Quote:
Originally Posted by Excaliber
I recently sold my house and was surprised at what the buyer had to go through to get loan approval. That is the buyer who eventually bought it, as several other's had to drop out because loan approval process was just taking to long! It's tough to qualify these days for plenty good folks with good jobs.
But I'm not sure how much blame is warranted for our current dabacle on low income housing loans. Heck the banks were loaning money like crazy to ANYBODY with a warm body. I suspect the BULK of the problem had to do with how those loans, good and bad, were bundled, sold and insured by Wall St. THAT I believe is the fundamental issue. Because of that "easy money" for the bank to sell/transfer the loans to ready and willing investor groups they became lax in applying more stringent accounting methods to making loans in the first place. Why bother? Someone IS going to buy the loan anyway, let them deal with the risk.
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ALL of the present debacle can be laid at the feet of both parties. The Community Reinvestment Act was passed 40+ years ago to stop "RED LINING" There have been numerous changes [STRENGTHENING] of the CRA since then. When passed it did nothing but make the banks spend the money to check employment and credit history and have the property appraised before REJECTING the loan. Rejecting the loan NOT because the banks wanted to reject the loan but because it would have been a worthless loan ending in default. And both Federal and State banking regulations did not allow banks to make such loans. Regulations also required that banks have only very highly rated paper, no high risk ventures allowed by law. Over the years, both parties, added teeth to the CRA while REPEALING a wide variety of banking regulations DESIGNED TO PREVENT OUR PRESENT SITUATION. All of the under the GUISE that poor people have the right to own a house too. THEY HAVE NO SUCH RIGHT! They have the right to an opportunity to make enough money to buy and pay for a house of their own. The real reason, both parties, RUINED banking regulations, was to BUY the votes of the poor. Have the poor benefited from the manipulations of the politicians of both parties? Not a penny. Adjusted for inflation, they likely have 50% less than they did 40 years ago when they were red lined against.
Since 1960, the Government, to the SHAME of both parties has GIVEN over TEN TRILLION DOLLARS to "the poor." And they seem surprised that "the poor" seems to be a growth industry.