tzor wrote: PLAYER57832 wrote:But the REAL truth is that banks have a notorious track record OF descriminating and that is why those laws were put in.. because banks were requiring HIGHER standards from minority candidates. They were not forced to give minorities "special treatment", only EQUAL treatment. Also, many, many people absolutely qualified for decent loans, but were steered over to ones that paid higher bonuses, gave the banks more money.
But what is "equal?" No matter how much we try to pretend we are post racial the fact that you cannot ignore the fact that minorities generally are in greater percentages in both poverty areas and urban areas. These are the places where wages are (by definition) low and land pressure has forced the prices of property above the levels that the population can practically afford. In many cases these resulted in rate disparities. Yes there were real cases of wrongdoing, but the Federal government has always had a bull in a china shop approach and sued the good and the bad alike.
No. Judging someone incapable of repaying because their wages are low is reasonable. Judging them incapable of paying because the have renigged on other debts is reasonable. The problem is that blacks/minorities
with good wages and
good payment records would be denied loans. And, the argument that these people lived in "bad areas" was A. also wrong and B. circular. A big part of why those areas were "bad" and stayed "bad" was because no one would issue loans on those properties. Catch-22. Area bad because no one can get a loan to improve, anyone wanting to improve is stymied by lack of bank loans.. regardless of other factors such as business plans, income, etc.
Even AFTER the laws were passed, minorities were still more likely to be offered a poor loan, one with higher interest rates or other issues.
HOWEVER, into this mix came some rather shadey folks who decided to take advantage and not even bother doing the
mandated checks. Time and again we heard of people taking loans with fraudulant income figures, etc. And I don't mean sheisters who intentionally defrauded the banks, I mean honest people who came into the bank, who truly just did not really "get" most of the loan business (who probably should have, yes, but not everyone is a business major) and who basically trusted that the loan officer knew what they were about. In more than a few cases, the people asking for the loans gave legitimate information, but forms were filled in with false information.
These groups got away with that because there was no oversight. Once these loans were bundled and sold off, they were essentially no longer really connected to the original bank, the original mortgage. Many of those issueing the loans are now gone.
tzor wrote: PLAYER57832 wrote:Add in some truly shady groups like Country Wide that made no pretense of even investigating people, and simply were mills to offer out loans that the bank knew it would never truly be responsible for.
But Country Wide was not a part of the slippery slope, they were the part of the free fall. Once banks were forced to make these loans and when they started massively shoving these loans off to Fannie and Freddie. (Side note: Back in 1989 I worked for Century 21 working on loan prequalification routines for the laptops of sales people trying to see if people could qualify for loans. This (just the prequalification routines) was some serious shit; rocket science looked easy in comparison. It wasn't easy to get a Fannie or a Freddie. ) Once people realized that Fannie and Freddie were taking off their hands POS loans then the door was not only open for places like Country Wide, the "WELCOME" sign was flashing in their faces!
The problem was not requirements to issue loans to minorities, as you claim. The problem was a general deregulation and that was NOT about issuing loans to minorities, even if it was "painted up and trotted out" that way by some. The REASON for the deregulation was this whole "reduce government" and "stop impeding business" baloney that you want us to try AGAIN, only more so!
tzor wrote: PLAYER57832 wrote:AND, ultimately, why on earth is this idea that individuals are supposed to know more than Real Estate agents and bankers about what a house is worth or will be worth allowed to take hold? Offer just about any other kind of loan and the BANK, the INVESTOR takes the risk. Even in this, the banks offering the mortgages did not really assume the risk, the investors (some WERE banks) who bought the rolled over "securitized loans" THEY are the ones making the risk. By rights, the only ones holding the bag for those idiot mortgages out to be the banks that issued them, not WE TAXPAYORS.
I thought they were supposed to teach that shit in school.
Oh PLEASE.. you yourself just described how complicated all that was. I have well above-average education. Moreover, though you have no way of knowing this, I have had to tangle with bank loans in some pretty serious ways since some major screwups of my accounts in college. I have more than once found myself explaining facts to everyone from college presidents to banks officers , the supposed "regulators" and even Congress. (true!)
As far as I am concerned, if someone issues a loan at even 60% interest and someone is stupid enough to take it... so be it! BUT, if you send me an offer in the mail, telling me you are issuing me a loan for 10% fixed rate, then I shouldn't have to wade through 3 pages of tiny print to find out that its really a 19% rate and that that 10% rate is just the BEST rate .. and oh, by-the way, by even applying, I am committing to pay you $50 in fees right off the bat.
If I have a due date of the 15th, the due date should STAY the 15th and not be suddenly switched 10 days beforehand, with a supposed "notice" buried down on the 4th page of more fine print.. most of which has nothing to do with a change in due date... etc.
tzor wrote: First and foremost I remember hearing, as though it was one of the commandments given to Moses that "Thou should always have a downpayment on thy mortgage of no less than 20%." This was followed by the commandment "If it looks too good to be true, it is too good to be true!"
If most of your neighbors and friend are getting similar deals, if you see advertisement after advertisement, if you TRUST IN THE REGULATIONS, then it no longer seems "too good to be true". THAT is the problem. It should not take and MBA in business to not get hoodwinked in a basic mortgage or even a credit card.
You want to give the banks and bigwigs a complete pass because the "joe smoe's of this world don't have PhDs of MBAs in finance. The Banks should be required to be honest. That's all.. simply to spell out terms in plain english, not pretend to x and then hide down on the 20th page that they are really doing yz.
If you seriously think that requiring banks to plain be honest, to hold a bit more in reserve instead of being allowed to speculate with ALL of their money.. or even more than they hold, then I am sorry. You are part of the problem, not the solution!
tzor wrote:The greatest generation bought small houses and worked like bastards to improve, upgrade and move up as their families grew. Their children, who grew up in those houses expected to start their families not from the same place their parents did, but from where their parents wound up. That managed to work ... for a while. But when the children of those children wanted to do the same, living in houses that were massively beyond the means of any starting family ... especially in urban areas where the market was already at an unsustainable bubble, then shit happened and now this generation will forever remain cursed and screwed.
You missed the part where greedy bankers and Real estate speculators were allowed to take all those average working folks for that ride... and where it wound up being we taxpayers who had to bail those bankers out.. AND where so many of those average folks wound up losing their homes, while the bankers have seen profits soar.
tzor wrote:I remember going to the houses (the so called Mc Mansions) in the early 2000's and looking at the wacko prices. $400,000 got you a massive house, cathedral ceilings, two stories with not one but two staircases to the bedroom suites (one for the living room and one for the dining room). Never mind trying to figure out how I was going to pay for the damn thing, I couldn't even think of how I was going to pay to clean the damn thing!
Nope.. you missed it. The problem wasn't "Mc Mansions" selling for $400,000. The problem was 1920's run down 1-2 beroom places selling for over $300,000.
Here is the thing. If somone making $30,000 a year pops in and says they want to buy a house for $200,000, the Real Estate agents AND the banks have a responsibility to tell that person "you really need to look at something cheaper". BUT, because the banks were not forced to take responsibility for their loans, because they were allowed to take their profits and simply run, and further because no one was bothering to look over the shoulder of any of these folks.. too many of those loans were made.
AND, in addition, a LOT of plain shady loans, loans where not only did the paymetns balloon, but the "excess" was simply added back to the principle, thus keeping it seeming as if the payment had not ballooned until the mortgage was far more than the house was worth. That is, someone starts out with a reasonable downpayment, but instead of building equity, finds a house "under water" even WITHOUT any drop in housing price.. and I mean a mortgage that had a reasonable (NOT extra, extra low) payment initially.
OR the many who simply had 2,3,4 even 10% interest tacked onto their mortgages.
OR the many who were offered "variable rate" mortgages, and were flat out told not to worry, because they could just refinance (and, in a few cases they could and did).
tzor wrote:I would have bought a condo in Key West (well actually stock island) in the 1900's in the $100,000 range. Next to a golf course even. Only it was a little on the cheaply built side and downwind of the garbage disposal plant on the island. Plus I only had around $10,000 free cash on hand to burn into a mortgage at the time. So I didn't do it.
I DID buy a house.. won't say where. I was offered loans that I found "suspicious". Luckily, I lived in an area that was not such high pressure as parts of LA, Sacramento, etc. Also... well, I had to pay cash because my income was not completely regular.
My grandfather bought a house, paid for it with cash, improved it , also paid with cash. Most of his neighbors did the same. And... house after house in that area is now being foreclosed upon because of loans like the "balloon" one I described above.
Banks are allowed to make money. People are allowed to invest, to risk losing money. The problem is that for the past few years, those investors have been making money by outright defrauding potential homeowners AND, even when it was not outright fraud, too many people were able to make money off these deals (real estate folks, bankers, security holders, etc.) to bother watching what was really happening.
This is a classic example of WHY regulation of these things is needed. You want to invest $50,000 in a piece of land or stock? FINE! You lose that $50,000, then YOU are out. But to invest $50,000 and then decide that you can just fix things so you won't lose much and its OK because you are just smarter and anyone who cannot wade through it is just dumb (note, I am quoting an interview there).. THAT is just wrong.
Bankers and investors are allowed to make money. They are NOT allowed to lie and hide what they are doing so that it takes an MBA not to get cheated on a credit card or mortgage.
