People bought into it because good banking principles were not followed with government intervention. No money down--limited creditworthiness--those aren't good banking principles, but those concerns go out the window when the GOVERNMENT IS THE GUARANTOR.
Now you're finally catching on..
Bush created a market that was bound to fail, then a Democrat led Congress started to clean up his mess with the Foreclosure Prevention Act of 2008 that was passed by Congress on July 26, 2008, and was signed into law by President George W. Bush on July 30, 2008. A Stimulus Bill signed by a Republican President, how the hell did that happen?
On July 30, 2008, the Federal Government passed H.R. 3221 - Housing and Economic Recovery Act of 2008. Section 2113 of the bill prohibits seller-funded DPA (Down Payment Assistance) for loans backed by the Federal Housing Administration. Prior to this bill, the seller could contribute up to 6% to the buyer to cover either a down payment or closing costs on an FHA loan. The changes are effective October 1, 2008. This bill is means the Elimination of Non Profit Down Payment Assistance. Only Government funded housing grants are available for Down Payment Assistance under the American Dream Down Payment Assistance Act. Follow the link for the housing program in your area. http://www.americandreamdownpaymentassistance.com/dpa_app.cfm
Crazy legislation that allowed unqualified people(Subprime) to buy houses and record low interest rates created Crazy demand for houses, inflating values by 30% to 100% in just a couple years. With inflated values of homes, people took out second mortgages or even refinanced their homes for sometimes 100% to 125% of the market value, allowing them to spend the equity in their house. Adjustable Rate Mortgages started to rise as interest rates began to rise, increasing monthly mortgage payments.
BAM!! Subprime mortgages begin to go into foreclosure at alarming rates, demand for houses begins to drop along with their values. Now most people that purchased a house between 2003 to 2006 are now upside down on their mortgage, meaning they can owe up to 30% to 100% more than the value of their home. Now there is no equity in many homes which leads to much less spending, leading to:
Democrats, liberals try to make us believe this all started just a couple years ago, but actually this crisis began much earlier when the Carter-era Community Reinvestment Act "forced banks to lend to uncreditworthy borrowers, mostly in minority areas". Old standards of lending and bank prudence became non-existent and replaced with harsh new regulations that REQUIRED banks to not only lend to uncreditworthy borrowers to do it on the basis of race.
Both Jimmy Carter and Bill Clinton share the blame for the subprime mortgage recession.
1st--Jimmy Carter's "affirmative action" banking laws 2nd-Bill Clinton made it worse: How? Clinton "supercharged" the new rules and despite warning from the GOP members of Congress in 92 "Clinton pushed extensive changes to the rules REQUIRING lenders to make questionable loans". Banks had to comply with Clinton's new rules otherwise they may not have been allowed to expand lending, add new branches, or merge with other companies. Banks were given a "CRA" rating that graded the diversity of their lending portfolio. "We have to use every means at our disposal to end discrimination and to end it as quickly as possible," said Eugene Ludwig, Clinton's controller of the currency, as told to the Senate Banking Committee in 93. SO: "In the name of diversity" banks made a huge number of loans that before they would not have and they opened branches in poor areas to lift their CRA ratings.
Meanwhile: Congress gave Freddie and Fannie the go ahead to finance it all by buying loans from banks then repackaging and securitizing them for resale in the open market. That is how the "Contagion" began. President Busy tried despirately in 03 to stop Freddie and Fannie from "mestastasizing" into the problem they are now. In fact, on Sept. 11, 2003 the lead story of the New York Times was, "The Bush admin. today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago". AND In 2005 McCain said, "If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mack pose to the housing market, the overall financial system, and the economy as a whole." Wonder why the democractic controlled congress didn't listen. Why should that surprise anyone what with the outright deceptions and dishonest double-speak of the likes of Pelosi and Frank and the 15 second attention span of the voters--ah, and the media, they'll never put their feet to the fire!
-------------- "Things turn out best for those who make the best of the way things turned out." Jack Buck
Why don't we just go with the fact that it is NOT gov't responsibility to make sure everyone has a home. If you cannot afford something, you don't buy it! It really isn't that difficult of a concept. I don't care if you are D or an R, gov't job is to make sure the lending practices are fair and that someone is not getting screwed by unfair lending practices, it is NOT their damn job to put you in a house.
-------------- After we screw up health care reform, let's take on the initiative of unscrewing the education system (gov't education) Tacitus: (c. 56 AD-c. 117) "The more corrupt the state, the more it legislates."
There are any number of proposals for the elimination of Fannie and Freddie--including this gem from none other than Slobbering Barney Frank--the DEFENDER of the government-sponsored corporations.
QUOTE
Dem. Frank says abolish Freddie and Fannie 'They only question is what do you put in their place .By JoAnne Allen
updated 8/18/2010 8:49:05 AM ET WASHINGTON — Fannie Mae and Freddie Mac should be abolished rather than reformed as part of the Obama administration's planned overhaul of the government's role in housing finance, Rep. Barney Frank, chairman of the House Financial Services committee, said on Tuesday.
"They should be abolished," Frank said in an interview on Fox Business, when asked whether the mortgage giants should be elements in housing market reform. "They only question is what do you put in their place," Frank said.
The Federal Housing Administration should be fully self-financing and Freddie and Fannie should be replaced with a new mechanism to help subsidize housing, Frank said in the interview.
"There is no more hybrid private-public," the Massachusetts Democrat suggested. "If we want to subsidize housing then we could do it upfront and let the budget be clear about that."
Fannie Mae and Freddie Mac were government-sponsored enterprises, privately owned companies supported by the government, until the Bush administration took control of the companies in 2008 to save them from collapse.
Frank said that he does believe the federal government should have a role in building affordable rental housing but thinks money should go toward projects by private developers.
On the question of whether the government should still provide some guarantees in the mortgage market, Frank said: "If we have it (guarantees), it has to be self-financed by the people who are benefiting."
Frank commented after Treasury Secretary Timothy Geithner convened a Washington conference of housing industry leaders to hear ideas about reforms for the $10.7 trillion mortgage market.
The firms' pursuit of growth and profits helped precipitate the financial crisis of 2007-2009, but their vast resources also helped minimize its impact.
Together, Fannie and Freddie and the Federal Housing Administration now back 90 percent of new U.S. home mortgages.
Fannie and Freddie have received $150 billion in taxpayer bailout money.
In the Fox Business interview, Frank also was critical of public policy that promoted homeownership at any cost. He also said the federal government should not be a "backstop" in guaranteeing mortgages.
"There were people in this society who for economic and, frankly, social reasons can't and shouldn't be homeowners," Frank said. "I think we should, particularly, stop this assumption that you put everybody into homeownership."
"Public policy has been too much to try to push people into homeownership."
Copyright 2010 Reuters. Click for restrictions.
Compare that what he said earlier, when the Bush Administration called for an investigation into Fannie and Freddie. From US NEWS nullMy Webpage
QUOTE
"These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
Yep, that was the CHAIRMAN of the House Financial Services Committee--the same guy that didn't see his boyfriend running an escort services out of their apartment also didn't see anything wrong with Fannie and Freddie.
Watch the Donks defend Fannie and Freddie when the Repubs demanded hearings. Pay particular attention to Maxine Waters defending Fannie and Freddie (If we don't support them, we won't have any more 100% finance) and Barney himself.[URL=]My Webpage[/URL]
The internet--bane of politicians everywhere.
-------------- "If you want to anger a Conservative, tell him a lie. If you want to anger a LIBERAL, tell him the TRUTH!"
slamming the breaks on this country is no rosy path for the most needy communities either; they finally have the microscope on them too and this statement is ethnic inclusive; in light of this, it is surprising to me that freddie and fannie continues to rock the google ad circuit
-------------- If we don't believe in freedom of expression for people we despise, we don't believe in it at all.
Any dictator would admire the uniformity and obedience of the U.S. media.
