At the peak of every boom comes one final act of repetitive stupidity. This may be it

[tn1911]

Lenders Seek Congressional Approval for No Income Mortgages. The mortgage lending industry seeks to eliminate debt-to-income rules for home buyers.

https://moneymaven.io/mishtalk/economics/just-in-time-lenders-seek-congressional-approval-for-no-income-mortgages-lwZELvUCP0ibhDOQZpyrkw

The move by Kraninger is by request of a group of lenders and industry groups, including Wells Fargo, Bank of America, Quicken Loans, Caliber Home Loans, the Mortgage Bankers Association, the American Bankers Association, the National Fair Housing Alliance, and others.

The finance leaders want to remove the 43 percent DTI requirement on both prime and near-prime loans.

Specifically, current rules includes things like verification of income, credit history and DTI, among others. The only portion the CFPB is asking to amend is the DTI requirement.

[MegademiC]

Isnt this partially what caused ‘08?

[tn1911]

Isnt this partially what caused ‘08?

Bad economic assumptions, it was generally assumed before the crisis that home prices would never decline simultaneously on a nationwide basis.

Securitization of loans, credit default swaps, greed and fraud is what blew up the economy.

[Vic79]

I guess they are in need of bailouts again.

I really hope they fail again, instead of bailouts we doze the buildings then burn what’s left.

[SomeOtherGuy]

NINJAs need overpriced tract houses too!

[OH58D]

It actually started in 1977 with James Earl Carter Jr. and the Community Reinvestment Act (CRA), and it still exists today. In a nutshell, Banks are leaned on by Federal Regulators to increase lending in certain areas and to people with lower income and credit scores. These regulators check the books annually to make sure the banks meet the guidelines of the CRA. If it doesn't, the bank is threatened with different fines and are not permitted to expand until they bring up their CRA numbers. Banks complain that they are making mortgages and loans that have a high chance to end up as bad debt (foreclosure and default). Doesn't matter if the bank has standards of lending - they must meet CRA guidelines.

The mortgage meltdown was closer in relationship to the repeal of the Glass-Steagall Act of 1933. This act prevented banks from taking depositors money and investing in various speculative vehicles like mortgage backed securities. Alan Greenspan was instrumental in getting Bill Clinton and Congress to repeal Glass-Steagall. Once that was done, mortgage companies sprang up by the hundreds, with Community Reinvestment Act guidelines, started doing little documentation mortgages, then selling off the mortgages to investment houses, who in turn bundled them as investment securities, thinking there was little chance of a downturn for the investor. However, many of these houses were worth less than what was owed on them, and the owners with poor credit and little money just walked away from them allowing foreclosure.

So, when you hear that it's just greedy capitalist bankers who created all these problems, remember it was laws and repeal of laws by Democrats who started this.

[The_War_Wagon]

The banks are getting tired of sitting on all the houses they gobbled up in '08.

It's a fire sale - EVERYTHING MUST GO!!! :rolleyes:

[Business_Casual]

True story the market is slower this year.

[JulyAZ]

Bank loans are insured. The value of your home goes down and you default on your loan? The bank gets reimbursed at the defaulted loan amount, then gets to turn around and resell the property again.

It’s why they didn’t help fix a lot of loans back in the day. The bank makes more on both ends.

This is gonna make the banks a lot of money.



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[flenna]

Another way to move the ghetto into good neighborhoods?