[SK in CV]

[quote=Hobie]
Then why did Freddie and Fannie buy the paper from the banks who issued loans mandated by the policy?[/quote]

That’s kind of like asking why apples are red. They bought the loans because thats what they do.

If you’re somehow arguing that Fannie and Freddie are to blame for the current mess, you need to review what happened over the last 5 years. The percentage and dollar value of non-GSE loans skyrocketed. The GSE’s stayed relatively flat in comparison.

[SK in CV]

[quote=Hobie]
Then why did Freddie and Fannie buy the paper from the banks who issued loans mandated by the policy?[/quote]

That’s kind of like asking why apples are red. They bought the loans because thats what they do.

If you’re somehow arguing that Fannie and Freddie are to blame for the current mess, you need to review what happened over the last 5 years. The percentage and dollar value of non-GSE loans skyrocketed. The GSE’s stayed relatively flat in comparison.

[SK in CV]

[quote=Hobie]
Then why did Freddie and Fannie buy the paper from the banks who issued loans mandated by the policy?[/quote]

That’s kind of like asking why apples are red. They bought the loans because thats what they do.

If you’re somehow arguing that Fannie and Freddie are to blame for the current mess, you need to review what happened over the last 5 years. The percentage and dollar value of non-GSE loans skyrocketed. The GSE’s stayed relatively flat in comparison.

[SK in CV]

[quote=Hobie]
Then why did Freddie and Fannie buy the paper from the banks who issued loans mandated by the policy?[/quote]

That’s kind of like asking why apples are red. They bought the loans because thats what they do.

If you’re somehow arguing that Fannie and Freddie are to blame for the current mess, you need to review what happened over the last 5 years. The percentage and dollar value of non-GSE loans skyrocketed. The GSE’s stayed relatively flat in comparison.

[SK in CV]

[quote=Hobie]Hold on guys. Put your guns down. The intent of the policy was to encourage banks to lend to folks who didn’t qualify under the current terms. ie. 20% down, income to prove loan repayment, etc.

The administration looked at the banks lending policies as ethnic discrimination rather than based on financial ability to repay.

The problems were the unintended consequences from this noble policy.[/quote]

As to the bolded part, not exactly. But that is exactly how lenders who had been redlining neighborhoods for years saw it. Despite the fact that down payment and ability to repay loans were not even part of the equation in their redlining.

The act outlawed redlining but specifically required that lending be done consistent with safe and sound lending practices. Not make loans to people who didn’t qualify.

Economic theorists rarely see descrimination. They make the false assumption that the market is color blind and class blind, collect their data based on that assumption, and prove their thesis. Empirical research, however shows otherwise.

[SK in CV]

[quote=Hobie]Hold on guys. Put your guns down. The intent of the policy was to encourage banks to lend to folks who didn’t qualify under the current terms. ie. 20% down, income to prove loan repayment, etc.

The administration looked at the banks lending policies as ethnic discrimination rather than based on financial ability to repay.

The problems were the unintended consequences from this noble policy.[/quote]

As to the bolded part, not exactly. But that is exactly how lenders who had been redlining neighborhoods for years saw it. Despite the fact that down payment and ability to repay loans were not even part of the equation in their redlining.

The act outlawed redlining but specifically required that lending be done consistent with safe and sound lending practices. Not make loans to people who didn’t qualify.

Economic theorists rarely see descrimination. They make the false assumption that the market is color blind and class blind, collect their data based on that assumption, and prove their thesis. Empirical research, however shows otherwise.

[SK in CV]

[quote=Hobie]Hold on guys. Put your guns down. The intent of the policy was to encourage banks to lend to folks who didn’t qualify under the current terms. ie. 20% down, income to prove loan repayment, etc.

The administration looked at the banks lending policies as ethnic discrimination rather than based on financial ability to repay.

The problems were the unintended consequences from this noble policy.[/quote]

As to the bolded part, not exactly. But that is exactly how lenders who had been redlining neighborhoods for years saw it. Despite the fact that down payment and ability to repay loans were not even part of the equation in their redlining.

The act outlawed redlining but specifically required that lending be done consistent with safe and sound lending practices. Not make loans to people who didn’t qualify.

Economic theorists rarely see descrimination. They make the false assumption that the market is color blind and class blind, collect their data based on that assumption, and prove their thesis. Empirical research, however shows otherwise.

[SK in CV]

[quote=Hobie]Hold on guys. Put your guns down. The intent of the policy was to encourage banks to lend to folks who didn’t qualify under the current terms. ie. 20% down, income to prove loan repayment, etc.

The administration looked at the banks lending policies as ethnic discrimination rather than based on financial ability to repay.

The problems were the unintended consequences from this noble policy.[/quote]

As to the bolded part, not exactly. But that is exactly how lenders who had been redlining neighborhoods for years saw it. Despite the fact that down payment and ability to repay loans were not even part of the equation in their redlining.

The act outlawed redlining but specifically required that lending be done consistent with safe and sound lending practices. Not make loans to people who didn’t qualify.

Economic theorists rarely see descrimination. They make the false assumption that the market is color blind and class blind, collect their data based on that assumption, and prove their thesis. Empirical research, however shows otherwise.

[SK in CV]

[quote=Hobie]Hold on guys. Put your guns down. The intent of the policy was to encourage banks to lend to folks who didn’t qualify under the current terms. ie. 20% down, income to prove loan repayment, etc.

The administration looked at the banks lending policies as ethnic discrimination rather than based on financial ability to repay.

The problems were the unintended consequences from this noble policy.[/quote]

As to the bolded part, not exactly. But that is exactly how lenders who had been redlining neighborhoods for years saw it. Despite the fact that down payment and ability to repay loans were not even part of the equation in their redlining.

The act outlawed redlining but specifically required that lending be done consistent with safe and sound lending practices. Not make loans to people who didn’t qualify.

Economic theorists rarely see descrimination. They make the false assumption that the market is color blind and class blind, collect their data based on that assumption, and prove their thesis. Empirical research, however shows otherwise.

[SK in CV]

[quote=Hobie]Don’t forget President Carter started with mandates to provide non discrimination and affordable housing in 1978(?). This, I believe is the tip of the arrow which got this snowball rolling.

[/quote]

Seriously? How so? Did it also create the S&L crisis in the late 80’s and the subsequent real estate bubble burst of the early 90’s? If you think non-descrimination policies are a bad thing, do you think discrimination is a good thing?

[SK in CV]

[quote=Hobie]Don’t forget President Carter started with mandates to provide non discrimination and affordable housing in 1978(?). This, I believe is the tip of the arrow which got this snowball rolling.

[/quote]

Seriously? How so? Did it also create the S&L crisis in the late 80’s and the subsequent real estate bubble burst of the early 90’s? If you think non-descrimination policies are a bad thing, do you think discrimination is a good thing?

[SK in CV]

[quote=Hobie]Don’t forget President Carter started with mandates to provide non discrimination and affordable housing in 1978(?). This, I believe is the tip of the arrow which got this snowball rolling.

[/quote]

Seriously? How so? Did it also create the S&L crisis in the late 80’s and the subsequent real estate bubble burst of the early 90’s? If you think non-descrimination policies are a bad thing, do you think discrimination is a good thing?

[SK in CV]

[quote=Hobie]Don’t forget President Carter started with mandates to provide non discrimination and affordable housing in 1978(?). This, I believe is the tip of the arrow which got this snowball rolling.

[/quote]

Seriously? How so? Did it also create the S&L crisis in the late 80’s and the subsequent real estate bubble burst of the early 90’s? If you think non-descrimination policies are a bad thing, do you think discrimination is a good thing?

[SK in CV]

[quote=Hobie]Don’t forget President Carter started with mandates to provide non discrimination and affordable housing in 1978(?). This, I believe is the tip of the arrow which got this snowball rolling.

[/quote]

Seriously? How so? Did it also create the S&L crisis in the late 80’s and the subsequent real estate bubble burst of the early 90’s? If you think non-descrimination policies are a bad thing, do you think discrimination is a good thing?

[SK in CV]

I have to agree with many of the others, that there is plenty of blame to go around, and virtually no one group is guiltless. From financiers to put the funds up to build homes, the builders, agents, brokers (of all types), lenders, the all but non-existent underwriters, and not least the buyers.

I’ve been inclined, over the last years, to identify the lenders, whose incentive to lend with impugnity had been unleashed by Gramm-Leach-Bliley, and the emergence of an unlimited supply of funds through securitization, as the prime culprit. Recent hearings in Washington confirmed these suspicions.

I’ve spent a few minutes trying to track down the origin of this quote from a liveblog of the WaMu hearings, so far to no avail, but the words, if accurate, are damning.

According to the FBI, 80% of mortgage fraud is committed by the lender. We’re not talking about stupid loan officers allowing borrowers to get away with something crazy that is bad for the bank. We’re talking about clever loan officers pushing fraudulent documents in order to score bigger paychecks, and bank executives looking the other way so that they can keep getting big paychecks from the securitization machine.

This isn’t a problem unique to WaMu. This is how the U.S. mortgage system operated for half a decade.

http://www.ourfuture.org/blog-entry/2010041513/liveblogging-washington-mutual-hearing

80% of the fraud. Not borrowers who lied on their applications. But lenders who encouraged and knowingly looked the other way. Stunning.

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