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New Clues on Foreclosures
There's new evidence on what caused the foreclosure crisis—and it may not all fall on the shoulders of subprime lenders. A new study from a database of millions of individual loans suggests the most important factor was whether a homeowner had negative equity in their home, and that the balance of the mortgage was greater than the value of the house. So-called "liar loans" had almost no impact on foreclosures, the Wall Street Journal's Stan Liebowitz reports, and the most important factor was "whether or not the homeowner currently has or ever had an important financial stake in the house."
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Deregulation by Clinton / Bush 43 caused a major part of our problems. It allowed all this to come to fruition.
Why Barney Frank, Chuck Schumer & Chris Doo are in jail, facing major prison sentences, baffles me. Same for Jamie Gorelich & C. Raines, too.
Nick-
Stop making nonsense talk
And get yourself some information.
For the love of God.
http://www.rollingstone.com/politics/story/28816321/the_great_american_b ubble_machine
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nickatdabeach,and they are still making regulations. Not all Demos are good and not all repub are bad We need great leaders on all sides,and those who are truthfull and do not want to line their pockets over others.They should line them,but fairly.We are becoming like sheep it baffles us,we dont like it, we accept it and wait.!!
Let's also not forget the Community Reinvestment Act, which was a Jimmy Carter initiative. It was amended in 1994 by Janet Reno and Bill Clinton in the wake of the LA riots to force banks to stop the practice of red-lining black neighborhoods. The banks had to do something with the risky loans, so they sold them to the hedge funds -- and the rest is history. Each time the Bush Administration tried to stop this practice, Barney Fag and Chris Dodd would jump up and scream racism.
Liberals like Barney Frank and Chris Dodd wanted to see more poor people buying homes, so they pushed Fannie and Freddie to adopt "liberal" policies and underwrite home loans to people who couldn't afford the homes. These stupid liberal policies triggered the crisis. The liberals pushed banks to make sub-prime loans to sub-prime borrowers.
Apparently you cannot read. The article says exactly the opposite. The whole point was that more foreclosures are from Prime loans, not sub-prime. So, next time, read the article 1st before spread your gems of wisdom.
Apparently you cannot read or think. The housing downturn STARTED with sub-prime mortgages. The whole point of the WSJ article was that price collapses that started in the sub-prime market are now affecting the prime loan market, leading to additional foreclosures from houses bought with prime loans and worsening the housing slump that began with sub-prime loans. So, next time, understand the world around you before spread your plaster gems of wisdom. Cheers!
the article is wrong and we all know it, Plant is right
No squigg-
Plant is NOT right.
That's the sixth grade version.
The article is wrong ritarita, sub prime loans were made to people who should never have gotten loans, then ARM's, then the economy fell apart and the tumble began, the housing market never would have been so inflated if the banks weren't pushing easy loans. That is the truth and the article is a puff piece, don't believe it, I promise, it is wrong.
Plant is not right. The housing downturn started because the bubble economy was in trouble. The house prices were going up too fast and too many people were counting on that. Sub prime mortgages were only a small part of the problem; the rise in home equity loans with LTV of 100% were the real problem. You had too many speculators trying to "flip" homes. You had too many borrowers using interest only and then defaulting when the mortgage rate jumped to cover i p. The whole system crashed only because the loans were securitized and tranched and there was no safety net (too many over leveraged security holders and CDS guarantors).
Plant does not let facts get in the way of his opinion.
In case you do not know, a sub-prime loan was one with higher interest made to someone who did not qualify based on loan default models. Sub-prime refers to prime rate (interest rate). The choice to lend to those with a higher chance of default due to credit score, past history, unsteady income or lack of verification, etc. was made by the banks. Fannie Mae asked for permission to ease the rules to get a larger market to lend to.
Most of the 0 down and interest only for X months loans were prime.
So, please get your facts straight.
Apparently you can't read either -- between the lines. Everyone knows this crisis was caused by making loans to people who couldn't afford them and everyone knows Liberal Democrats like Barney Fag and Chris Dodd pushed the banks to make these loans.
Jakedog - "reading between the lines" is apparently code for "making up nonsense". There is no evidence that Frank or anyone else pushed any banks to do anything - as though they could (pre-bailout, banks were not listening to congress). The banks wanted to make loans to more people because they could sell these loans on the back-end. The culprits are those that figured out a way around the asset rules - the ibanks that securitized all loans so they could leverage the money many times over. Everyone in the chain is guilty - they all did it because they were making a lot of money.
The point of the WSJ article is purely that a large number of the defaults have been prime loans (people who could afford it), either because they no longer could afford it (lost job, over extended, etc) or because they went underwater and just walked away from the loan. Even in the early days of the bubble bursting, this was happening because many middle class people were buying speculative homes in places like Las Vegas and central valley of CA and were counting on prices only going up.
The question I always ask myself when I hear this argument; is WHY did the "liberals" push for home ownership in poorer neighborhoods?
Could it be that when people have a stake in their nieghborhood they are more inclined to take care of it? The effect of which reduces CRIME, and increases the potential for multi-generational stability and prosperity.
Oh and by the way it was WORKING-check crime statistics during Clinton.
The "right" always argues that it was the bleeding heart liberal mentality that pushed home loans for poor people. I say it was a practical solution to the urban horrorshow of the 80's; and it sucks that a good idea was ruined by greedy bastards.
The economy slowed, people overbought, houses were overpriced, people defaulted and the economy worsened. Banks went broke and are still being closed. Lots of people are upside down on cars and homes and no jobless, running out of unemployment while employment continues to slide. LOL What kind of joke is this for the WSJ to print? The banks took a huge hit when home values went upside down but then they drove up the values.
Squiggy, Banks Suck, they're greedy bastards
Yes they do, big time, no question and I'm wouldn't defend one, never have, never, never, never, they brought it on themselves for sure, make no mistake, but this article is not telling the truth or the whole story so don't believe it either!
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Exactly right. This WSJ piece is about the "discovery" that someone who puts no money down will walk away from a home loan when the price of the home drops below the loan amount. In actuality, thats old news.
And in order to make this "discovery", the article's author had to completely redefine what constitutes a "prime loan." He defines a house loan with zero down to be a prime loan.....and then announces his discovery that such "prime" loans are being defaulted on. However, In the past, banks wouldn't loan on mortgages unless the lender could put 10-20% down and only buyers who could make a substantial "down payment" were considered to be safe enough to qualify for a "prime loan."
Why is that Wall Street seems to be the last to know, understand or fix the problems attributed, by and large, to them?
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You are so right, it will be a mess if lots of people are doing this, might be more people now that the markets are off, one to watch and research
..and squiggy, when you are right, you are so right!
I went to your provided link and read about HUD's "reverse mortgage".
The fees are clearly listed, as is the requirement that the interested borrower go through a "counseling" process to understand the financial implications of undergoing such a loan. I think your prediction of scandal is wishful thinking.
let's hope people don't fall for it, this is a way for the banks to make up for lost profit at the expense of inheritance! Don't for one minute think, ever, a bank is on your side or there to help! That's bullshit pure and simple!!!! This is a way for them to up their assets and your kids will lost what you worked and paid all your life for. Don't do it! It's worse than leasing a car!
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I wouldn't recommend this plan to MY Grandmother, but there is a reason for HUD to offer the loan.
I think we can all agree that Social Security benefits have not kept pace with the cost of living-never mind all of the retirment plans that have lost-what 40% of their value. A senior in a paid-off home needs more monthly income-here is a way to do it. Is it the BEST way-I don't know-I don't live on a "fixed income".
But the organizations that DO provide the counseling services include AARP, the National Foundation for Credit Counseling and the National Council on Aging.
The INTENTION of HUD seems to be above board-does that mean that some squirrely bank or loan officer won't try to bilk the seniors? Of course not. Buyer beware and all that.
But I really don't think HUD is lurking in the background waiting to rob Grandpa Joe of his hard-earned equity.
I would also mention that I have had both a straight from the bank home loan and an FHA loan. The hoops I had to jump through for the FHA-please don't get me started, and out the 3 appraisals I was required to get, the FHA appraisal came in the lowest. So again, I do not think HUD is the villian in all this.
Property values should become a function of the people, not a function of banksters ...
http://blogdredd.blogspot.com/2009/02/property-value-verdict-of-people.h tml
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laughorcry and wait ,for the next 20 years heading with reverse mortgages.People are going to outlive their mortgages,old,but not dead,without health,jobs,or credit cards.Fun The greed of the people who handled all those loans,bankers ,companies insurances, mortgagers,banks from other countries, and unfortunately nobody did a thing.And politicians, did less than nothing.We will see !!Who will help and keep promises now.
This crisis was caused by many things.banks practices...reaching out to the average man offering the world for free.The economic downturn.Rich people with alot of money and too many mortgages caught with them.The average joe trying to have a home and build eguity.BUT the big problem.......Nobody read the fine print anyplace.Credit cards,job loss,wanting eveything and it ALL changed overnight......We all lost.Somehow.Someway.
kscr14,you are so right. And its terribly sad,it did change overnnight,and so many have lost so much,and it will take years for some kind of recoup.But we are no longer the producers,inventors manufacturesrs, we are the consumers.without jobs,business growing ,without,credit cards,credit histories are ruined, card companies are bailed out ,banks are bailed out but not the people,) We have all lost in many ways.And this infra structure,bable babale,everyone cannot be in infrastrucuture,We will see.India has growth ,excellent medicine,China has growth,production,they are what we were 40yrs ago The truth it is scary,and the debt being passed on to future generations.Its ugly.
Can someone explain what the article is saying in easy language.? If you have mortgages that are more money than the house is worth,at rates that started being peanuts and then inflated to inconceivable amounts,then came the taxes. and the properties deflated the mortgage quadrupled the taxes were ridiculous,and people that should have been helped, or denied the denied the loan,,or not t aken advantage,are out on the streetsWhere were oversights,leaders agencies?And the banks ,realtors companies,mortgagers wallstrett with them made fortunes,so many got obscene wealth pushing anyone and everyone to take out loans.AND DODD
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1:59 am, Jul 4, 2009
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