c.1992, Liberal Minority Home Ownership Push Was Democrats Definition of "Affordable Housing"

An L.A.Times article from May 31, 1999 by Ron Brownstein will shed some light on the backstory of the real time nightmare unfolding in Washinton at this hour. Read as the Times wonk crows about all the good Bill Clinton is ....well...enforcing.

Clinton legacy building with a Ponzi scheme strong armed by Janet Reno brought to you by Liberals defining "affordable housing" as homeownership to unqualified buyers, underwritten by you and me, fellow taxpayer. But of course, not until it all crashes, in say, 2008...

Remember, these are words from 1999...

It’s one of the hidden success stories of the Clinton era. In the great housing boom of the 1990s, black and Latino homeownership has surged to the highest level ever recorded.

{snip}

As HUD Secretary Andrew Cuomo says: “There have been points in the past when the economy has done well but minority homeownership has not increased proportionally.”

[JANE INTERJECTS: Andrew Cuomo is supposedly a top choice by John McCain for a cabinet post in his White House. Scary.]

{snip}

All of this suggests that Clinton’s efforts to increase minority access to loans and capital also have spurred this decade’s gains. Under Clinton, bank regulators have breathed the first real life into enforcement of the Community Reinvestment Act, a 20-year-old statute meant to combat “redlining” by requiring banks to serve their low-income communities. The administration also has sent a clear message by stiffening enforcement of the fair housing and fair lending laws. The bottom line: Between 1993 and 1997, home loans grew by 72% to blacks and by 45% to Latinos, far faster than the total growth rate.

Lenders also have opened the door wider to minorities because of new initiatives at Fannie Mae and Freddie Mac–the giant federally chartered corporations that play critical, if obscure, roles in the home finance system. Fannie Mae and Freddie Mac buy mortgages from lenders and bundle them into securities; that provides lenders the funds to lend more.

In 1992, Congress mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers. (emphasis mine)

{snip}

And who controlled Congress in 1992?

That's right, boys and girls. THE DEMOCRATS.

And America will deserve the reaming it will get if we keep these corrupt thieves in office this November. This is not a bail out, Janiacs. This is a backdoor TAX. A transfer payment. Nothing more. What Liberals couldn't get approved legislatively, they mandated behind closed doors.

And it is up to you to communicate to all your terrified friends that this...what are they calling it now... "rescue" is no life preserver, but rather a flaming tire necklace.

If you are wise, while this useless band-aid is pretending to stanch the blood (for the next few weeks), you will get your personal affairs in order, once and for all. Buy some antique gold coins that can't be confiscated, get a few thousand bucks out of the bank to hold for when they shut down the ATMS around Christmas, and don't buy a thing on credit.

Lastly, strap in tight. The ride will be long, bumpy, and because we are no longer on the Gold Standard (which helped us pull out of The Great Depression) it may well last for the remainder of our lives.

Comments

[Jerry]

There is one aspect to all of this that I have not seen explained.

For mortgages in a pool backing mortgage-backed-securities (MBS), the servicing agent has no authority to exercise discretion with respect to those mortgages. That is, if a mortgage gets behind, the servicing agent is required to initiate foreclosure proceedings according to the terms of the loan. The pooling arrangement obligates the servicing agent to do so.

It is the inability to exercise discretion with respect to loans in a pool that makes MBSs so toxic in today's circumstances. Unless some "body" is granted the authority to renegotiate these troubled loans at their discretion, you can make matters (i.e., losses and resulting ripple effects) far worse. Let me explain.

If a mortgage were held by a bank (rather than in a pool), the bank could foreclose, but in a weak real estate market, the bank might opt instead to adjust the terms of the loan. The latter being preferred because the bank will lose less.

In a foreclosure, the homeowner will vacate the house. And if the house does not sell right away, the house/yard will fall into disrepair, further depressing the property's value, and even more so in a weak real estate market because the property is tainted. Thus the bank loses both interest income and principal, and sometimes a lot of principal.

However, if the loan is modified (by lowering the interest rate and/or extending the loan's maturity to reduce the monthly payment), the homeowner remains in the house. In this case, the bank will lose interest income but may not lose any principal -- but even if some principal is written off, the amount lost would be less than in a foreclosure.

[Mike]

"Lastly, strap in tight. The ride will be long, bumpy, and because we are no longer on the Gold Standard (which helped us pull out of The Great Depression) it may well last for the remainder of our lives."

Unfortunately, what pulled us out of the Great Depression was not the gold standard. If anything it might have actually hindered any turn around. Gold was required to back any credit that would have been issued by the federal reserve to lend to banks that were failing. The reserve could do nothing because it had reached the limits of what gold backed credit it could issue. Those reserves limit liquidity in the market.

Will this last the next few years? Maybe. The rest of our lives? That's a bit much. Life moves on from this kind of thing, and the credit market hasn't completely dried up. Especially if you're a creditworthy borrower.

[JANE SAYS: And what exactly DID end the Great Depression? You don't offer your expertise on that, Mike. You could say our sudden participation in WWII....but that was an artifice financed WITH the full faith and credit of the United States of America , which at the time was based.....MIKE...ON THE GOLD STANDARD. Funny how Jews being cooked wasn't enough to get a Democrat off his ass and host a war, but his domestic legacy mattered to FDR, by damn.

Two idiot Republicans (via the Smoot-Hawley Tariff) and Hoover hastened Wall Street into the crash by even discussing this stupidity before it actually passed, then caused the Great Depression by its passage. FDR drew out the misery with his New Deal.

THIS CURRENT "BAIL OUT" OF YET ANOTHER FAILED SOCIAL ENGINEERING EXPERIMENT BY CONGRESS IS NOTHING MORE THAN "THE NEWER NEW DEAL".

Additionally, Mike, there is no theoretical "limit" on what the Reserve holds, IF IT WERE BASED SOLELY ON GOLD. No, we can't go BACK to the Gold Standard. The Fed has printed too much funny money to ever, ever go back. GOT it. But "the full faith AND CREDIT of the United States of America" used to mean something on the world stage FOR NO OTHER REASON than Ft.Knox was full.

Don't you see? Now that term means NOTHING, so we will GET NO HELP for this crash from the international ATMs we are so used to relying on.

And don't even get me STARTED about what I think of Alexander Hamilton and his GD "Federal Reserve". {When I get to Heaven, I am going to kick that arrogant bastard square in the cods, I swear.}

When his Great Society wasn't living up to the socialist propaganda, FDR artificially undervalued gold, summarily confiscated and overnight robbed hard working American citizens of millions of dollars, and then reinflated the value so the new owner, the GOVERNMENT, could make the profit it required to buy back our credibility in the world credit markets.

And sadly, Mike, America will cease to be a "Super Power" in my children's lifetime if not my own. And perhaps I was not clear in what I meant by "lasting" our lifetimes. The EFFECTS will last our lifetimes. Of that, I am certain.

And Mike, buddy, you just toddle right on out and buy you a plasma tv...after all, **YOU** are a "creditworthy borrower".....because its all about YOU, right? YOUR good credit, right? HARDLY. Oh, your PERSONAL widdle "credit score" will be fine....until you can't pay the 23%+ revolving interest rate when it soars because AMERICA has lost its credit worthiness abroad (because our dollar is backed by NOTHING) and the bank that owns your card (and your tv!) can't get money to loan out at decent interest rates for SECURED loans like mortgages. They may just cancel your card regardless of your ability to pay.

Then what will you spend at WALMART, Mike? Oh...bummer...WALMART is closed in this near future scenario because the supply chains are interrupted because there are no truckers or stock to carry...because WALMART'd business model is an "in time" model based on ....CREDIT.

Did you ever watch ITS A WONDERFUL LIFE, Mike? It is a very good explanation of where money goes once you deposit in your bank. Perhaps you could use some American style economic remediation from a big 'ol tv you are so convinced you will always be able to pay off.....We're AMERICA, RIGHT? Too big to fail......after all..."life moves on" didn't you say?

Tell that to Rome. ]

{**screw this..this a post all on its own..I have three more bone head comments like yours in moderation....stand by.**}