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<blockquote data-quote="av8torntn" data-source="post: 909199" data-attributes="member: 8259"><p>The CRA required by regulation which in my mind is equal to required by law. Banks had to comply with CRA goals to meet regulatory requirements. That's not misconception that is fact. If a bank wanted to do anything that required regulatory requirement they had to prove they were making risky loans. </p><p></p><p><span style="font-family: 'NewCaledonia'"></span></p><p><span style="font-family: 'NewCaledonia'">" In <strong>1995</strong>, how-ever, the rules were tightened, so that banks had to show that theyhad actually made the required loans, not that they were simply try-ing to do so. The change had a profound effect. Under the initialrule, banks could turn down applicants who did not have the neces-sary credit resources—such as a significant downpayment or a job—but <strong>under the new regulations the onus was put on the banks to finda way to make the loan, even if it did not meet their lending stan-dards</strong>. The phrase in the CRA regulations was that banks had to be“flexible or innovative” in their underwriting. From the point of viewof the banks, their lending standards had to be loosened. They hadto show that the mortgages were being made. "</span></p><p><span style="font-family: 'NewCaledonia'"></span></p><p><span style="font-family: 'NewCaledonia'"><a href="http://www.cato.org/pubs/journal/cj30n2/cj30n2-12.pdf" target="_blank">Link</a></span></p><p><span style="font-family: 'NewCaledonia'"></span></p><p><span style="font-family: 'NewCaledonia'"></span></p><p><span style="font-family: 'NewCaledonia'">Edit to add: CRA loans were not the same as subprime loans but they did default at about the same rate so I find it difficult that you can blame subprime but not CRA. My take .</span></p></blockquote><p></p>
[QUOTE="av8torntn, post: 909199, member: 8259"] The CRA required by regulation which in my mind is equal to required by law. Banks had to comply with CRA goals to meet regulatory requirements. That's not misconception that is fact. If a bank wanted to do anything that required regulatory requirement they had to prove they were making risky loans. [FONT=NewCaledonia] " In [B]1995[/B], how-ever, the rules were tightened, so that banks had to show that theyhad actually made the required loans, not that they were simply try-ing to do so. The change had a profound effect. Under the initialrule, banks could turn down applicants who did not have the neces-sary credit resources—such as a significant downpayment or a job—but [B]under the new regulations the onus was put on the banks to finda way to make the loan, even if it did not meet their lending stan-dards[/B]. The phrase in the CRA regulations was that banks had to be“flexible or innovative” in their underwriting. From the point of viewof the banks, their lending standards had to be loosened. They hadto show that the mortgages were being made. " [URL="http://www.cato.org/pubs/journal/cj30n2/cj30n2-12.pdf"]Link[/URL] Edit to add: CRA loans were not the same as subprime loans but they did default at about the same rate so I find it difficult that you can blame subprime but not CRA. My take .[/FONT] [/QUOTE]
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