Re: the "subprime mortgage crisis"

On Apr 5, 10:56 am, "Randolph M. Jones" <rjo...@xxxxxxxxxxxx> wrote:
MoParMaN wrote:
<deemsb...@xxxxxxx> wrote in message
news:53cc63dd-15e3-4d51-adbe-0bbdbfb9f458@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
On Apr 5, 9:30 am, stephenj <s...@xxxxxxx> wrote:
all i know is (a) i'm against any type of tax-payer bailout of
"predatory lenders" or the stupid people who agreed to loan terms that
they cannot afford to pay off; and (b)bill clinton and newt gingrich
deserve a significant share of the blame because the 1995 changes to the
CRA created the "securitization" of mortgage loans, and "encouraged"
financial institutions to lend lots more money to low-income borrowers.

typical governmnet: pass a law forcing financial institutions to loan
money to low income and minority borrowers, then blame them for
"preying" on them when they do and a housing bubble bursts. sheesh.

Most of these people are not "low income", their incomes are just
too low for the debt. The government did have a small program for
guaranteeing notes for first time home owners, but that was discontinued
because of the failure rate.

The government did not force lenders to make subprime loans.  The lenders
had too much money and no other way to invest it.  They lowered their
standards from the rule of 39 to a rule of 15 or worse.

For you idots that don't understand what a subprime loan is, it is a loan
made to people that normally would not qualify for a loan under the rule of
39 criteria.  That criteria is you must 39 percent of your disposable income
left after you pay all your other bills. If you have 39 percent of your
money left or more, you qualify.  The higher above 39 percent that you have
left would also determine a better long term note rate...

When mortgage lenders lowered their standards to lend all this money they
had doing nothing, they basically cut their own throats by making bad loans
against the history proven track record of the rule of 39.

My qualifications for make these statements, are that I have been in the
mortgage family my entire life.  My father started and was president and ceo
of Dallas Fort Worth Mortgage, my mother was a big wig with FNMA, she bought
and sold trillions of dollars in mortgages and my middle sister works for
the GSA, real estate division.

The home loan fiasco if the fault of the lenders and the rat*** poor
people that had no way in hell to repay the debt.

No one should bail out either one.  If they lowered their standards, they
deserve to fail in business and go bankrupt.  Borrowers should be foreclosed
on and kicked back to the apartments.  Hey, you should know what you can
afford, it doesn't take a fucking rocket scientist to figure out a budget.

I'm generally in support of the notion, at least philosophically, that
both the borrowers and the lenders in this case need to deal with the
consequences of their own actions.  But I suppose it's also worth
keeping in mind that lots of people have their investments in those
lending companies.  And when they lose their shirts, that obviously
leads to pretty wide-ranging impact on the economy as a whole.  So one
way or another, government bail-out or giant hit to the economy, all of
us are going to deal with the consequences of their actions, as well,
and it might pay in the long run to incorporate that fact into whatever
policies and remedies we support.  History has proven that this kind of
thing isn't just as simple as "don't bail them out and they'll never
take this kind of risk again."


If government bails them out, all you are doing is spreading the harm
over the entire population versus the actual owners of the company.
I'm for screwing the owners. They played the odds and lost.

Jon
.