the government forced banks to offer loans to people who could not qualify.

[cehs]

The banks didn't want CRA initially because it forced them to make loans to poor people in areas that they historically had flagged as high risk, or quite frankly (given the time period) contained monorities. THey had whole maps with location they refused to lend too irregardless of income, loan to value, etc. To correct that that inequity, the feds passed cra and I believe fair lending acts as well (not sure on the time frame). I know I know, all of that warm and fuzzy liberal stuff...who cares about discrimination. To support this Fannie and Freddie were formed. Tiem went by, and pretty soon some one realized they could take advantage of this system and increase lending volumes and margins by selling off more and more loans (traditionally banks placed more mortgages in their local portfolios.) NExt thing you know ther are mortgage brokers popping up ot meet the demand created by falling rates. Falling rates created building boom and the whole system took off.

I bet you find that after 2000, banks were actualyl lobbying hard to protect all of this "forced lending" because they were making som mcuh money on all sides. Both in origination and by selling them off to investors. The systme hit it's peak and became unstable, when demand from the investors started outstripping suppyl. Meaning rather than selling off what you generated to control your risk, it became a profit center and orginators are being pressed hard ot push paper at all costs. They in turn push hard on appraisers, realtors and pressure borrowers for both refinances and purchases. They went where hte moeny was good. Not on CRA, FHA, rurla housing... oh no, those are chicken feed.... they wanted the 200k+ loans. That's where the money was.


Hers' how it went:
ORIGINATOR - "can you afford $$$$ per month?" (note they aren't asking for W2 or actual verifiable income)
BORROWER - "Ya we can swing that... besides it's going ot keep gaining 10% in value and we can just refinance when the rates changes or baloon expires... right?"
ORIGINATOR - "absolutely, you can't lose... rates will rpobably keep going down too. Now, I jsut need you to fill this out stating the most you could amke with bonuses, tips and any investment income you have, you'll need $$$,$$$ to qualify for this loan. Don't worry it's just a piece of paper, you can afford thsoe payments right?"
BORROWER - "Oh, OK"
ORIGINATOR - "enjoy your new home. IF you excuse me I have my next appointment comming in".

IF the borrower was lucky, they might have known it was a ARM or a balloon and what that meant 3-5 years later.

I will agree that government corruption allowed this to all get ignored then swept under the rug. All sides had a hand.

You want it to stop. How about strict open meeting laws with serious pentalties? No closed door strategy sessions. If tax payer dollars are impacted and there are more than 2 elected officials are discussing anything, there needs to be a 24 hour notice of a meeting, an agenda published, and notes taken with the opportunity for the public to attend. The exception would be national secturity specific issues. But a independant member of the judicial branch should be in attendance to make sure that's what is discussed.

As for lobbyists. I'm not sure if there is a law now, but the daily schedule of congressmen should be published as legal record (meaning lying is perjury) and it includes who they will meet with. Any deviations get filed as amendments within 48 hours.

Term limits are another nice strategy too. Finally, lets, just keep more programs and tax dollars at the state level. Now I know I'm biased because I'm in one of the few states that has a balanced budget (actually had a large surplus last year). W'ed probaby get involved in a let fewer wars si more military was were national guard and you needed permission from that state Govener to use them, and if mobilized for more than 6 months, it would require approval form the state legislature. The exception being an act of war being declared.

I HAVE one of those mortgages, and that is NOT how it went.
They KNEW that I am self employed, and asked me to show proof of my last three years of income.
I showed that to them, and told them that PART of my INCOME is LEGALLY hidden. I make more than the 1040 shows. So they had to do a DECLARED income statement that I had to sign.
THEY also told me what I had heard back in the 90s that they would be audited by the government IF they did not accept SOME of this type of mortgage.
The bill (don't remember the name) was proposed by DEMOCRATS, then when conservatives WARNED about fredie mack and salley may being in trouble, the DEMOCRATS vehemently denied there was ANY problem.
The banks had to do something, or get stuck with the bad loans, so they were sold as DERIVATIVES on the stock market. (wrong thing to do, but profitable).
NOW we taxpayers bailed out wall street and the banks, while home owners with limited income got stuffed down the drain.
By the way, I am STILL in my home and making payments, due to the LEGAL tax deductions for business owners......

[AStudent]

I HAVE one of those mortgages, and that is NOT how it went.
They KNEW that I am self employed, and asked me to show proof of my last three years of income.
I showed that to them, and told them that PART of my INCOME is LEGALLY hidden. I make more than the 1040 shows. So they had to do a DECLARED income statement that I had to sign.
THEY also told me what I had heard back in the 90s that they would be audited by the government IF they did not accept SOME of this type of mortgage.
The bill (don't remember the name) was proposed by DEMOCRATS, then when conservatives WARNED about fredie mack and salley may being in trouble, the DEMOCRATS vehemently denied there was ANY problem.
The banks had to do something, or get stuck with the bad loans, so they were sold as DERIVATIVES on the stock market. (wrong thing to do, but profitable).
NOW we taxpayers bailed out wall street and the banks, while home owners with limited income got stuffed down the drain.
By the way, I am STILL in my home and making payments, due to the LEGAL tax deductions for business owners......

Yup....kinda like a car salesman told me that get that tank of gas if I bought the truck...didn't happen.

It's all a sales pitch....I work at a rv dealership now and working with salesmen on a daily basis I've seen that they will throw you every line in the book. True, not true, half true, doesn't matter as long as you buy something.

[exreo]

The banks were partners in crime with the backing and goading by the federal government. My question is, why hasn't Congress screamed bloody murder for hearings into who the crooks were in this mess and who has absconded with all the billions of dollars first from investors then again from gov't bailouts? This has been a free for all for certain high end money people facilitated by politicians as kickbacks for getting them elected.

The reason for no inquiries is they would immediately point back at the politicians sitting on the bench. Self incrimination. They don't need an inquiry because they see the crooks in the mirror every day and there are plenty on both sides of the aisle in this scam. Then you have the Trial Lawyers and other special interest groups running cover for them. Have you asked yourself why no calls for Tort Law reform? Because Congress is full of trial lawyers who make their fortunes off ridiculous tort laws. They are all a bunch of crooks and creeps.

Pull the chain and flush.

Exactly right, but most all the crooks have a "D" next to their name. This is the M.O. of democrats. That is, to buy votes with our money and by showing special favor to minorities.

[Elfshadow]

Exactly right, but most all the crooks have a "D" next to their name. This is the M.O. of democrats. That is, to buy votes with our money and by showing special favor to minorities.

Fault lies on all sides. The democrats originated the problem but republicans relaxed regulations on the banks which made a bad situation worse. Risk or regulations would have prevented what happened but both where removed leading to a perfect storm.

[DeltaT]

And you guys get mad when a home owner comes on her and state all HVAC contractors are crooks based on the home owners statement.

Not all banks participated in this issue. Many small ones refused to issue mortgages because of the fraud and the soon to be failures not to mention the position of dishonestly to the banks customers. This refusal was typically by small banks in small communities where the bankers knew the problems these type of business pratices would bring on to their communities. And they need to be recognized and rewarded.

As for the other banks, yes, they knew the consequences and they got paid for placing these loans. But they were forced to place these dishonest loans or go out of business.

I'm not defending those that are guilty but we, as an industry are guilty in our own way. Who in our industry has rejected the millions of chinese/mexican capacitors that have been put on the market for the past 20 years or so. We know abou them, as one example, but we don't do anything about them..as a small example, because we benefit and get paid.

This program was created to benefit inner cities which were being "red lined", a term used in the mortgage banking industry because red lines were put around certain sections of certain cities where mortgages would not be placed, and only a few people in Congress pushed this program into the everyday life of all citizens corrupting the entire industry and giving us what we have now.

Yet they have not paid one cent in punishment. One has already retired and treated like a hero.

[energy star]

I HAVE one of those mortgages, and that is NOT how it went.
They KNEW that I am self employed, and asked me to show proof of my last three years of income.
I showed that to them, and told them that PART of my INCOME is LEGALLY hidden. I make more than the 1040 shows. So they had to do a DECLARED income statement that I had to sign.
THEY also told me what I had heard back in the 90s that they would be audited by the government IF they did not accept SOME of this type of mortgage.
The bill (don't remember the name) was proposed by DEMOCRATS, then when conservatives WARNED about fredie mack and salley may being in trouble, the DEMOCRATS vehemently denied there was ANY problem.
The banks had to do something, or get stuck with the bad loans, so they were sold as DERIVATIVES on the stock market. (wrong thing to do, but profitable).
NOW we taxpayers bailed out wall street and the banks, while home owners with limited income got stuffed down the drain.
By the way, I am STILL in my home and making payments, due to the LEGAL tax deductions for business owners......

Wrong.

[energy star]

Exactly right, but most all the crooks have a "D" next to their name. This is the M.O. of democrats. That is, to buy votes with our money and by showing special favor to minorities.

Wrong

[energy star]

Fault lies on all sides.

Correct

[hearthman]

Fault lies on both sides because the Republicans have muted to the Left and very few true conservatives are left. That is why we have the Tea Party as distinguished from the Republican Party and they dislike each other greatly. The Repubs have sold their souls to the devil just as the Left did long ago. The Repubs. are just a milder version of Progressivism, more like Progressive Lite. There are vote whores on both side of the aisle who will sell their souls to the highest bidder. In exchange, voters get their thirty pieces of silver.

[DeltaT]

Fault lies on both sides because the Republicans have muted to the Left and very few true conservatives are left. That is why we have the Tea Party as distinguished from the Republican Party and they dislike each other greatly. The Repubs have sold their souls to the devil just as the Left did long ago. The Repubs. are just a milder version of Progressivism, more like Progressive Lite. There are vote whores on both side of the aisle who will sell their souls to the highest bidder. In exchange, voters get their thirty pieces of silver.

Couldn't agree more.