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Surging Mortgage Rates Set Off Scramble to Buy Homes

Vern said:
I'm sure your fellow conservatives (and conservative like posters) appreciate your obedient "nuh uh's" but I have to ask, what was " laid long long before [Bush] came into office" that caused a "dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004".
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The Community Reinvestment Act.
 
Vern said:
Links change fled. again I'm asking you how you "know" the link didn't change. and again I assume if I could somehow prove the link did change, you would then accept that Bush is responsible for the Bush Mortgage Bubble?
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Look a the effing URL.

THE URL.

The links didn't "change".

The links go to very different portions of the website.

Their security is different for those web pages.

ht tp://theusconstitution.org/text-history/940]Text, History and Boumediene | Constitutional Accountability Center


htt ps://www.theusconstitution.org/blog/supreme-court-strikes-down-bush-era-preemption-rule-but-decision-is-too-late-to-impact-subprime-mortgage-mess/


You don't understand how websites work... Do you?
 
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Well, the good news is Congress passed a bill yesterday loosening the regulatory requirements for mortgage lending in most US financial institutions. A collapse may happen again. Good news.
 
tres borrachos said:
Well, the good news is Congress passed a bill yesterday loosening the regulatory requirements for mortgage lending in most US financial institutions. A collapse may happen again. Good news.
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And if/when it does everyone else will be blamed.
 
Casper said:
And if/when it does everyone else will be blamed.
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Can I blame you? I mean, just because I want to.

You are correct. By the way, being in this industry I do know that the regulatory changes out of Dodd-Frank, from the CFPB as well as other actions have made it harder for the community banks and smaller credit unions to manage mortgage lending compliance. But the decent person in me knows that we do need to regulate so we don't have another 2007.

The Republicans seem to not care though. They will do anything to ensure that "Obama's legacy" is erased. Including something as stupid as this.
 
The wife and I were looking in the late 90's. We made $100,000 combined, and our maximum price for a house was $160,000. We ended up paying $145,000.

The median mortgage/taxes/insurance approaches $2,000 a month. Hopefully households are making $150,000 in income in order to comfortably afford that.

This story recommends up to a $320,000 house for a person making a paltry $80,000:

https://www.thestreet.com/story/12849280/1/rules-thumb-determine-how-much-spend-house.html

If one makes $80,000, their max house is about $140,000, and that's pushing it.
 
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tres borrachos said:
One more time. No bank or credit union was ever forced by the government to hand out a no income verification loan.
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Hold your horses pardner. Let's bring this back to 1953. A severe housing shortage had developed throughout the country, bringing about an unprecedented recession in the American housing industry. Unlike previous and subsequent industry recessions in the housing industry, the problem was not lending standards, other recession or depression factors, but lack of product. After once in lifetime delays, the returning soldiers of WWII, with late starting families were desperate for housing for their brand new families, seeking that white picket fence and the suburban lifestyles, with many just as desperate to leave the shared homes of parents and inlaws. Lines of buyers had formed every weekend at the model homes created by tract housing developers like those who created Levittown in the potato fields of Long Island.

Urban environments, recognizing the need since before the end of the war, had started building multi floor apartment building projects themselves, city projects, which some returning vets embraced because of artificially low rents, but who quickly joined the multitudes of young families seeking the American Dream, a house of their own. And they rejected brick and concrete canyons, leaving them as quickly as they could, to become centers for the welfare generation. Certainly, some of the private apartment developments, because of locations did survive as desirable locations for many, but they were relatively rare.

During 1930, Herbert Hoover, in fear of an armed rebellion by WWI veterans, consolidated the Veterans Bureau, and other veterans' military services under the direct Cabinet control as the Veterans Administration. After his first year in office, Dwight Eisenhower issued an Executive Order to the Veterans Administration to form a no income check, asset lending veterans mortgage program guaranteed by the VA. The VA mortgages were only to require a 10% downpayment, contrary to standard mortgage lending practices of a 20-25% downpayment. Furthermore, Ike's executive order demanded that no new banking licenses, Federal, State or local be issued to any institution for consumer banking services not participating in the VA lending program, and no existing banking institution receiving FDIC or FDLIC insurance for conventional banking could receive that insurance without participating in the VA lending program. With all intents and purposes, this executive order forced banks to issue none income verification mortgage loans. For them not to participate, would not only cripple their other consumer banking efforts, but they could face the wrath of the public for not being patriotic.

It certainly didn't hurt that the lending institutions themselves welcomed this patriotic means of assisting needs of the Veterans, the tract housing developers who wouldn't break ground without a mortgage commitment entered into agreements with local S&L institutions for granting mortgage commitments at their sales offices, leading to major expansion of the tract housing, meeting the needs of the market and ending the housing recession in less than a year or so.

5 years later, evidence showed a bit less than 1% mortgage loan failure ratio for VA insured mortgages, well below the industry ratio of 5-6%. This of course led to the formation of Fannie Mae and Freddie Mac. And it commenced the great waves of housing costs inflation, as tract houses initially sold for between $3,200-3,600 reached $7,200-7,800 within 3 years.

There have been other instances of government demanded no income check lending programs, some as a result of court orders in response to red lining policies, others through special assist programs in depressed regions by State governments. None had the success ratios of the VA programs, and most either failed costing local governments to come through with insurance guarantees, or bankrupt local government agencies, which should have alerted the industry as whole before setting up for the 1986 mortgage backed bond crisis based on failure to adhere to industry standards for mortgage lending.
 
Felis Leo said:
What would you recommend, Vern?
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Vern said:
I would recommend never voting republican. They do seem to run up the deficit and create a financial crisis. But as far as mortgage bubbles goes there is nothing to worry about. Bush's protection of predatory lenders was ruled unconstitutional. Also its the law that banks have to verify that the borrower can afford the loan.

Supreme Court Strikes Down Bush-Era Preemption Rule — But Decision is Too Late To Impact Subprime Mortgage Mess

..a regulation adopted by the Office of the Comptroller of the Currency (OCC) under President George W. Bush that preempted state efforts to enforce fair lending laws against branches of national banks. The regulation prevented states from enforcing their own laws against predatory lending and discriminatory credit practices – including the types of practices that directly resulted in last year’s subprime mortgage crisis — and was part of an aggressive effort by the Bush Administration to use federal preemption to trump important state laws that protect consumers, the environment, and public health and safety.

Text, History and Boumediene | Constitutional Accountability Center
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You being new around here, probably didn't realize that you wouldn't get a real answer.
 
tres borrachos said:
Well, the good news is Congress passed a bill yesterday loosening the regulatory requirements for mortgage lending in most US financial institutions. A collapse may happen again. Good news.
Click to expand...

I'm still digesting this bill, but I wouldn't jump to conclusions. So far, I see no granting of permissions for lending institutions to operate brokerages for selling mortgage backed bonds, and that was the crux of the problem in both 1986 and 2004. Flushing the banks with investment money that had to be working, regardless of observing lending standards. Nor does it allow for a lending institution to ally with investment banks or other bond issuers to do the same. So far what I see is redaction of language that prevented other investments by lending institutions, some of which have a value, or liability yet to be determined. It seems to me this bill allows lending institutions to directly involve in equity markets, rather than through a separately owned affiliation.

Then again, there's a lot of language here, yet to be analyzed, re-examination, and I could be mistaken with initial analysis.

Despite all the negative publicity subsequent to both crashes, actual later overall analysis show that tho many were hurt, some institutions gutted, the overall markets strengthened above and beyond the levels prior to the crashes during subsequent years. And that is even with some areas not recovering at all. Whether or not other factors entered the picture is a discussion for another day. But with both crashes, a lot of people lost money, and a lot more people made money.

My grandfather used to tell me the most profitable and opportunistic financial period during his lifetime was the Great Depression. He'd then follow that with "one man's problem, is another's opportunity." Took me a long time to understand the why of what he was saying.
 
Vern said:
U.S. homebuyers, already contending with escalating prices, now are getting hit with the most-expensive mortgage rates in seven years. Funny thing: It’s only making them move faster…..

Home prices jumped 7.6 percent in April from a year earlier to a median of $302,200, and sellers got a record 98.8 percent of what they asked on average, Redfin said Thursday.

https://finance.yahoo.com/news/surging-mortgage-rates-set-off-140000677.html

Uh oh, home prices are going up faster than inflation, interest rates going up, derivatives are still unregulated, Glass Steagall is still repealed, Freddie and Fannie still exist as does the CRA. And we have a republican president and congress. The last time we had these conditions, we got a mortgage bubble that destroyed the economy. So what’s to prevent another mortgage bubble? Based on what people tell me caused the Bush Mortgage Bubble, the answer is nothing.

I guess its time to start stocking up on gold and survival seeds again.
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Better regulations on who qualifies for loans, a slowly increasing prime, an economy that has a better foundation (more "real" value and less speculative value). Also, the crash was partly due to the market seeing a Dem. congress coming in and it "hunkering down" in preparation. That Bush Mortgage Bubble" should be called the "Pelosi Mortgage Bubble"
 
Vern said:
why not? It happened on his watch. And it was his policies. But who cares if it was his policies, happening on his watch meets your obedient conservative standards.
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No. It was Dem policies that allowed banks to give loans to people who never should been given loans because of regs. that Dems. put in place to let banks make those loans and then basically hand them over to the gov't to deal with. While it happened during the Bush admin. it was the incoming Dem. congress that the market was responding to.
 
Chomsky said:
Lending practices, including government backing, are not as crazy loose as they were back then.

There may be a bubble building, but it's not of the same nature as the last one. Remember NINJA loans? My God!

As for the correlation between rates and demand, the spike in demand that occurs as rates start to rise after a sustained period of low rates, is common. What you're seeing is the buyers that were sitting on the sidelines, or only mildly motivated, now becoming highly motivated and panicked at the thought of rising rates shutting them out of the market. It's not uncommon, and usually works its way out after a period of time.
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Getting loan rates back to a reasonable level is one of the best things that's happening right now. We need to get away from being a "borrow and spend" society and get back to a "save and spend" society. Higher interest rates encourage saving and discourage borrowing.
 
faithful_servant said:
Better regulations on who qualifies for loans, a slowly increasing prime, an economy that has a better foundation (more "real" value and less speculative value). Also, the crash was partly due to the market seeing a Dem. congress coming in and it "hunkering down" in preparation. That Bush Mortgage Bubble" should be called the "Pelosi Mortgage Bubble"
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What

I was always told it was the Barney Frank bubble. The most powerful man in the US, the ability to force a republican congress, senate and president to do his bidding.

The cause of the housing bubble was a lack of regulations on mortgages, the allowing for mortgages being made to people without good credit, or allowing them to get a mortgage they could not afford. The packaging of these mortgages in securities to be traded removed from the originator the motive to ensure the mortgage would not go into default. They would not suffer the consequences of the default yet make money originating the mortgage. Places in the US with strict mortgage regulations like Texas, (limits Home equity lines of credit among other items) did not have a mortgage crisis. Other areas like Arizona with similar building standards, but with weak mortgage regulations did. The CRA did not force companies to make bad loans, they did it themselves because they could still make money on bad loans. In places they could not make bad loans, the loans were not made.
 
Fledermaus said:
Look a the effing URL.
THE URL.
The links didn't "change".
The links go to very different portions of the website.
Their security is different for those web pages.
ht tp://theusconstitution.org/text-history/940]Text, History and Boumediene | Constitutional Accountability Center

htt ps://www.theusconstitution.org/blog/supreme-court-strikes-down-bush-era-preemption-rule-but-decision-is-too-late-to-impact-subprime-mortgage-mess/

You don't understand how websites work... Do you?
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Poor fled, your posts are typically conservative: posting what you want to believe as fact. And thanks for that lesson in URLs. But the link changed. I’ve posted that link dozens of times. Here’s an example from my FAQ thread
Vern said:
Supreme Court Strikes Down Bush-Era Preemption Rule -- But Decision is Too Late To Impact Subprime Mortgage Mess | Constitutional Accountability Center
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Look, the forum gave it a title that doesn’t match the current story. And nobody in the thread said “wrong link.” That’s because it matched when I previously posted it. I understand that as a conservative (or conservative like poster) you’re not going to let go of a narrative just because its been proven false. So let me stop from posting “nuh uh, you changed it”, Eohrn posted the same link so he could flail at it.
eohrnberger said:
So what about this Supreme Court Decision?
Supreme Court Strikes Down Bush-Era Preemption Rule -- But Decision is Too Late To Impact Subprime Mortgage Mess | Constitutional Accountability Center
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Now you know links can change. Your welcome.
 
Vern said:
Poor fled, your posts are typically conservative: posting what you want to believe as fact. And thanks for that lesson in URLs. But the link changed. I’ve posted that link dozens of times. Here’s an example from my FAQ thread

Look, the forum gave it a title that doesn’t match the current story. And nobody in the thread said “wrong link.” That’s because it matched when I previously posted it. I understand that as a conservative (or conservative like poster) you’re not going to let go of a narrative just because its been proven false. So let me stop from posting “nuh uh, you changed it”, Eohrn posted the same link so he could flail at it.


Now you know links can change. Your welcome.
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Stop trying to bull**** your way out of it.

You ****ed up.

And now you are blaming the forum for your **** up.

No links changed.
 
HowardBThiname said:
The Community Reinvestment Act.
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Wow, you didn’t even have to use a verb. Anyhoo, I’ll let the fed shred that conservative narrative for you.
Vern said:
"Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "
The Fed - Page not found
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The fed says the same thing as Bush.

Vern said:
From Bush’s President’s Working Group on Financial Markets October 2008
“The Presidents Working Group’s March policy statement acknowledged that 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.” http://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf
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Sot be clear, there’s nothing in the CRA that told the banks they could or should stop checking the borrower’s ability to repay the loan and there is nothing in the CRA that prevented Bush’s regulators from doing their jobs.

Now HT, if you do reply, “nuh uh” aint gonna cut it.
 
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Fledermaus said:
Stop trying to bull**** your way out of it.

You ****ed up.

And now you are blaming the forum for your **** up.

No links changed.
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I tried to stop you from taking the dishonest/typical conservative way out but you couldn't be stopped. And you interpreting my post as "blaming the forum" tells me you're beyond help. the forum gives some links a title when you post them. and it gave it the title 5 years ago that reflected the article concerning Bush's preemption rule being found unconstitutional. Sorry fled, the link changed. Sadly you wont.
 
Vern said:
I tried to stop you from taking the dishonest/typical conservative way out but you couldn't be stopped. And you interpreting my post as "blaming the forum" tells me you're beyond help. the forum gives some links a title when you post them. and it gave it the title 5 years ago that reflected the article concerning Bush's preemption rule being found unconstitutional. Sorry fled, the link changed. Sadly you wont.
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Poor Vern.

The links didn't change.

You ****ed up.
 
HowardBThiname said:
No need to be verbose -- my answer was concise and complete. I'll let Business Insider explain the concept to you.

The Community Reinvestment Act contributed to the subprime mortgage collapse.
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no HT, your "answer" was a lying conservative narrative. and I showed it was a lying conservative narrative in my post to you. See how you ignore that to post "look, this editorial says what I want to believe". congratulations, you now join the ranks of every conservative (and conservative like poster) on the planet in being able to find an "editorial" that you want to believe. The CRA was around for almost 40 years. As bush and the fed told you "lending standards dramatically declined late 2004". The Bush Mortgage Bubble was people buying houses they couldn't afford. the CRA doesn't put someone in a house they cant afford. What puts someone in a house they cant afford is a No Doc loan. And banks couldn't give a mortgage to anybody with a pulse until Bush preempted all state laws against predatory lending. And guess when he did that? yep, 2004.

So in 2004, 4.3% of all mortgages were No Docs. In 2006, it was about half of all loans.

http://www.dallasfed.org/assets/documents/research/eclett/2007/el0711.pdf

“Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."

Now your "editorial" touches on that aspect of the Bush Mortgage Bubble but falsely concludes it has to do with the CRA.

"What's more, George W. Bush was a major proponent of the kind of mortgages that banks had started making under the CRA. He urged low-to-no doc mortgages and the elimination of downpayments, just like the CRA regulators had long done.

He's trying to give you just enough data with as few lies as possible. he's to be commended for trying but he's still lying. so the CRA was around for almost 40 years with no problems. Bush preempts all state laws against predatory lending and magic presto, we have predatory lending bubble. Whats not to understand?
 
Vern said:
no HT, your "answer" was a lying conservative narrative. and I showed it was a lying conservative narrative in my post to you. See how you ignore that to post "look, this editorial says what I want to believe". congratulations, you now join the ranks of every conservative (and conservative like poster) on the planet in being able to find an "editorial" that you want to believe. The CRA was around for almost 40 years. As bush and the fed told you "lending standards dramatically declined late 2004". The Bush Mortgage Bubble was people buying houses they couldn't afford. the CRA doesn't put someone in a house they cant afford. What puts someone in a house they cant afford is a No Doc loan. And banks couldn't give a mortgage to anybody with a pulse until Bush preempted all state laws against predatory lending. And guess when he did that? yep, 2004.

So in 2004, 4.3% of all mortgages were No Docs. In 2006, it was about half of all loans.

http://www.dallasfed.org/assets/documents/research/eclett/2007/el0711.pdf

“Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."

Now your "editorial" touches on that aspect of the Bush Mortgage Bubble but falsely concludes it has to do with the CRA.

"What's more, George W. Bush was a major proponent of the kind of mortgages that banks had started making under the CRA. He urged low-to-no doc mortgages and the elimination of downpayments, just like the CRA regulators had long done.

He's trying to give you just enough data with as few lies as possible. he's to be commended for trying but he's still lying. so the CRA was around for almost 40 years with no problems. Bush preempts all state laws against predatory lending and magic presto, we have predatory lending bubble. Whats not to understand?
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You're way off base here.

We all know what a subprime mortgage is and how it impacted the housing bubble, what you fail to recognize is that the bubble started in the 90s, and there was a REASON why banks were writing those loans.

Why was the FHA offering 103% loans? Not because of GWB -- they were doing that before he was ever elected. And the FHA wasn't the only game in town.

You might want to ask yourself how it became lucrative for banks and lending agencies to make those loans in the first place. Banks don't make risky loans, after all.
 
Fledermaus said:
Who was at the wheel when the crash occurred is irrelevant if the causes of the crash were laid long long before he came into office.

Your simplistic "Bush dun it" nonsense has been knocked down by both left and right leaning posters.
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What you wrote is completely true.

Bush and the Republicans DID try to take credit for "record home ownership" (LOL) and had policies like the American Dream Downpayment Act that added to the problem, but the policies that caused it can be traced at least back into the Reagan admin. GHWB and Clinton both did things that helped create it.

If I was going to assign "blame", it would go largely to AIG, Goldman Sachs and Alan Greenspan. The politicians just enabled them.
 
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