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:
hopefully, my added emphasis will illustrate where you were wrong
Every instrument that was full of inflated home values. To include individual properties. Note, 'under water" means you owe more than it is worth. Had one made a larger downpayment, or owned the home for 20 years, then they are not underwater, but still the owner has lost a large part of their assets. Now, if you want to debat minutia, you will have to do it with yourself. The point is that having 20-30% of all homes underwater will cause a real good start to a recession, which it did.
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
The CRA was the basis for initial pressures on these banks in the poorer communities. Cuomo and HUD based their lawsuits on discrimination, which just happened to parallel higher-risk loans, as blacks were on average poorer, and in more depressed communities. Regardless, the "solution" was government expanding FF to fix everything, especially the infux of sub-prime buyers.
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
The shrub and everyone else did not do enough. Surely you have seen slobbering Barney and do-nothing Dodd saying FF was fine. "What me worry" ?
does anyone knowingly buy during a bubble, when they know to expect losses [rhetorical question]
Yes, because they anticipate getting out in time. Some are more savvy than others. And some are downright stupid. Business 101.
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
Which is exactly as I have been saying. Once the bubble got going, it was a feeding frenzy on easy money. FF backed close to 50% of the market in the end. How could anyone lose if government had so much of everyone's ass covered ? That was a big part of it all going to crazy: Government.
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
Agreed, but it took a perfect storm regardless. The huge growth of FF, combined with larger numbers of sub-primes, and the repeal.
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
And one component of that risk was exactly as you have stated. Government was going to take that risk off your hands. And the Fed kept interest rates low.
problem is, you don't know what the duck you are talking about
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
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 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
Then track down the original speech. I have watched the entire thing before. You wil see the same presentation by Cuomo, and the same answers to the questions. As I have said folks, if you want to know, go the the video, and if in a hurry, jump to the 2:15 mark. Or just watch the entire first 4 minutes or so. All Cuomo, in his own words. It should make you sick.
