25% of all Americans are in homes underwater. That you are not is not going to change the dynamic.
using your number, we can then conclude that 75% of the mortgages are NOT underwater. now let's compare that to what you originally posted:
The bubble had to burst. When it did, every portfolio, derivative, piece of land, etc, went underwater.
hopefully, my added emphasis will illustrate where you were wrong
Read Cuomo's lips. They compelled "higher risk, higher default" loans. Go find the original 20 minute speech and Q and A. Couldn't be more clear. The point of it all is not so much that higher risk loans were made, but that more buyers were pulled into the market. The added buyers started the bubble, not that some buyers were higher risk.
CRA - the response to the banking industry's tactic of red lining areas in which it would not make loans - required lenders to make loans in the same communities from which they realized deposits
now, would a reasonable person expect the loans in those formerly red lined areas to be as sound as those in more affluent areas? but simply because the community is less affluent does not automatically mean that members of that community are not sound credit risks
CRA did then cause more loans to become available. but NOTHING required lenders to make un-creditworthy loans. at least nothing you have been able to cite thus far
Yes, we agree. Fannie was stupid like everyone else. But the bubble was 4-5 years inflated by then. Fannie's involvement at that point did not matter. They were just trying to make money too at that point. FF did lower their lending standards too though. They did start to make lousier loans, again so as to not miss out on the frenzy. However, I am talking about what got it all started. There was essentially no stopping it after the first few years, until it popped. No politician was going to stop it.
look at the date of this report:
http://www.fhfa.gov/webfiles/747/FNMSPECIALEXAM.pdfit it is may 2006. AFTER it was learned that fannie mae was cooking the books. and still the shrub did nothing. because profits were still flowing. it wasn't until the meltdown that the taxpayers picked up the ongoing tab for the now massive losses
Again, it really does not matter. Your credit worthy buyers were willing to pay more for a house than what had been the usual inflationary increase. Because the bubble had begun.
does anyone knowingly buy during a bubble, when they know to expect losses [rhetorical question]
lenders were making liar loans because they were making money on them
as soon as they made the loans AND realized their fees they flipped the mortgage paper to the voracious market, which wanted higher yields than it could realize on more conventional paper
the lenders were not holding these loans but were instead selling the risk to an ignorant marketplace
Glass Steagle was repealed in 1999. MBS's etc didn't really start to fly for another few years, as investment firms saw the huge opportunity to make money off the bubble.
many of us in the banking industry knew when glass-steagle was repealed that we were in for a financial rollercoaster with the taxpayer ultimately paying for the ride. this repeal assured that profits would be privatized while any losses would be socialized
As Cuomo said "higher risk, higher default rates". As I noted, this would come down to a definition of "credit-worthy", and "not credit worthy". However, we have the exact video of Cuomo admitting a setllement, based on a DoJ lawsuit against a Texas bank, that the bank had agreed to make loans that he admitted were "higher risk", etc.
interest rates are determined by degree of risk ... banking 101
lenders not complying with CRA were hammered. usually by acorn when said lender was involved in a prospective merger. its non-compliance was a hurdle which had to be surmounted if it wanted to participate in the merger/acquisition
so, the lenders made loans they would not keep but would lay off to unwitting investors. they did this rather than looking for good credits within the formerly red lined communities. and since the lender was not intending to to hold onto the mortgage paper it was writing, it realized enhanced loan yields/fees and CRA compliance
Dude, if it looks like a duck, walks like a duck, and talks like a duck .... its a duck.
problem is, you don't know what the duck you are talking about
You can hide behind "non-credit worthy" all day long.
not hiding whatsoever
that was the assertion, that lenders were being required by the government to make un-creditworthy loans
i even promised to make a public apology if you could offer any cite to show the government actually required lenders to make un-creditworthy loans. and thus far, neither of you have been able to proffer such a cite
Clearly they were compelled to make "less credit worthy" loans. Loans they had deemed "non-credit worthy" before the settlement.
nope
all they had to do was comply with the CRA, and make loans to creditworthy applicants from formerly red lined communities
nothing compelled them to write non-creditworthy loans
I encourage folks to look at the video. The answers, in Cuomo's own words, start at about 2:15. Enjoy.
i wasted my time watching that heavily edited faux news propaganda piece against Obama. it told us nothing ... at least those of us who understand lending
