By Jacky, on October 19th, 2008
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.”
Continue reading Blame Low Income Home Buyers
By Jacky, on March 6th, 2008
There has been another shattering record number of foreclosures
in the last quarter of 2007! In the last three months of 2007, home foreclosures hit an all-time high and an increase in the number of borrowers defaulting on their home mortgage loans.
Not only are the value of homes falling as a result of large home mortgage foreclosures, but also borrowers who are stuck with home mortgages that cost more than their house is worth, are simply walking away. There are still many home mortgages in the coming months that are due to “reset” or as I call it rise in mortgage payment.
The rate of failing home loans should climb through much of the year as national home values sink, said MBA chief economist Doug Duncan.
“You should expect to see, as long as house prices are declining, an increase in delinquencies and foreclosures,” he added.
Lower home values make it difficult for struggling homeowners to refinance and can create an incentive for them to simply walk away from their home and mortgage.
“We don’t expect to see the peak in delinquencies or foreclosures until mid to late 2008,” Duncan said.
Subprime mortgage borrowers were taking all of the heat for this mortgage mess, but all across the spectrum of borrowers, mortgage payments are falling behind. In the last three months of 2007, there were about 1 out of 20 delinquent payments from home loan borrowers, and about 1 out of 6 delinquent subprime borrowers.
As far as subprime mortgages go, many people think that this subprime lending business just started in the last year or so. Not true, there have been over ten years of subprime lending practices going on, but mostly targeting minorities. The mass appeal of the money that was made from over-charging home loan borrowers with subprime mortgages was to great of a payday for Wall Street and other investors. The end result of these fraudulent loan practices is what we are seeing today in the record breaking number of foreclosures. To stop foreclosure has become almost impossible. Continue reading Home Foreclosure Wave Still Cresting
