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      09-12-2012, 01:10 PM   #30

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Originally Posted by pt View Post
Regarding the bolded sentence, could I please trouble you to post the text in the law that caused banks to lend to people that couldn't afford to buy?
"For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership."

As it turns out, it's harder to actually find this stuff now; it used to be on the website of the Department of Housing & Urban Development, and then it was removed. (likely because the whole housing fiasco made this approach seem embarrassing and absurd in hindsight). Fortunately, once something ends up in an internet search cache, even if you delete it, it never really goes away.

In your list of causes, #8 is really what I am talking about here. Creating innovating mortgages to reach more subprime borrowers. Think about it, why on earth would any businessman want to do that, unless they were strongly nudged by some government program to do so?

If you went back in time to the 80's or something before this nonsense was put out there, and you talked to any bank manager, do you really think they would say, "What we really need to do more is offer mortgages to people who really shouldn't have one in the first place because they have justifiably been labeled credit risks"

As the finance professor and senior fellow at the Wharton school of Business says, "It strikes me as reckless to promote home sales to individuals in such constrained financial predicaments."

Originally Posted by pt View Post
How do we leave the political crap behind and address the mechanical causes of the problem, several of which are unchanged?
I'm not sure we can leave the political crap out of it; its the promotion of political ideologies such as the socialist notion that everyone is equal in their ability to pay a mortgage, that is the genesis for policies like this in the first place.