Quote:
Originally Posted by xoxoxoBruce
Either a person is qualified for a mortgage or not. I see the problem as;
1- greedy people trying to make money by turning houses in the bubble, and
2- Greedy lenders talking people into predatory mortgages they didn't understand.
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Numbers from Frannie and Freddie demonstrate the problem. Whereas most mortgages qualified for the traditional agreements, in the past seven years, even these applicants were rechanneled for ARMs. Whereas sub-prime loans were issued to a single digit percent of applicants, suddenly these mortgages were being pushed to so many who did not need them. Something like 21% of those who qualified for traditional mortgages were instead only offered sub-prime mortgages. Why? From the highest levels, the economy *must* be fixed by pushing more mortgages; sell more homes; stimulate the economy.
Stimulating the economy rather than addressing its problems was promoted by the George Jr administration. Create a robust economy by throwing money at it. Cheney said, "Reagan proved that deficits don't matter". Fannie and Freddie were only doing what their 'bosses' wanted. As a result, home priced were inflated by 20% to 40%.
Need to promote sub-prime loans was so encouraged that NINJA became a new and acceptable standard. Nobody cared whether the applicant qualified. From the highest levels of government, we wanted more people buying homes.
Yes, each sub-prime homeowner who could not afford his mortgage only has himself to blame. That does not, for one minute, exonerate anyone else of guilt. Irrelevant how dumb the mortgage applicants were. Those who were promoting mortgages to people who could not qualify are now seeking to blame anyone else. Those who pushed mortgages without first qualifying those applicants are also just as guilty of creating this national problem.
Again, sub-prime mortgages were encouraged at the highest levels of the Federal government mostly in the past seven years. Sub-prime was even pushed on people who qualified for traditional mortgages. That is where this problem originated.