpies preyed on the hopes, dreams fears and aspirations of the pigeons once again, and have apparently convinced many of the remaining pigeons that it really was the pigeons' own fault...

But let's not tax them a little more to try and repay the huge deficit they largely helped to incur. They DESERVE that money that they EARNED fair and square, just like you and me.

 

[hal2kilo]

Not quite. Lenders were happy because risk was passed on to investors via securitization. the GSE's didn't buy the worst mortgage securities- those were sold to investors directly via Wall St.

The only reason that pre- 2005 adjustable rate subprime short term mortgages performed as expected is that buyers escaped into long term notes enabled by rising prices. Performance of long term subprime instruments has been as expected all along when the general downturn of the economy is taken into account. When interest rates rose & prices (expressed as monthly payments) became unsustainable, the whole ponzi scheme collapsed on itself.

The ownership society was a scam all along, part of the larger scam perpetrated by the true Bush constituency for the last 30 years. One of the things many people believe is that lenders won't lend them more than they can reasonably afford to repay, that lenders operate on conservative principles. That hasn't been true for some while, so the sharpies preyed on the hopes, dreams fears and aspirations of the pigeons once again, and have apparently convinced many of the remaining pigeons that it really was the pigeons' own fault...

Blaming the victims is peachy and all, but the sad truth is that we're all victims, anybody who didn't profit handsomely from the bubble. Just because one's ideology prevents them from seeing it that way doesn't mean it's not true.

Buh, Buh, Buh, Barney Frank blah, blah, blah

 

[Craig234]

Edit: I misinterpreted hal2kilo's post. Zebo pointed that out, so I removed the post based on the misunderstanding.

 

[Zebo]

He was mocking the idiots blaming CRA.