Why did Mortgage lenders offer loans to people that didn’t qualify for those loans?
by Mortgage Rates on Wednesday, October 13th, 2010 | 14 Comments
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Barack Obama and other left wing activists accused the lenders of racism because not enough poor people were getting mortgages.
The lenders never should have caved into the left wing activists.
One thing that we should learn from this we do not want one of the left wing activists who pressured the lenders into making irresponsible loans to people who did not have the ability to repay those loans in the position of the President of The United States of America.
Although Hillary Clinton would have been the best candidate, given the decision of the Democratic Party hierarchy to give Barack Obama the Democratic nomination then John McCain is the best choice in this election.
Oh they had a choice. Deregulation lead the way.
http://www.votenobailout.org
They were pressured by Democrats, including Bill Clinton himself.
Greed.
When the homeowner defaults on the loan the bank repos it and makes a quicker profit than if they let the loan run its course.
Contrary to the latest extreme right wing propaganda….
They gave loans to people because it was profitable to do so. By that I mean they made their money off of fees and start up costs for the loans.
Then they would take the loans chop them up and repackage them to sell as derivatives.
They essentially sold off the risks.. (supposedly) and banked off of the initial fees.
No it wasnt because the vast majority of Mortgage lenders are Republicans because they werent,
The Democrats have been taking PAYOFFS from Fannie and Freddie to look the other way FOR DECADES!
NOW VIDEO FOUND of the CEO of Fannie Mae in 2005 explaining the “FAMILY” connection with Democrats
http://www.youtube.com/watch?v=usvG-s_Ssb0
as IBD points out today, and they didn’t want to countenance an end to their populist policies:
But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”
Yes, the market was fueled by greed and overleveraging in the secondary market for subprimes, vis-a-vis mortgaged-backed securities traded on Wall Street. But the seed was planted in the ’90s by Clinton and his social engineers. They were the political catalyst behind this slow-motion financial train wreck.
And it was the Clinton administration that mismanaged the quasi-governmental agencies that over the decades have come to manage the real estate market in America.
http://ibdeditorial.com/IBDArticles.aspx?id=306370789279709
It’s called cooking the books.
They had more than a choice…this isn’t a “housing slump” a “housing crisis” or even a “banking crisis” this what a true “market correction” looks like when bankers fall asleep at the wheel.
Deregulation helped this, but it can be summed up in one word…greed.
This was done at the “request” of James Earl Carter and again by William Jefferson Blythe Clinton.
I agree with Mike’s answer. Racism had a lot to do with it.
It’s because of mortgage bundling.
Used to be, you went to your bank, and if your credit was good and the house cost less than three times your annual salary, you got a loan.
Then companies started buying all the debt because it’s more profitable for a company to service a million mortgages than a thousand. So, since all of the mortgages were getting bought up anyway, lenders would offer loans to people with poor credit taking loans for houses with 8 times their income.
The lenders didn’t care, because they knew the debt would be purchased in a month or two anyway, and they’d get a big fat commission on the deal, leaving the mortgage bundler stuck with the bad debt.
So, nobody was forced to make the loans — the problem was that nobody was stopping them from doing it.
can you provide proof that the majority were republicans?
Didnt think so.
You seem to not place any blame on greedy homeowners.
Very few people who were given loans didn’t qualify for them.
Very few people who defaulted on their loans couldn’t affor them when they got them.
What do you expect to happen when the economy loses millions of good paying manufacturing jobs?
Do you expect Convienience stores and fast food resturants to pay them what they were earning out of the kindness of their hearts??!
This whole idea that everyone who defaulted on their loans couldn’t afford them when they were given them is nothing but another right-wing excuse so they can continue to deny that the American economy is in real trouble and isn’t going to get better as long as our businesses are competing with communist labor.
BECAUSE THEY KNEW THAT BUSH WOULD BAIL THEM OUT IN THE END