Blame Low Income Home Buyers
After several weeks of billion dollar lifelines being thrown to Big Business and Wall Street, there appears to be a growing consensus that the mortgage crisis was caused by low-income home buyers. Many people believe that because low to moderate income home-buyers received SUBPRIME mortgage loans to buy their homes from banks and brokers who turned around and sold investments backed by those SUBPRIME loans on Wall Street, that these home-buyers are responsible for the financial crisis we are currently experiencing in the United States and around the globe. Many are pointing directly at the Community Reinvestment Act (CRA), which was created to prevent redlining and discrimination in certain geographic neighborhoods by banks and lenders.
Just to name a few of the people blaming low income homeowners for “wanting the American Dream” are as follows from the Washington Post’s Clarence Page;
Neil Cavuto of Fox News opined last month that if banks hadn’t been forced to make loans to “minorities and risky folks,” the Wall Street disaster would not have happened.
Ann Coulter blamed “affirmative action lending policies” that loaded banks up with mortgages that eventually defaulted and brought the financial system to its knees.
George Will on ABC’s “This Week” blamed “regulation, in effect, with legislation, which would criminalize as racism and discrimination if you didn’t lend to unproductive borrowers,” because “the market would not have put people into homes they could not afford.”
And there’s Rep. Michele Bachmann, a conservative Minnesota Republican, who caused a stir in Congress by quoting an Investor’s Business Daily article that accused the CRA and President Bill Clinton of forcing banks to give out loans “on the basis of race and often little else.”
It is appalling that the economic prosperity of Wall Street was designed on the backs and salaries of working people and when their house of cards crash, the working class homeowner gets the blame, while Wall Street gets the billions of tax-payer monies as a bailout. In effect, this process of predatory subprime lending started in the late 1990’s. There were many homeowners who were targeted and forced into foreclosure from their primary lenders for being slightly one month late and other inconspicuous fees appearing in their mortgage payments from the so-called “servicer” of the loan. Primary lenders would package their mortgages and sell them to Fannie Mae and Freddie Mac at face value, and would then set themselves up a “servicer” who collects the mortgage payments from the homeowner. This entitled banks and lenders to get paid many times for one home mortgage. Let the greed begin!
This is just the tip of the iceberg of the greed-driven world of debt and foreclosures. There is more to this story behind the financial crisis and we will bring more of it to you soon!
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