View Full Version : Here we go again: gov pushing subprime loans
Obama administration pushes banks to make home loans to people with weaker credit
http://www.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html
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Obama administration pushes banks to make home loans to people with weaker credit---
And it worked so well last time.
Maybe they'll run prices up again and I'll be able to sell my house and unass out of dodge.
CarlosDJackal
04-06-13, 22:41
"The definition of insanity is doing the same thing repeatedly and expecting different results."
Do any of you feel like you're in a really bad movie?
It's predatory lending when the private market does it, but it's social justice and economic recovery when the government encourages it.
VooDoo6Actual
04-06-13, 23:09
Good luck w/ Phantom & Blue Sky equity w/ this economy & administration.
It's predatory lending when the private market does it, but it's social justice and economic recovery when the government encourages it.
Bush started the practice. Just throwing that out there. I'm not defending Obama at all, but maybe if you and all your friends felt similarly almost a decade ago we wouldn't have such a ****ed economy/government.
Do any of you feel like you're in a really bad movie?
Something like that. I think my first serious WTF moment was in 1994 when a jury awarded Stella Liebeck $2.86 million because she spilled hot coffee on herself. It's gotten worse since then.
Bush started the practice. Just throwing that out there. I'm not defending Obama at all, but maybe if you and all your friends felt similarly almost a decade ago we wouldn't have such a ****ed economy/government.
It was around before Bush.
In fact, Bush's people testified in Congress against some of the policies being pushed, to no avail.
I am not absolving Bush of all responsibility, but he did not come up with the idea.
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Gov has lost all sense of reality. Or morality.
History is doomed to repeat itself.
It was around before Bush.
Investors Business Daily - Don't Blame Bush For Subprime Mess
Posted 12/01/2008 07:09 PM ET
http://news.investors.com/120108-451438-dont-blame-bush-for-subprime-mess.aspx
"Here at IBD, we've done more than a dozen pieces — most recently, in yesterday's paper — detailing how rewrites of the Community Reinvestment Act in 1995 under President Clinton, along with major regulatory changes pushed by the White House in the late 1990s, created the boom in subprime lending, the surge in exotic and highly risky mortgage-backed securities, and the housing boom whose government-fed excesses led to inevitable collapse."
polymorpheous
04-07-13, 08:27
It's predatory lending when the private market does it, but it's social justice and economic recovery when the government encourages it.
I was just thinking the same thing.
Something like that. I think my first serious WTF moment was in 1994 when a jury awarded Stella Liebeck $2.86 million because she spilled hot coffee on herself. It's gotten worse since then.
Yea I was pretty young when that happened but my father's best friend still says that was the moment it all went to shit too.
Bush started the practice. Just throwing that out there. I'm not defending Obama at all, but maybe if you and all your friends felt similarly almost a decade ago we wouldn't have such a ****ed economy/government.
I'm pretty sure it started under Carter, but was accelerated during Clinton and Bush's terms. Ultimately though, this is a product of the Fed after the dot com bubble burst.
I'm pretty sure it started under Carter, but was accelerated during Clinton and Bush's terms.
From the article I linked to above:
Bush's first budget, written in 2001 — seven years ago — called runaway subprime lending by the government-sponsored enterprises Fannie Mae and Freddie Mac "a potential problem" and warned of "strong repercussions in financial markets."
In 2003, Bush's Treasury secretary, John Snow, proposed what the New York Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." Did Democrats in Congress welcome it? Hardly.
"I do not think we are facing any kind of a crisis," declared Rep. Barney Frank, D-Mass., in a response typical of those who viewed Fannie and Freddie as a party patronage machine that the GOP was trying to dismantle. "If it ain't broke, don't fix it," added Sen. Thomas Carper, D-Del.
In November 2003, just two months after Frank's remarks, Bush's top economist, Gregory Mankiw, warned: "The enormous size of the mortgage-backed securities market means that any problems at the GSEs matter for the financial system as a whole." He too proposed reforms, and they too went nowhere.
Ultimately though, this is a product of the Fed after the dot com bubble burst.
How do you figure this is case?
Crow Hunter
04-07-13, 09:26
One reason, according to policymakers, is that as young people move out of their parents’ homes and start their own households, they will be forced to rent rather than buy, meaning less construction and housing activity.
The stupidity of these people is incredible.
So do homes magically appear to renters but they have to be built if they are bought???:confused:
A net increase in the number of households in the US means there will be demand for housing whether it is renters or owners. Landlords will build new apartments/townhouses/homes if the demand is there and they will be more likely to be able to afford the loans.
It would honestly be better if they rented for the first couple of years and built up a good down payment while settling into their new independent lives without a mortgage and upkeep of a home hanging over their heads.
These idiots are setting our economic policy:rolleyes:.
So do homes magically appear to renters but they have to be built if they are bought???:confused:
No, the quote you posted refers to first time buyers being ubable to qualify for a loan, so the gubberments answer is to ease the standards which they theselves just tightened.
Crow Hunter
04-07-13, 11:03
No, the quote you posted refers to first time buyers being ubable to qualify for a loan, so the gubberments answer is to ease the standards which they theselves just tightened.
I was referring to the statement that only new households buying houses will stimulate the housing economy.
Which is totally incorrect. What will stimulating building more houses is more people needing somewhere to live.
It doesn't matter if they rent or buy. If there are 10,000 households in a community needing shelter and there are only 9,000 homes available, there will be demand in the housing sector and it can only be filled by people building new residences.
It doesn't matter if this is by people building single family homes to sell or single family homes to rent out to others.
Young people being forced to rent IS NOT a bad thing, contrary to what was stated in what I quoted. It is a GOOD thing.
People just starting out new careers/relationships/etc DO NOT need the hassle and expense and stress of trying to own a home when they do not even know for sure what they want to do with their lives.
It is NOT a bad thing to rent a couple of years and see "how close to live to your Mother-in-law" as Dave Ramsey says. It allows people to easily relocate to new jobs/relationships/etc if needed and gives them time to save up a good down payment so they can get a loan without needing the government to force banks to loan money.
I know this from personal experience. I bought a new house 4 months after getting married and 2 months after starting a new job in a completely different part of the state that turned out to SUCK in a major way. It was INCREDIBLY stressful. If I had waited and rented for a year (or more), I would have ditched that job and moved back closer to family instead being stuck in a horrible job because I couldn't afford to lose money trying to sell a house.;)
People just starting out new careers/relationships/etc DO NOT need the hassle and expense and stress of trying to own a home when they do not even know for sure what they want to do with their lives.
This was considered SOUND financial advice and conventional wisdom in the 80's and 90's. Young people who had money to invest were discouraged from purchasing homes or property because property is not liquid. Freedom to relocate for better jobs, relationships, or continue their education was considered priority.
Then around 2002- everything in the lending/RE industry went full dumbshit with subprime, no doc loans, and HELOC. Everyone starting watching House Hunters, Trading Spaces, and real estate agents started claiming that a 1 bedroom condo in the ghettos would be worth 1 million dollars in 5 years.
Suddenly, going eyeballs deep in debt for an overvalued home was considered a social status symbol.
Crow Hunter
04-07-13, 12:41
This was considered SOUND financial advice and conventional wisdom in the 80's and 90's. Young people who had money to invest were discouraged from purchasing homes or property because property is not liquid. Freedom to relocate for better jobs, relationships, or continue their education was considered priority.
Then around 2002- everything in the lending/RE industry went full dumbshit with subprime, no doc loans, and HELOC. Everyone starting watching House Hunters, Trading Spaces, and real estate agents started claiming that a 1 bedroom condo in the ghettos would be worth 1 million dollars in 5 years.
Suddenly, going eyeballs deep in debt for an overvalued home was considered a social status symbol.
You are correct.
I do however, think that the banks are carrying it a little too far. I refinanced our current home at the end of 2011 and it was ridiculous the amount of documentation that I had to go through. Especially considering that I was refinancing with the same bank that I had my current loan with in a supposedly "streamlined" program, doing a "cash in" refinance with both myself and my wife having a 790+ credit rating and no other debt.
I can imagine trying to get a loan with little to no history being difficult.
History is doomed to repeat itself.
Yep but what amazes me was how fast the turn around time was on this one.
Not much time in between to make the mistake learn our lesson then forget the lesson and repeat the mistake.
-Jax
Young people being forced to rent IS NOT a bad thing, contrary to what was stated in what I quoted. It is a GOOD thing.
People just starting out new careers/relationships/etc DO NOT need the hassle and expense and stress of trying to own a home when they do not even know for sure what they want to do with their lives.
I didn't buy my first house until 18 years after I graduated high school. And I bought well below my means on that and the other houses I have owned.
Crow Hunter
04-07-13, 13:52
I didn't buy my first house until 18 years after I graduated high school. And I bought well below my means on that and the other houses I have owned.
You were smarter than me.
I got offered a position at a company and they paid to relocate me, put me up in a hotel for 3 months and pay closing costs on a house.
I took the job and we found a subdivision that was building nice houses and my wife found one she liked and we could finish it to our tastes. We got "the fever". While not above our means, it was more than I was really wanting to be on the hook for.
Prior to that, I had never had any debts other than a new truck that I bought and paid off in 3 months because having debt stressed me out.
If I had been smart and just rented for the first 2 or 3 years of our marriage at least, we would have been much better off.
Actually, I should have been suspicious of someone willing to give an engineer with 3 years experience a $10,000 raise, closing costs and full relocation expenses to begin with.:D
Specifically loaning to people with mediocre credit isn't the problem. Credit isn't the indication of the ability to pay that it used to be.
Hell I showed a house to a guy the other day who makes mid 6 figured and has a low 500 credit score and almost no debt.
However we all know that this will go badly. And as a REALTOR it terrifies me.
They have to do this to keep things going with their pumping out fiat currency. Their spend and spend and spend plans won't work and will crash eventually. This sort of thing just postpones the inevitable (and makes the inevitable worse)...
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Because, you know, **** critical thinking and shit.
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