White House Logic

Crash? What crash?

White House pushes for home loans to people with weaker credit

WASHINGTON — The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

So what could possibly go wrong in this weak economy?
http://www.denverpost.com/digitalfirstm ... ker-credit

...doomed to repeat it...

Presently the pendulum has swung too far in the other direction, restricting home ownership to only those with near perfect credit scores and the ability to pay 25% down. Correction is overdue to allow those such as first time home buyers moving out their parent's house the ability to participate in the dream of home ownership while preventing the abuses of the lenders during the last administration is long over due. This in turn will crank up the construction industry and nation's economic engine. The fiasco of the last administration did not occur until largely unregulated lenders used highly risky practices to make loans without sound basis.

Dog, are your lips red from drinking all that Kool-aid. Didn't have anything to do with Fannie Mae & Freddie Mac lowering standards and pushing for an abnormally high homeowner rate that both the Dem and Republican parties encouraged?

FredHayek wrote: Dog, are your lips red from drinking all that Kool-aid. Didn't have anything to do with Fannie Mae & Freddie Mac lowering standards and pushing for an abnormally high homeowner rate that both the Dem and Republican parties encouraged?

It had very little to do with the Community Reinvestment act, as has been widely studied. The vast majority of the loans that defaulted were not insured with Fannie Mae & Freddie Mac but were from private insurers. Those lenders then sliced and diced and repackaged those risky loans as derivatives and were sold at huge fees. In order to keep making those ridiculous fees, they needed more and more high risk loans and did not follow proper appraisal practices. Here is a fact for you. 84% of the subprime loans were made by private lenders.

On the other hand, very few of the loans by the GSEs or that were made under the CRA defaulted. Simple fact that does not support your allegations. Of course we know that facts are not necessary for the outrages posited by the conservatives.
Here is some background reading for you that might keep you from embarrassing yourself.
Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data..including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve [also here], have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.
http://www.scribd.com/doc/59874222/Why- ... ing-Crisis

I just think it would be smarter to wait until we've recovered from the first crash before we set the next one in motion. I say we go back to the days of 20% down and decent credit instead of encouraging more risky loans during a shaky economy so people can't just walk away from loans without significant loss. Is that the selfish conservative way?

Making credit too easy to get and increasing the number of home buyers above natural levels leads to inflation. Remember home prices rising 10% per year in hot markets? If they had increased down payment requirements the market would have stabilized. Instead the speculators and flippers helped to further raise the price of housing. Just like is happening right now with college tuition. If easy loans weren't available colleges wouldn't be raising tuition 10% per year.

Rick wrote: I just think it would be smarter to wait until we've recovered from the first crash before we set the next one in motion. I say we go back to the days of 20% down and decent credit instead of encouraging more risky loans during a shaky economy so people can't just walk away from loans without significant loss. Is that the selfish conservative way?

So you agree with the President. Because that is about what he is proposing.

Something the Dog Said wrote:

Rick wrote: I just think it would be smarter to wait until we've recovered from the first crash before we set the next one in motion. I say we go back to the days of 20% down and decent credit instead of encouraging more risky loans during a shaky economy so people can't just walk away from loans without significant loss. Is that the selfish conservative way?

So you agree with the President. Because that is about what he is proposing.

If he actually said there should be 20% down and good credit to buy a house, then yes I agree. I must have missed that speech.

Yea, me too. The logic is too much to handle.