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Interesting read on home prices
- Thread starter MarylandMark
- Start date
I just got done reading that. Good article. You guys want some more insight into this mess? It all began in 1993 when Clinton singularly rewrote Fannie and freddie rules turning these pseudo lenders into ATM machines for minority and poorer folks in predominantly urban, low-income (democratic) areas. Then in 1994 Clinton pushes it a just a little bit further and creates his National Home-Ownership Strategy (look it up...but you won't find it on the DNC website archives anymore (they removed it about a year ago because it's probably too embarrassing at this point)) which simply exacerbated the already huge problems created by Carter's Community Reinvestment Act. (Brilliant 
) As if this idiocy wasn't enough, Clinton again rewrote the rules (via Robert Rubin's treasury department) which essentially forced lenders to satisfy quotas for sub-prime and minority loans to get a satisfactory a CRA rating. Without meeting these quotas, banks wouldn't qualify for any of the multitudes of governmental capital re-investment opportunities. Now, you guys remember Andy cuomo?...in ’97 clinton got Cuomo, to allow freddie and fannie to get into the sub-prime market even worse. The Dem. Congress lowered capital limits so F&F only had to hold 2.5% of capital to back their investments (but other banks needed 10%). This is when banks really cranked up the ATM machines pouring ungodly amounts of money into poor areas requiring no money down and no verification of income…this is a nice little deal the dems worked out with F&F…It’s no wonder that 384 politicians got big campaign donations from F&F (over $200million in lobbying and campaign contributions). Well, guess what? 15 years later, minorities made up 49% of the 12.5 million new homeowners, most of whom were in interest only or ARM loans…well, here we sit, reaping the benefits…I can’t fvcking wait for more Clinton influence under ‘bama, the savior.
) As if this idiocy wasn't enough, Clinton again rewrote the rules (via Robert Rubin's treasury department) which essentially forced lenders to satisfy quotas for sub-prime and minority loans to get a satisfactory a CRA rating. Without meeting these quotas, banks wouldn't qualify for any of the multitudes of governmental capital re-investment opportunities. Now, you guys remember Andy cuomo?...in ’97 clinton got Cuomo, to allow freddie and fannie to get into the sub-prime market even worse. The Dem. Congress lowered capital limits so F&F only had to hold 2.5% of capital to back their investments (but other banks needed 10%). This is when banks really cranked up the ATM machines pouring ungodly amounts of money into poor areas requiring no money down and no verification of income…this is a nice little deal the dems worked out with F&F…It’s no wonder that 384 politicians got big campaign donations from F&F (over $200million in lobbying and campaign contributions). Well, guess what? 15 years later, minorities made up 49% of the 12.5 million new homeowners, most of whom were in interest only or ARM loans…well, here we sit, reaping the benefits…I can’t fvcking wait for more Clinton influence under ‘bama, the savior.
clayinaustin
Charter Member
Lessons from the Depression
The Great Depression of the 1930s was preceded by a real estate bubble, also fueled by loose lending standards and shrinking down payment requirements. Those real estate problems — and solutions — echo today's.
Florida real estate was the epicenter of speculation in the mid-1920s. Developers ran up prices by selling to borrowers who put as little as 10% down. Those were shockingly risky loans at a time when the standard mortgage lasted five years and required a 50% down payment.
The risky loans went bad first, but it was the spread of credit problems to the supposedly safe loans — five years and 50% down — that caused the housing market to collapse.
The five-year loans required no payments to reduce principal. Homeowners expected to refinance mortgages when the loans expired, usually with the same lender. The stock market crash led to a "liquidity crisis" — no money to borrow — that dried up mortgage refinancing.
Millions of families lost their homes to foreclosure. Falling prices on nearly everything — homes, farm crops, wages — made consumers reluctant to buy and banks afraid to lend.
Will we never learn?
The Great Depression of the 1930s was preceded by a real estate bubble, also fueled by loose lending standards and shrinking down payment requirements. Those real estate problems — and solutions — echo today's.
Florida real estate was the epicenter of speculation in the mid-1920s. Developers ran up prices by selling to borrowers who put as little as 10% down. Those were shockingly risky loans at a time when the standard mortgage lasted five years and required a 50% down payment.
The risky loans went bad first, but it was the spread of credit problems to the supposedly safe loans — five years and 50% down — that caused the housing market to collapse.
The five-year loans required no payments to reduce principal. Homeowners expected to refinance mortgages when the loans expired, usually with the same lender. The stock market crash led to a "liquidity crisis" — no money to borrow — that dried up mortgage refinancing.
Millions of families lost their homes to foreclosure. Falling prices on nearly everything — homes, farm crops, wages — made consumers reluctant to buy and banks afraid to lend.
Will we never learn?
