Wall Street's Gullible Occupiers

[Bruce Nunnally]

The huge government investment in subprime mortgages achieved its purpose. Home ownership in the U.S. increased to 69% from 65% (where it had been for 30 years). But it also led to the biggest housing bubble in American history. This bubble, which lasted from 1997 to 2007, also created a huge private market for mortgage-backed securities (MBS) based on pools of subprime loans.

As housing bubbles grow, rising prices suppress delinquencies and defaults. People who could not meet their mortgage obligations could refinance or sell, because their houses were now worth more.

Accordingly, by the mid-2000s, investors had begun to notice that securities based on subprime mortgages were producing the high yields, but not showing the large number of defaults, that are usually associated with subprime loans. This triggered strong investor demand for these securities, causing the growth of the first significant private market for MBS based on subprime and other risky mortgages.

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[JimD]

My simplistic take on this real residential property financial disaster can be expressd by the words of my neighbor/realtor/friend who told me more than four years ago;

"The days of NINA loans are over".

In residential realtor shorthand, NINA equals "no income, no assets". To which I would add, "no documentation". Ask your favorite residential mortgage broker about the accuracy of that proposition.

Realtistic economics has returned. If you cannot produce unencumbered 20%% down payment for a residential propery loan, do not even apply.

Personal opinion follows:

The concept of "everyone is 'entitled' to home ownership even if they can't pay for it" can be traced to the Carter administration. Check it out.

One possible search term is "redlining". There are many others.

[KHE]

My simplistic take on this real residential property financial disaster can be expressd by the words of my neighbor/realtor/friend who told me more than four years ago;

"The days of NINA loans are over".

In residential realtor shorthand, NINA equals "no income, no assets". To which I would add, "no documentation". Ask your favorite residential mortgage broker about the accuracy of that proposition.

Realtistic economics has returned. If you cannot produce unencumbered 20%% down payment for a residential propery loan, do not even apply.

Personal opinion follows:

The concept of "everyone is 'entitled' to home ownership even if they can't pay for it" can be traced to the Carter administration. Check it out.

One possible search term is "redlining". There are many others.

This is very true. I still can't believe it when some people still preach that it is eveyone's "right" to own a house. I reply, "Show me in the Constitution and/or the Bill of Rights where it states that." That usually shuts them up but they do not change their opinion.

[Texas Jim]

I worked for a bank for 12 years, before I retired last year...

My son still works for a major bank as a back end programmer.

We heard it referred to as NINJA loans...

No

Income

No

Job

Approved

Still means the the same thing... :)

[WarrenJ]

Many forget this all began when bankers woke up one morning to find a government gun pointed at their heads demanding loans be made to folk who had no hope of paying them back. Sure, the banks eventually got carried away, but it all started with a loaded congressgun in Washington, D.C.

[Texas Jim]

Warren... You are correct about that...

It was not the banks fault that it started.

[BodybyFisher]

In 1995, I was working for a large NY commercial bank and I sat next to the Community Reinvestment Act Officer (CRA). The CRA was created so that banks would reinvest in the neighborhoods that they had branches in.

One day I was sitting there and the CRA Officer was being grilled during an audit by CRA officials. The question was, why did this black man's mortgage get rejected, and this white man's mortgage get approved? The CRA officer took the file and said, Mr. X's (the black man) mortgage was rejected because he had no credit, and his income was not adequate to support the size of the loan he requested. The CRA OFFICIAL said, based on who's criteria? The CRA officer said, We apply the same criteria to all loan requests, we do not base our loans on an applicants race, creed, etc., its based on our lending criteria and our criteria is the norm in the industry.

Regulations have been in place for as long as I can remember, its NEVER been based on race, creed, sex, etc LAWS WERE ON THE BOOKS THAT WERE WEAKENED!!!!!!

Then you see this:

[BodybyFisher]

The one I love is Jamie Gorelick, not only did she tie the FBI and CIA hands, she was involved with FNMA/FHLMC, if I was such a failure, I'd retire to a rocking chair.