Anatomy of a Train Wreck

Discussion in 'Current Events' started by wkmac, Oct 6, 2008.

  1. wkmac

    wkmac Well-Known Member

  2. The Other Side

    The Other Side Well-Known Troll Troll

    This report places the blame squarely on the shoulders on the goverment aka George W. Bush and his "Home Ownership Society".

    Everything after this mandate was controlled by Greed, No oversight and a lack of understanding of all the many loop holes that were exploited by Realtors, Appraisers, Mortgage Writers, Title companies and Banks.

    For three years, millions and millions of dollars were made while sitting on a ticking time bomb.

    Facts are simple, here are three of them directly from the White House:

    President Bush signed the American Dream Downpayment Act into law in December 2003. This fund will help approximately 40,000 families a year with their down payment and closing costs and is set to begin helping families early this spring.
    Since 2001, President Bush has doubled the funding for housing counseling for families.
    President Bush proposed the Zero-Downpayment Initiative for Federal Housing Administration (FHA)-insured single-family mortgages for first-time homebuyers in his FY 2005 budget. FHA projections indicate that this new mortgage product would generate about 150,000 new homeowners in the first year alone.
    Through America's Homeownership Challenge, more than 2 dozen companies have made commitments to increase minority homeownership, including pledges to provide more than $1.1 trillion in mortgage purchases for minority homebuyers this decade.

    A host of bad decisions from GW Bush were exploited. The ZERO downpayment was probably the worst of them all.

    The President called for the elimination of "barriers" that prevented minorities from buying a home. The word "barriers" was subsituted for the word "RULES". Read it for yourself.

    A new report from the Department of Housing and Urban Development (HUD) -- which analyzed the most recent homeownership data from the U.S. Census Bureau -- highlights the many barriers that prevent minority families from owning their own home. The barriers include:
    • A lack of inventory of affordable single-family housing available for sale in many areas where a majority of residents are minority families;
    • A need for down payment assistance, which affects minority families to a greater extent than non-Hispanic whites because they have less accumulated wealth that can be used to help children with down payments;
    • A lack of access to affordable mortgage credit;
    • A lack of understanding of the homebuying process;
    • Weak credit histories, often arising from a poor understanding of financial matters and where financial counseling is required;
    • A lack of information about available homeownership programs in the community; and
    • Language difficulties or cultural differences.
    Here, the President calls for a reduction to the 20% downpayment requirement, in fact he calls for zero downpayment. The first President to ask for such a thing. The President calls for an "easing" of credit scoring for those people with bad credit who would otherwise be unable to buy a home.

    These two mandates were the "timers" to the ticking time bomb.

    This next mandate is my favorite.

    *Creating new mortgage products to meet the unique needs of recent immigrants;

    Recent immigrants? You mean "illegal aliens" right Mr President?

    All in all, this President has been a disaster to this country. His "Home Ownership society" started out as a noble idea and turned into the biggest policy failure in US history.
  3. dannyboy

    dannyboy From the promised LAND

    wow, why is it that all bush haters have a serious problem with reading comprehension?

    schmuck, you didnt even read the report. otherwise you would have read this
    lemme see, bush took over from clinton who was president fro, 92-2000. wow, that means that this problem started in early 90's when clinton took office, not bush.

    why dont you park the hate and rhetoric at the door and get to the real problem?

  4. The Other Side

    The Other Side Well-Known Troll Troll

    Here is a sample of what was SAID about this crisis, not a crisis in the 1990's. A DIRECT blow to the BUSH administrations "Home Ownership Society". It was President BUSH that directed the home mortgage industry to switch to ZERO DOWNPAYMENTS, not Carter, Reagan, Bush1 or Clinton. Only this current President was dumb enough to suggest this in his ZERO DOWNPAYMENT INITIATIVE..this cannot be disputed. No other President or member of congress shares this blame. In this report, the author clearly spells out that the ZERO DOWNPAYMENT loans are EXACTLY the cause of this problem along with problems that occured AFTER the initial creation of the problem.

    "After the government succeeded in weakening
    underwriting standards, mortgages seemed to require
    virtually no down payment, which is the main
    key to the problem, but few restrictions on the size
    of monthly payments relative to income, little examination
    of credit scores, little examination of
    employment history, and so forth also contributed."
    (this is the Home Ownership Society program alltogether)

    "This was exactly the government’s goal."
    (the Bush Administration 00/08)

    "The weakening of mortgage-lending standards
    did succeed in increasing home ownership (discussed
    in more detail later). As home ownership rates increased
    there was self-congratulation all around.
    The community of regulators, academic specialists,
    and housing activists all reveled in the increase in
    home ownership and the increase in wealth brought
    about by home ownership. The decline in mortgage underwriting standards was universally praised as an“innovation” in mortgage lending.

    The increase in home ownership increased the
    price of housing, helping to create a housing “bubble.”
    The bubble brought in a large number of speculators
    in the form of individuals owning one or two
    houses who hoped to quickly resell them at a profit.
    Estimates are that one quarter of all home sales were
    speculative sales of this nature.

    Speculators wanted mortgages with the smallest
    down payment and the lowest interest rate. These
    would be adjustable-rate mortgages (ARMs), option
    ARMs, and so forth. Once housing prices stopped
    rising, these speculators tried to get out from under
    their investments made largely with other peoples’
    money, which is why foreclosures increased mainly
    for adjustable-rate mortgages and not for fixed-rate
    mortgages, regardless of whether mortgages were
    prime or subprime. The rest, as they say, is history.
    In good times, strict underwriting standards seem
    unnecessary. But like levees against a flood, they serve
    a useful purpose."
    (the disaster waiting to happen)

    Comprehension goes along way. As has been stated before, all presidents from John F. Kennedy to Bush2 have used the Home Ownership to help americans, however, it was President Bush who under advisement, REMOVED safeguards relating to home buying and encouraged GREED to take over.

    This greed was uncontrolled by everyone in charge Democrats and Republicans alike. As long as money was being made, everyone looked the other way.

    You should research the Home Ownership Society created by and promoted by President Bush, look at each sector carefully and find out that each of the sectors responsible for the housing crash began on June 17, 2002.

    Here are the White links to read for yourself.
    (pay close attention to the last paragraph on this page)

    Who's out of touch with reality?

  5. tieguy

    tieguy Banned

    Your links do show an effort by the president to increase home ownership amongst minorities. And it does show his leadership in trying to propose solutions to allow more minorities the opportunity to own their own home. Stating such and then trying to say the president insisted loans be made to families that had no prayer of paying them off is quite a leap in logic that does not appear to be supported by any of your information.

    The point you make about zero down loans being the cause of this current crisis is also a leap. I wish it were so simple for us to lay blame on one type of loan. But I suspect the issue at hand is much more complicated then simply identifying one loan that caused all our problems.
  6. dannyboy

    dannyboy From the promised LAND

    hey mr liberal

    the point i was making is that this issue was not the brainchild of bush, it had its roots many years before.

    and as you say, under advisement of his finacial experts, and in keeping with the "some racial segments of our society get special treatment because of skin color, and nothing else doctrine of our gooberment, things he did made it worse, inclucing the bailout. but the track was already laid for the train to follow blindly in the name of racial equality.

    problem with all that is that a great many homes that are being defaulted on "belong" to those that had been flipping homes, not "home owners". and that flipping of homes was also a serious cause of the bubble that has burst. not what the system was designed for.

    but all that gets lost on someone like you who is only interested in bashing someone that is thankfully gone in two months anyway. i just dont get it.

  7. The Other Side

    The Other Side Well-Known Troll Troll

    "The point you make about zero down loans being the cause of this current crisis is also a leap. I wish it were so simple for us to lay blame on one type of loan. But I suspect the issue at hand is much more complicated then simply identifying one loan that caused all our problems."

    This was'nt my point, it was the point of the author of the report. The author clearly spells this out. ZERO DOWNPAYMENTs put the home owner behind the 8 ball from the begining.

    "the point i was making is that this issue was not the brainchild of bush, it had its roots many years before."

    This is where you are wrong. Home Ownership has always been a way for presidents to begin working on the next election. If home ownership can increase in the years prior to an election (second term) presidents go out of their way to increase home ownership.

    This time however, GW went out of his way to encourage Illegal alien purchasing, low credit score qualifying, no income verification, no work history verification, no down payments, goverment assisted downpayment programs, inner city community based organized home purchasing, variable interest rates, low income wage earners and deregulation of the mortgage industry.

    These specific ideals combined for a disaster. This was the first time in history that a president mandated these ideals be implemented. This has nothing to do with previous presidents.

    Yes, the ideal of home ownership was the brainchild of many presidents, unfortunately, it was BUSH that exploited the rules to create a false economy. Indeed, the economy was robust from 2003 to 2006, but this was all built on a false premise of security.

    The home ownership society was responsible for enormous wealth from some home owners, realtors, appraisers, mortgage writers, title companies and bankers.

    However, if you understand the whole problem, it was GREED that spoiled the party.

    The unchecked GREED from the bottom to Wall Street only made this crisis worse. Removing safeguards or what rational people call "RULES" were re-named "BARRIERS" by president BUSH.

    The links I provided demonstrate this clearly.

    Prior to 2002, a person would need 20% down, a 2 year work history, a credit score around 750, a proper income to debt ratio, verifiable income and 2 years of W2's.

    It was BUSH that eliminated these requirements.

    President Bush has specific numbers layed down. Eliminating "BARRIERS" would assist people to buy homes who would otherwise be unable to buy.

    He wanted to see 1 million new LOW INCOME Black americans home owners, 1 million new LOW INCOME Hispanic home owners and a total of 5.5 million new homeowners by 2010.

    By 2006, he got 6.8 million new home owners. Currently, 3.3 million have gone into foreclosure and another 2 million are anticipated to fail by end of spring next year.

    That would total 5.3 million and almost as many foreclosures as new home buyers alltogether.

    These numbers are staggering. NO PRESIDENT prior to GW is responsible for this mess.

    There are many things to blame AFTER the creation of the Home Ownershp Society but this does'nt eliminate blame from GW Bush. Without safeguards, the program was destined to fail.

    It was created to get votes for the 2004 election and for the most part, that was successful.

    If the the Home Ownership society was such a success, why have all the parameters listed in it been removed and no longer a viable option for home buyers?

    GW takes his share of the blame, greed takes the other half.
  8. wkmac

    wkmac Well-Known Member

    There is no doubt the "Ownership Society" concept played into this whole mess and the massive debt runup of the Bush adminstration also didn't help matters. However, the fact is there were actions in the 1990's that compounded this situation just as there were in the 80's under Reagan and yes even Carter had impact. One could argue IMO that Nixon killing Bretton-Woods and taking the dollar completely away from gold in 71' played some roll.

    You could even go all the way back to 1934' and the creation of FHA is locating a starting point for what would come later.

    Wanna discuss historical economic actions and fractional reserve banking policy surrounding this? NO? Oh that's right, no room to blame the republicans and make the democrats look good can ya. Well, the good news is the reverse factor is true as well so no room for either side to extoll it's snakeoil politics on the backs of the poor, trapped voter.

    But all that said, let's say you are right and that the democrats are blameless here and this is all some nefarious republican nightmare caused in the last 7 plus years. If that were the case it wasn't to concealed because voices were speaking out about the trainwreck. Even a republican in Ron Paul (you know, that madcap village square idiot that ran for President) stood in the well of Congress in 2003' and warned of the coming "train wreck" and proposed legislation to try and stop it. (A good 2 years before McCain had his Damascus Rd. experience) So it was enough for Ron to see so it would seem to me that the good democrats minding the store would see it as well. Their response?

    Geez Dude, look at all the video from 2005' alone where democrat after democrat including leaders like Barney Frank and Chris Dodd who openly and postiively proclaimed there was nothing wrong in the mortgage lending marketplace and no action by Congress was needed. Everything was hunky dory. In fact, they attacked the regulator who was warning a train wreck was coming. Now granted, repubs. owned the WH, Congress and SCOTUS at the time so to parade themselves as a party now as some Paul Revere is IMO totally dishonest but the fact is the democrat party not only sat on their own hands but went so far as to proclaim in loud voice, "LET THE GOOD TIMES ROLL!" RIP Ray Charles.

    I'm just as fed up and totally disgusted with the republican party and what they've done to this country but I'm not stupid enough to buy the type of snakeoil democrats are selling either in place of the republicans. The 2 parties that run American politics have "BOTH" gotten us where we are today. If one has led the charge then the other has sat back complacent to milk it for political power and to ensure their own electability come the next election at the hand of a blinded and fooled public.

    And we also need to blame in very loud voice the Main Street Media (MSM) who have been nothing but a voice for the liars in charge instead of a barbarian at the gate. Hard to tell the truth, lose your access and thus effect your share price to the holding company that owns you because of falling ad revenue because the other media conglomerate lied and has access 24/7 to the Washingtonian versions of Britney Spears and Paris Hilton that we otherwise call elected officials.

    What I find even more amazing these days is watching the democrats parade the importance of the Constitution when for so many years they trampled all over it and even publically demonized it. I don't even remember how many committee reports I read back in the 80's where Sen. Kennedy would openly berate someone in the Congress when they mentioned clear Constitutional prohibitions against certain actions of Congress but now that the shoe is on the other foot, he and his ilk have become rabid Constitutionalist. Reminds me of the avowed, committed atheist who upon realizing his impending death makes a miraclious conversion to Jesus. I call that a "convience conversion" just to hedge his bets. Let the democrats back in total power again and they'll leave the constitution as fast as the republicans left the ideals of fiscal responsibility and limited gov't.

    Sorry pal, but trying to tell me that old whore that's slept with everyone has somehow become a pure virgin just won't work with me. That 8itch is a pure skank to the bone and she'll spread those legs for anyone at the end of the day! Ask ATT and the support they got over FISA immunity.

    To the Group,

    In other threads I commented watching Sen. Chuck Schulmer (another constitutional trampler who claims to have found Jesus) explain when he heard the grim news about our economic mess that he, (in his own words) "gulped!" I often wondered just what it was that had such a huge impact and now thanks to one brave Congressman who recently took to the Congressional well, maybe we have a hint.

    Fear Mongering exposed by Mr. Sherman on CSPAN

    I also pointed this out in another thread and one might suggest a connection to what Congressman Sherman was saying.

    Why aren't the good Donkey crowd here alerting everyone to the overblown fear tactics being used by Bush in all this mess?

    Answer: They're to busy riding their donkey and following the big elephant in front down the same ole' dead end road that terminates over the edge of a very high cliff!
  9. The Other Side

    The Other Side Well-Known Troll Troll

    There is plenty of blame on both sides as Ive said many times, however, the ball had to start rolling someplace. Here is a little something about Phil Gramm.

    NEWS: Years before Phil Gramm was a McCain campaign adviser and a lobbyist for a Swiss bank at the center of the housing credit crisis, he pulled a sly maneuver in the Senate that helped create today's subprime meltdown.
    By David Corn
    July/August 2008 Issue

    Who's to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. Yet has Gramm been banished from the corridors of power? Reviled as the villain who bankrupted Middle America? Hardly. Now a well-paid executive at a Swiss bank, Gramm cochairs Sen. John McCain's presidential campaign and advises the Republican candidate on economic matters. He's been mentioned as a possible Treasury secretary should McCain win. That's right: A guy who helped screw up the global financial system could end up in charge of US economic policy. Talk about a market failure.

    Gramm's long been a handmaiden to Big Finance. In the 1990s, as chairman of the Senate banking committee, he routinely turned down Securities and Exchange Commission chairman Arthur Levitt's requests for more money to police Wall Street; during this period, the sec's workload shot up 80 percent, but its staff grew only 20 percent. Gramm also opposed an sec rule that would have prohibited accounting firms from getting too close to the companies they audited—at one point, according to Levitt's memoir, he warned the sec chairman that if the commission adopted the rule, its funding would be cut. And in 1999, Gramm pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—setting off a wave of merger mania.

    But Gramm's most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.
    It's not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."

    It didn't quite work out that way. For starters, the legislation contained a provision—lobbied for by Enron, a generous contributor to Gramm—that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. (For Gramm, Enron was a family affair. Eight years earlier, his wife, Wendy Gramm, as cftc chairwoman, had pushed through a rule excluding Enron's energy futures contracts from government oversight. Wendy later joined the Houston-based company's board, and in the following years her Enron salary and stock income brought between $915,000 and $1.8 million into the Gramm household.)

    But the Enron loophole was small potatoes compared to the devastation that unregulated swaps would unleash. Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It's like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm's bill—which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers—a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed.

    In essence, Wall Street's biggest players (which, thanks to Gramm's earlier banking deregulation efforts, now incorporated everything from your checking account to your pension fund) ran a secret casino. "Tens of trillions of dollars of transactions were done in the dark," says University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. "No one had a picture of where the risks were flowing." Betting on the risk of any given transaction became more important—and more lucrative—than the transactions themselves, Partnoy notes: "So there was more betting on the riskiest subprime mortgages than there were actual mortgages." Banks and hedge funds, notes Michael Greenberger, who directed the cftc's division of trading and markets in the late 1990s, "were betting the subprimes would pay off and they would not need the capital to support their bets."
    These unregulated swaps have been at "the heart of the subprime meltdown," says Greenberger. "I happen to think Gramm did not know what he was doing. I don't think a member in Congress had read the 262-page bill or had thought of the cataclysm it would cause." In 1998, Greenberger's division at the cftc proposed applying regulations to the burgeoning derivatives market. But, he says, "all hell broke loose. The lobbyists for major commercial banks and investment banks and hedge funds went wild. They all wanted to be trading without the government looking over their shoulder."
    Now, belatedly, the feds are swooping in—but not to regulate the industry, only to bail it out, as they did in engineering the March takeover of investment banking giant Bear Stearns by JPMorgan Chase, fearing the firm's collapse could trigger a dominoes-like crash of the entire credit derivatives market.
    No one in Washington apologizes for anything, so it's no surprise that Gramm has failed to issue any mea culpa. Post-Enron, says Greenberger, the senator even called him to say, "You're going around saying this was my fault—and it's not my fault. I didn't intend this."
    Whether or not Gramm had bothered to ponder the potential downsides of his commodities legislation, having helped set off an industry free-for-all, he reaped the rewards. In 2003, he left the Senate to take a highly lucrative job at ubs, Switzerland's largest bank, which had been able to acquire investment house PaineWebber due to his banking deregulation bill. He would soon be lobbying Congress, the Fed, and the Treasury Department for ubs on banking and mortgage matters. There was a moment of poetic justice when ubs became one of the subprime crisis' top losers, writing down $37 billion as of this spring—an amount equal to its previous four years of profits combined. In a report explaining how it had managed to mess up so grandly, ubs noted that two-thirds of its losses were the fault of collateralized debt obligations—securities backed largely by subprime instruments—and that credit default swaps had been "key to the growth" of its out-of-control cdo business. (Gramm declined to comment for this article.)
    Gramm's record as a reckless deregulator has not affected his rating as a Republican economic expert. Sen. John McCain has relied on him for policy advice, especially, according to the campaign, on housing matters. The two have been buddies ever since they served together in the House in the 1980s; in 1996, McCain chaired Gramm's flop of a presidential campaign. (Gramm spent $21 million and earned only 10 delegates during the gop primaries.) In 2005, McCain told a Wall Street Journal columnist that Gramm was his economic guru. Two years later, Gramm wrote a piece for the Journal extolling McCain as a modern-day Abraham Lincoln, and he's hailed McCain's love of tax cuts and free trade. Media accounts have identified Gramm as a contender for the top slot at the Treasury Department if McCain reaches the White House. "If McCain gets in," frets Lynn Turner, a former chief sec accountant, "we'll have more of the same deregulatory mess. I like John McCain, but given what I know about Phil Gramm, I wouldn't vote for McCain."
    As a thriving bank exec and presidential adviser, Gramm has defied a prime economic principle: Bad products are driven out of the market. In John McCain, he has gained an important customer, so his stock has gone up in value. And there's no telling when the Gramm bubble will burst.
  10. av8torntn

    av8torntn Well-Known Member

    I think that's quite a stretch there. I think the powers that be have realized that all of the training has focused on counter insurgency ops. I also read there is a push to return to some of the force on force training as well.

    On a side note I for one was hoping for a 2000 point one day drop I always thought the stop trading measures would go into action but it would have been a good day to fund my Roth IRA for the year.:happy-very: I do agree in part with what the Congressman was saying. No need to rush into a bad bill. Although his motives are different than mine. I want what is best for the Country. I do however still think the best action would have been to reduce regulation and eliminate the capital gains tax.
  11. av8torntn

    av8torntn Well-Known Member

    Wkmac just to clarify my position on the above post. I am thinking that the Posse Comitatus Act is still in effect. Not sure if the Patriot act changed any of this.
  12. sortaisle

    sortaisle Livin the cardboard dream

    I don't get why people think the zero down is such a bad thing. I did my zero down. I've owned 2 homes since then. It seems to me that the writer of the article is just pandering to his readers. If the lending institutions loaned money to people who didn't have a chance, then that's all on the lenders and the buyers. Corporate greed.
  13. tieguy

    tieguy Banned

  14. The Other Side

    The Other Side Well-Known Troll Troll

    Er Bu.(cough) Please show us where GW encouraged illegal alien purhasing.

    "Creating new mortgage products to meet the unique needs of recent immigrants":

    talking point, from a speech given by GW BUSH on June 17th 2002"


    All you have to do is read this whole page.
  15. toonertoo

    toonertoo Most Awesome Dog Staff Member

    Not sure if this has been covered. With such biased views I dont know if I can get an answer here, but what the heck..................
    Most of these sub primes were covered by Pmi insurance, I have PMI, as when I refinanced out of my last loan the value had dropped and I didnt have the equity, So have the insuring companies went out of business also>>>>?????
  16. The Other Side

    The Other Side Well-Known Troll Troll

    "Did you not understand the issue when you posted it? Why would you post something as if it were fact if you're not prepared to stand behind it? Zero down payments does not put anyone behind any eight ball if they can afford to make the monthly morgage payment. Did you not understand this simple point when you posted it as gospel?"

    "After the government succeeded in weakening
    underwriting standards, mortgages seemed to require

    virtually no down payment, which is the main
    key to the problem"

    This is the exact quote from the author of this report cited by WKMAC.

    He is speaking directly about the current mortgage crisis.

    I understand all too well. The majority of FAILED loans are zero downpayment and variable rate loans to low to moderately low income buyers.

    The author cites this fact as well as the goverment currently.

    It is a fact that a person who can afford a mortgage payment with zero down is the right candidate for this type of loan, however, this is not the majority.

    The Bush administration pushed hard to get minority low income buyers into the market with zero downpayment loans.

    FACT: President Bush mandated HUD to push zero downpayment loans with variable rates to minorities.

    These are the very highest percentage of failed loans. The author cites the "easing" of standards to achieve the cited goals of Pres Bush (5.5 million homes by 2010) as the point where this crisis began.

    It went all wrong when all guidelines went into deregulation.

    Let me make myself clear on this issue, there are responsible parties all the way from Wall Street to main street. Both Democrats and Republicans alike.

    Money corrupts, and as long as people were making money during the boom, everyone was looking the other way.

    This is what happens with corruption and greed.

    What happens next is whats important here, what direction does the Goverment and Wall Street take to stabilize the country, many jobs are at risk right now.

    How many people do we all know who will be unemployed next year at this time???

    The Bush "Home Ownership Society" was a noble idea and this I agree with the author, it was the lack of safeguards that caused this crisis to grow to a disaster.

    In the begining, the home ownership society was to build single family homes around the country in the 100K to 200K price range, and Bush ordered Fannie mae to set aside 400 billion dollars to back these loans.

    The problem started when the builders began to make homes larger than what was suggested by the Bush Administration.

    Both Fannie Mae and Freddie Mac were not designed to cover loans greater than 200K and they ended up backing loans as much as 800K with zero down and variable interest rates.

    People who bought in these circumstances have walked away from homes when the rate changes to prime plus 2 percent or (ex: 6.75% prime 2006 plus 2% = 8.75%) on a first mortgage! The difference on the first would jump to a level that people just couldnt afford.

    The second made it worse. The second is always 1.5% higher to begin with, so a second at 7.85% would be 9.85%!

    A 100 percent loan is structured at 80/20

    Folks who bought a 800K home at 80/20 with an adjustment in 3 or 5 years were destroyed when they could'nt re-fi or sell the home.

    Fannie and Freddie were not designed to cover this.

    This is the point I am making. The banks were selling these junk loans to foreign banks just to get them off the books.

    At the end of the day, is this all GW Bush's fault? NO.

    He merely planted the seeds for failure, the system just exploited the idea.

  17. The Other Side

    The Other Side Well-Known Troll Troll

    The Homeowner's Protection Act (HPA) of 1998
    What Loans Are Covered?
    Generally, the HPA applies to residential mortgage transactions obtained on or after July 29, 1999, but it also has requirements for loans obtained before that date. This new law does not cover VA and FHA government-guaranteed loans. In addition, the new law has different requirements for loans classified as "high-risk." Although the HPA does not provide the standards for what constitutes a "high risk" loan, it permits Fannie Mae and Freddie Mac to issue guidance for mortgages that conform to secondary market loan limits. Fannie Mae and Freddie Mac are corporations chartered by Congress to create a continuous flow of funds to mortgage lenders in support of homeownership. As of January 1, 2000, mortgages in amounts of $252,700 or less are considered conforming loans. For non-conforming mortgages, the lender may designate mortgage loans as "high risk."

    Ways to avoid PMI
    In today's market, there are some new ways to avoid mortgage insurance even when you don't have the standard 20 percent down payment.
    Pay more interest: Some lenders will waive the mortgage insurance requirement if the buyer accepts a higher interest rate on the mortgage loan. The rate increases generally range from .75 percent to 1 percent, depending on the down payment. The advantage is that mortgage interest is tax deductible. (Use the mortgage calculator to see what your payment would be.)
    Using an "80-10-10" loan: This program involves two loans and a 10 percent down payment. The 90 percent loan is financed with a first mortgage equal to 80 percent of the sale price, and a second mortgage for the remaining 10 percent of the sale price. The second mortgage has a higher interest rate but since it applies to only 10 percent of the total loan, the monthly payments on the two mortgages are still lower than paying one mortgage with mortgage insurance. Plus, again, there is the advantage of mortgage interest being tax deductible.
    Example: If we compare the purchase of a $100,000 home under the "80-10-10" plan with a standard fixed mortgage including PMI, we find that the former is $17.45 cheaper each month.
    Here's how it works. Under the "80-10-10" plan, the 10 percent down payment on a $100,000 house is $10,000. The first mortgage is $80,000 at 7.50 percent, which comes to a monthly payment of $559. The second mortgage for $10,000 has a 9.50 percent interest rate, making a monthly payment of $84. Total monthly payments of the two loans: $643.
    With a $10,000 down payment, one mortgage of $90,000 at 7.50 percent has a monthly payment of $629, plus PMI of $31.45, making a total payment of $660.45.

    Many of the loans in default did not carry the PMI insurance requirement because of the structuring of the loans. Creative loan structure is just one element in the collapse of the home market.
  18. The Other Side

    The Other Side Well-Known Troll Troll

    On December 20 2007, Bush said this:

    "The Federal Government must not prolong necessary corrections in the housing market, bail out lenders, or subsidize irresponsible borrowing and lending, at the expense of hard-working people who have played by the rules. GSE reform and FHA Modernization represent the appropriate next steps to address the housing downturn by creating a stronger and more effective regulatory regime for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. More effective regulations would help ensure that these firms do not take actions that place taxpayers or the financial system at increased risk."

    This is exactly what we saw last week when congress and the senate approved a bailout.

    ??? Amazing.
  19. The Other Side

    The Other Side Well-Known Troll Troll

    On December 16th 2003 Bush signed one of the largest "SOCIAL PROGRAMS" in the nations history.

    President Bush Signs American Dream Downpayment Act of 2003
    Remarks by the President at Signing of the American Dream Downpayment Act
    Department of Housing and Urban Development
    Washington, D.C.

    This administration will constantly strive to promote an ownership society in America. We want more people owning their own home. It is in our national interest that more people own their own home. After all, if you own your own home, you have a vital stake in the future of our country. And this is a good time for the American homeowner. Today we received a report that showed that new home construction last month reached its highest level in nearly 20 years. (Applause.)
    The reason that is so is because there is renewed confidence in our economy. Low interest rates help. They have made owning a home more affordable, for those who refinance and for those who buy a home for the first time. Rising home values have added more than $2.5 trillion to the assets of the American family since the start of 2001.
    The rate of homeownership in America now stands a record high of 68.4 percent. Yet there is room for improvement. The rate of homeownership amongst minorities is below 50 percent. And that's not right, and this country needs to do something about it. We need to -- (applause.) We need to close the minority homeownership gap in America so more citizens have the satisfaction and mobility that comes from owning your own home, from owning a piece of the future of America.
    Last year I set a goal to add 5.5 million new minority homeowners in America by the end of the decade. That is an attainable goal; that is an essential goal. And we're making progress toward that goal. In the past 18 months, more than 1 million minority families have become homeowners. (Applause.) And there's more that we can do to achieve the goal. The law I sign today will help us build on this progress in a very practical way.
    Many people are able to afford a monthly mortgage payment, but are unable to make the down payment. So this legislation will authorize $200 million per year in down payment assistance to at least 40,000 low-income families. These funds will help American families achieve their goals, and at the same time, strengthen our communities.
    And there's more to do, as well. We'll continue to pursue a broad agenda to help people own a home. There are three steps I want to describe to you right quickly about what we intend to do. First, those who apply for mortgages should be made aware of all the costs and warned about predatory lenders who take advantage of inexperienced buyers. So we've doubled the funds for housing counseling services, including those run by faith-based and community groups.
    We understand that buying a home for the first time is complicated, and we want to simplify the process. We want to help people understand the pros and cons of buying a home. We want people to be fully aware of what it means to buy a home and what it takes. And we want people as best protected as possible from those shysters who would take advantage of first-time buyers. (Applause.)
    Second, we need to make the home-buying process more affordable. Some of the biggest up-front costs in a home purchase are the closing costs. Sometimes they catch you by surprise. (Laughter.) Many home buyers do not have the time to shop around looking for a better deal on closing costs. You're kind of stuck with what you're presented with. And so they end up paying more than they should. So we've proposed new rules to make it easier for buyers to shop around and to compare prices on closing costs, so they can get the best deal and the best service possible.
    And thirdly, we want to make buying a home simpler. Many first-time buyers look at the paperwork from a loan application, and frankly, get a little nervous about all the fine print. Those forms can be intimidating to the first-time home buyer. They can be intimidating to the second or third-time home buyer, too. (Laughter and applause.) So this administration has proposed new rules to simplify the forms home buyers and homeowners fill out when they apply for a loan or close on a mortgage.
    We understand that buying a home is a big step, and so these three recommendations we're making, these three changes in the rules will make that step easier; will enable people to make the step to buying a home -- they'll be able to do so with more confidence. These are practical ways that we are working to expand homeownership across the country.
    The dream of homeownership should be attainable for every hardworking American. That's what we want. In this act of Congress I'm going to sign, the regulations that I hope are finalized soon will help thousands of families fulfill the dream. And so now it my honor, right here at this important Department, the Department responsible for encouraging homeownership in America, to sign the American Dream Downpayment Act. (Applause.)


    200 million per year x 5= 1 trillion dollars!

    This money for people who could'nt afford to buy in the first place. This is nothing more than socializing the housing market.

    Now we have socialized Wall Street.
  20. wkmac

    wkmac Well-Known Member

    Until recently I would have agreed and felt the exact same as yourself but I've learned some new things that have me very cautious these days.

    The Posse Comitatus Act of 1878' was in full force until the 2006' John Warner Defense Authorization Act (HR 5122) in which sec. 1076 allowed for US Armed Forces to be used domestically during emergencies. BTW: Patriot Act did not change Posse Comitatus Act to my knowledge. Anywho, in 2008' HR 4986, Public Law 110-181 reversed the 2006' language restoring to the original 1878' law. President Bush at the officla signing issued an addendum that said the following:

    There is concern based on the above statement about how far the executive branch would go and let me say this. This isn't about Bush specifically as it is about the change over the years in power shifting from the legislative branch to the executive. And let's be honest, if the impossible did occur and America errupted across the board full scale into some sociatal meltdown, a brigade is not going to be enough troops so there you go with that. However, I believe in the old longstanding principle of eternal vigilance and we could except there's nothing to this and sit back not uttering a word and then some politician, political cabal or even political party could use this thing in a nefarious way because we aren't looking. But by pointing the finger at it, making a big public deal about it and forces public focus on it, "IF" there was someone thinking about it, they may have to re-think those plans now.

    I'd rather speak out and appear wrong over the longhaul than to not say a word but turn out to be right! The way I see it, by speaking out and being wrong I have a much better chance of insuring I am wrong in the end. And ultimately that's what I want anyway because that would mean American life rolls on!

    It's also ironic that yesterday Democracy Now covered this very subject by interviewing Col. Michael Boatner, Future Operations division chief of USNORTHCOM and Matthew Rothschild, Editor of The Progressive magazine on this issue and Posse Comitatus.

    You can watch it on video stream or just read the transcript at the link. I felt the Col. Boatner and Rothschild did good jobs at presenting their points and were each given plenty of time to make them although Rothschild was trying to make a point at the end but had to be cut off because of time. I found it humorous although I'm sure some would alleged some nefarious work at play. :happy-very:

    No matter which side of the issue you fall under, it's well worth the time to read and I believe everyone would learn from bothsides from this. Also it was refreshing to hear an interview that was not only full of substance but both sides were respectful and very civil (at least from reading the transcript, I didn't watch the video) and as a result I felt informed frm both sides as well.

    I will say this on Sherman's comments. I spoke with my own Congressman (a republican) who also voted against the bailout of which I thanked him for and he even told me he recieved a lot of hard pressure to vote for it. Now he never said anything of martial law but he was told that literally the entire economy would completely collaspe in a very nuclear kind of way. You and I both agree this bailout is a bad idea and there wasa lot of fearmongering going on through this whole process. Dick Armey, former Repub. Congressman from Texas has now confirmed Dick Cheney himself lied to him (Armey) about nukes in Iraq to get Armey to change his vote against the Iraq war in favor to support. If that would happen there, I can't doubt now what Sherman is saying as stated in the YouTube piece.

    The plan fact is I no longer trust my gov't and what it tells me and to compound it, the gov't doesn't trust me either becuase I along with over 80% of my fellow Americans said no to the bailout and Washington did just the opposite anyway. Folks, that should at the end of the day speak volumes.