A poor person can own a home as well as a rich person. Based upon the metrics most banks use, one can afford a home that is 2-3x their income.

A family making 30k a year is someone I would consider on the poorer end. They can still buy a 60-90k home which is attainable. It may not be in the most affluent neighborhood but still it can be had. Often they may be minorities. They can be poor and have good credit.

Not every poor person is a dead beat.

Again NO bank was told they had to make loans to people with 375 credit scores. No bank was told to make 125-150% to value loans.

This is where they got into trouble. They packaged up bad loans as good ones and sold them as investment grade securities. Why buy T Bills when the same risk debt can get you 3x the return? Problem was they were fraudulently packaged.

Sub prime loans have existed and can be profitable if written right. They do have a higher default rate and can be sold. No problem as long as they are listed as what they are.

 

2-3X your income is not a metrics it is a general guideline for looking at houses. The general metrics is a house payment amounting to a certain percentage range of your monthly income.

I never said they were. With that said, generally a poor person does not have the good, long credit history needed for a high credit score and alternative methods of determining credit worthiness have to be employed. This typically results in a lower credit score.

That is not what I stated. If the banks were unable to write enough loans to the poor and minorities they had to lower their minimum acceptable credit score. Typically what would happen, from the wife's telling, is the banks would come out with incentives for loan officers to push mortgages to minorities so the credit rating would not have to be dropped as much. There wasn't enough of these loans to crash the system by themselves. Just like there wasn't enough "liar loans" to crash the system by themselves. When you consider the majority of the poor are working in jobs that are low on the food chain and are quickly cut during tough economic times, they certainly didn't help the situation much.

 

First off there were no WMD over there.. That was just a ploy to get into a war... The stock market was tanking and look what happens when you go to war.. Stock market went back up.. Sorry but this was just a chance for Jr. to finish his daddy's job.....

I would be more worried about that crazy bastard in N. Korea having nukes than saddam... His scud missile's were a joke....

Why should we finance the rebuilding of their country? Why should we support their way of life? With all the money revenue they get from oil, they could rebuild their country in no time... The US ALWAYS sticks it's head in business it shouldn't... But we can't be the world police... We turn a blind eye to our own in this country... We race off to other parts of the world to help other's but yet we fail to help our own CITIZENS in this country..

The only reason why we get our noses in other countries business is, WHAT CAN THEY DO FOR ME???????????? IF our government can't profit or have some kind of other move in mind they will not bother...


James

 

Couldn't agree more!

 

3x your annual income and about 35% of your total income toward payments are a couple of the criteria used.

Sure poorer people's jobs are usually the first cut but also they tend to find work quicker too as they aren't locked into an industry.

Again the biggest driver in all of these problems was greed. It motivated all kids of funky loans that were written to get people into mortgages that were not sustainable long term. It led to liar loans and people refinancing every time they fell behind on payments. It led to housing prices rising at a rate where no one would under normal terms could afford.

There were few if any regulators overseeing what was going on and banks couldn't help but know the crap was going to hit the fan.

 

we have spent 16 trillion on welfare from 1965-2008

 

Why was the US involved in Yugoslavia then ?

You are not suppose to notice the amount in give away programs.
This is the death of a thousand cuts, and it hidden under the horrid amount of money spent on another ( GOP ) item, and will continue long after the US is out of Iraq.

EDIT : Just went and looked at the Fiscal Year 2010 spending ( all taxing bodies so the federal funds sent to the state are included )

#1 item : Health care : 1,021.6 B
#2 item : Pensions : 952.3 B
#3 item : Education : 900.1 B
#4 item : Defense : 848.1 B ( all spending for defense not just Iraq, this is all of it together )
#5 Item : Welfare : 749.4 B

Health care in FY 2010 alone was more than all of the Iraq war......

 

The damn administration that let this happen should be strung up for creating this mess. When did the home ownership initiative start again ?

"The National Homeownership Strategy: Partners in the American Dream" ring a bell ??

Right from HUD :
June 23, 1997
PRESIDENT {.......} ANNOUNCES URBAN HOMESTEAD INITIATIVE TO BOOST HOME OWNERSHIP IN AMERICA'S CITIES
http://archives.hud.gov/news/1997/pr97-107.cfm

August 15, 1996
$1 BILLION HUD URBAN HOMEOWNERSHIP INITIATIVE TO CREATE 15,000 INNER CITY HOMEOWNERS EACH YEAR

When did the 1st actually fall ?? ( CountryWide )......

When it hit the fan, nobody reported on where the start of this mess was at.
DiTech started pumping 125% loans to help make this happen when ? ( hint : Oct 6, 1997 ).

Yep the administration that let this type of thing happen with few if any regulators overseeing what was going on really should be hung out to dry, but he did bring confidence to people..... Enough confidence for them to sign up for something they could never pay for.

 

I can say it CLINTON! Still he has more credibility than the last 2 presidents combined. He could get elected today without question. Right or wrong!

Fiscally Clinton did most everything the GOP wanted. NAFTA, calling off most regulators, eliminating rules separating banks and insurance companies, etc.

Owning a home has always been a status thing in America, like 2 cars in the driveway and doing better for your kids than you had.

Again NO one made DiTech make 125% loans. They did it out of greed. They saw home prices skyrocketing and figured they had little to lose.

I remember homes that went for 90k a few years before selling for 300k at the height of the boom.

It is funny today to look at homes in the hood with granite counter tops and stainless appliances. I am always on the hunt for rental properties and see it all the time. People expect to get a premium on it too.

 

True, but you are only pointing at the Wall street Banks, how about Ginnie Mae ( government ) that had $ 1B in money to guarantee the loans made by Ditech ( and others ).

You seem to miss that Clinton used $ 1B ( allegedly not tax payer money, but where did the feds come up with $1B from, if not via the taxpayers ) to guarantee the loans made by banks.

The government said they would back the securities, make it happen ( they did not care what had to happen, this was via HUD, so the rules went out the window ).
In 2008 39.9 % was still in the other category ( not S&L, not banks, not credit unions, etc ) for the mortgages they were guaranteeing.

The price run up is supply & demand, that is how it works, the demand outpaces the supply and prices are driven up. The reverse has been happening for 2+ yrs.
The Economist had an article that the available housing stock in the US means a new house would not need to be built until 2014. This was 3 speeches ( +/-) from the POTUS, so that date is too soon, considering what happens every time he talks.

 

I could be wrong but I don't believe Freddie and Fannie guarantee 125% LTV. I know FHA has certain criteria...maybe not?

True economics leads supply and demand but the credit terms led to a false supply and demand. If you make anything available for free, people will take 3 .

I will tell you this. One day we will see a meltdown one day that will make the mortgage stuff seem like DisneyLand. It is going to be more like torture of a thousand cuts. This meltdown will be with student loans. This is a true mess that few realize.

 

Not Freddie Mac, not Fanny Mae, Ginnie Mae. This is the fed organization that Clinton used for the $1B. The $1B was used to lower the guarantee charges by almost half, if in the target areas ( the hood ).

OK, Clinton used $1B ( not tax payers money ) to create a false demand is what you are saying.

This is not an easy task previously, else every student from Harvard Law would not have a single student loan. Sallie Mae is not making any hint of this getting easier to do.

The case of sitting in your parents basement, not working is not going to prove undue hardship. That proves laziness. Courts have rules against people with substance abuse, saying this is not a hardship, they can overcome it and get back to work to pay off the loan. If a Heroin addict cannot get away from the loan, how is someone sitting in a basement going to ?

Sallie Mae even has it has to be an undue hardship to your family and dependents and this has to be a separate filing from the other debits being sought relieve from. The web site even makes a point of unless you have a lot of bills, don't try it, you are more than likely going to get the smaller amounts released and your credit rating damaged, and still be stuck with the student loans.

If it is a PLUS loan, same thing but now the parent has to go through the mess.

The loan could be changed to an extended or graduated repayment plan, but this is not for free.

Could be some additional money is going to be carried by the feds, but considering the amount for the health care line item ( pre obamacare ) this will be a drop in the bucket. That was over $1T in FY 2010 alone.

 

I see people all the time that are on disability and have no chance of ever going back to work getting loans for amounts they will never pay back. The schools are only accountable for default rates for 2 years after students leave school. They can get forbearances to cover that and they look great. Defaults will skyrocket. Some people are judgment proof and can cause havoc for this system.

 

The dems in the last congress tried to pass a law that made private student loans easier to eject, but this never made it past committee. The private student loans are still under the 2005 law.

Does not matter who is accountable for the loan at what time, the ability to release this debit is slim and none ( the addict could not get it released ). The loan might sit for a long time, but it will be a case of any money earned, the gov will get their pound of flesh.

You can defer and delay the loan, but at some point the loan will need to be extended to reduce the payment or be converted to a graduated program.

Not too sure where you got the info above, got any facts on this ?

The funny part, yet another Teacher perk, if the teacher worked in a Dept of Ed classified "low-income" school, after 5 years the teachers is eligible for a loan forgiveness program, the feds eat the loan.....