Which law exactly? And can you clarify the role of fannie and freddie? According to Nouriel Roubini among others - this conception is wrong. Second - this is a good time to remind people that this particular issue (the en masse filing of fraudulent affidavits) has nothing to do with anything other than banks' willingness to break the law on an industrial scale in order to cut costs. There's no justification for it under any circumstances here. If you don't want to follow foreclosure laws in Florida then don't lend in Florida. That's all.
Have you even read some of the articles in this thread? Fannie and Freddie came up with No-doc loans? Fannie and Freddie created mortgage securities? Fannie and Freddie made lenders file fraudulent appraisals? Fannie and Freddie made people trade those securities over and over so a bunch of crooks could skim off the top of every transaction? Fannie and Freddie made these guys fraudulently rate these securities highly and then forced them to sell to pension funds and other investors based on that fraudulent rating? Come on. There has been an issue with the Fannie and Freddie stuff, but when you look at the whole picture, it's only a few pixels and comes nowhere remotely close to accounting for the hole we're in... but it is a convenient GOP talking point to... what? Well, we've been over that before in other threads. Anyway, I don't understand why one party is more defensive on this than the other. I also don't understand why both parties, presumably elected by the people, are not representing the people on this issue. I further don't understand why the people haven't marched on Wall Street and burned down every big bank and tarred and feathered every crook and politician who contributed to this. I will agree that the lack of regulation, the deregulation, and intentionally spotty institutional accountability led to this, and that was definitely a bipartisan failure. However, you look at the timing and the extent of this problem and you see the timing correlates nicely to the Republican takeover of Congress and that party has certainly and consistently advocated policies that helped make this worse. I love it how wingers bring up Fannie/Freddie and Barney Frank yet fail to mention the Gramm-Leach-Bliley Act that built the edifice that our financial system has fallen from.
Great...because how we got to have so many non-performing loans was my entire point. I do find it somewhat interesting how one party hops all over the banks for their malfeasance, but is entirely mum regarding the scores of fraudulent loan applications that were submitted during the times of easy credit. If there have been fraudulent documents filed in courts, then that issue obviously needs to be addressed. Fortunately, President Obama has come out against a foreclosure freeze, because that would only serve to stall the economic recovery.
Now you're moving the goal posts. You specifically mentioned Frannie, Freddie, and Barney in a way that made it look like that was the sole reason we are in this mess when in reality, it had very little to do with it. We can easily agree that there were a bunch of irresponsible people using their homes as ATMs and trying to make a quick buck flipping properties, and they deserve a good chunk of blame. However, it was the banks and the mortgage companies and the deregulation and lack of oversight of those services that made that possible and the bulk of the blame for that lies squarely on the Repubs and a number of sell-out Dems (including Clinton, who was too weak politically to veto the Gramm bill... but of course, he was weak for a reason, right?). And really, are you suggesting we shouldn't be pissed off at bank malfeasance?
Of course not. I am, however, saying that to focus all of the anger and blame at the banks is simplistic and not accurate. All parties involved had larceny in their heart. A lot of people who submitted accurate loan applications were simply buying more home than they could really afford, given their other purchases (cars, HDTVs, etc). Now when it ends badly, they want a bailout. Even when they got a loan modification, the redefault rate is high. Interesting that you bring up the Gramm Act. Clinton signed it largely because in order for a bank to reap the financial benefits, they had to have a very high CRA score. In short, they had to have a certain percentage of loans to low income borrowers. How would a bank achieve this? Enter the LIBOR ARM and the so called "liar's loan," or stated income loan. Without the requirement in federal law to make such loans en masse, there would have been a much smaller number of subprime loans to go bad in the first place. Now...to the extent that banks have bitten at the golden carrot or failed to keep accurate documents, they will have a price to pay. Do not mistake that issue with how we got here in the first place. Both sides of the aisle used this as a political football. Specifically Gramm, Frank, Clinton and Bush. Truly bipartisan.
You should check out Simon Johnson's "13 Bankers" and Michael Lewis's "Big Short" for good reads on what caused this mess. Fanny and Freddie amplified the securitization waves but they lagged behind the big banks moves. This site's a good start if your reading list is backed up. http://makemarketsbemarkets.org/modals/report_fannie.php
Because the parties that you blamed for it were not submitting them. I'll ask you again, can you specify your theory of the crisis? Cause from here it's looking questionable if you're going to do what you hinted at doing before.
Gosh why do banks keep their money in a vault? Because if the money is out there for the taking, people are going to take it. The banks were making fees, a fee per loan. The more loans they make, the more fees they collect. The speed limit was due diligence but they put the pedal to metal. And, I wouldn't even have a problem with that, if the banks held the risk. But they didn't they packaged this garbage, got it fraudulently rated, and sold it off to other investors. *personal note - my former brokerage bought a bunch of this crap in my account as undivided interest in a pool and I couldn't get out of it.
The way they obtained the ratings and then stuck investors with a bad deal is what I have a problem with. As for the banks making fees per loan, this ignores two important facts. First, the banks were making these loans to get the CRA score necessary under the law to enjoy the benefits of deregulation. This was passed so that the banks would do just what they did so the politicians could talk about how they made home ownership a reality for millions that could never have it before. Even better...when the whole thing unravels, the politicians can then take none of the blame. What a great deal! Secondly, every time one of these loans goes to foreclosure, the servicer loses money, and not just a few bucks.
Sorry, but the facts don't back up your CRA nonsense. CRA only applied to banks and thrifts. Bank affiliates, investment banks, and independent mortgage banks are not covered. The great majority of the housing meltdown came from loans made in CA, AZ, NV, and FL between 2003 and 2008 when prices were ridiculously beyond any sane value. You're parroting the Limbaugh types and trying to blame a law started a quarter of a century earlier and a gay guy on a financial meltdown precipitated primarily by institutions that were never subject to CRA. CRA did not kill Countrywide.
And hasn't for years: http://bbs.clutchfans.com/showthread.php?p=3938414&highlight=gross#post3938414 The more intersting thing is why this fake explanation is propounded - probably because admitting that deregulation failed is just an anathema to some, and they won't do it no matter how true it is.
That's funny, because I thought that bank deregulation was a crappy idea when it happened...and I still do. If you think about it, the thought that bank deregulation is a bad idea is not inconsistent with thinking that dangling the CRA carrot was also a bad idea.
Politicians think: A house for every American ..... that's good for me A boom in housing prices.... everybody gets created equity, local property tax income explodes....that's good for me The banking industry contributes huge amounts to my campaign...that's good for me So it's all good baby, sheeeit
ding ding ding. Political football. The politicians get to talk about how they created a situation where all of these people can own a home. See how good we politicians are? We are for the people. Smoke. Mirrors. Disaster.
Why was the CRA "carrot" a bad idea? I'm going to save you the trouble and (and, if you continue on the same "it was the CRA!" trope, the embarrassment) of going through the exercise, but suffice it to say CRA-eligible loans were only responsible for a fraction of defaults...and probably even a smaller fractin of dollar value, given the disproportionately large impact of jumbo loans & speculators on total loan values. What's important is that you take this tiny piece and decide to "remind" us of it - because taht's the story that your side wants to push. Well, yes, we created a horrific system and our primary philosophy and the raison d'etre of the conservative movement (free markets uber alles) of the last 3 decades failed miserably, and was only saved by government intervention, but a small fraction of something else that we OPPOSE didn't prove immune to an economic downturn - ergo - we need to remind people of that. Why remind us of it? To distract.
lord have mercy, did someone really try to blame minori umm i mean the CRA again, glad I got in late on this thread
You see this point of view is really jaded and close minded.....to think its just one party responsible for the mess is just plain ignorant. You don't think that democrats are in on this? Heck Barney Fwank and Chris Dodd should be in prison for their part. The democrats best play is when they muck up the works and then blame the GOP for it... The bottom line is the big banks own the government (see the federal reserve) and they also own the politicians through campaign contributions, kcikbacks, buyoffs, etc. When the zeros get that numberous its a dirty game being played...
A Beginners Guide To Fraudclosure A great little 9 page summation of the mortgage crisis by my friend, broker and handsome radio star Lance Roberts from his weekly client newsletter. Here is the problem that David Kotok sees; “…if enough mortgage‐paying homeowners realize that they may be able to get out of their mortgage loans and keep their houses, scott‐free? That’s basically a license to halt payments right now, thank you. That’s basically a license to tell the banks to take a hike.
