Obama administration pushes banks to make home loans to people with weaker credit

[NumberSix]

yeah, I read the article. I understood it too.

Apparently not if you're asking what this has to do with the government.

[KyrieTheFuture]

Because banks were giving loans to people who couldn't even afford to buy food. Banks are irresponsible. They've been doing this shit for awhile, watch the big short the investment banks are doing the exact same thing under a different name.

Anyone who watches a rocket mortgage commercial and isn't terrified is a problem.

[NumberSix]

Because banks were giving loans to people who couldn't even afford to buy food. Banks are irresponsible. They've been doing this shit for awhile, watch the big short the investment banks are doing the exact same thing under a different name.

Anyone who watches a rocket mortgage commercial and isn't terrified is a problem.

There's a cure. It's called, let them fail.

If they do bad business, let them fail. Let them lose all their money and have to sell off all of their assets. Don't bail them out. Just let them die.

[KyrieTheFuture]

There's a cure. It's called, let them fail.

If they do bad business, let them fail. Let them lose all their money and have to sell off all of their assets. Don't bail them out. Just let them die.

Yes but if you create shitty instruments for people to invest in, those people fail when the bottom comes out, not the bank.

[poido123]

Houses are very affordable in America.


You would have to pay double for a lot of the houses over here comparitively.

[UK2K]

Houses are very affordable in America.


You would have to pay double for a lot of the houses over here comparitively.

Thats what I don't understand. Its not that hard to qualify for a house NOW.

My RE agent was telling me that here, when a house goes on the market, its got viewings scheduled within hours. She told me a house went on the market last Tuesday, and that afternoon she had shown it three times.

Dont know about the rest of the country, but its most definitely a sellers market here.

[Velocirap31]

Wow, it's 2001-2007 all over again.

[senelcoolidge]

not this again. What is wrong with Obama, this idiot is just doing anything he can to destroy this country.

[rufuspaul]

Thats what I don't understand. Its not that hard to qualify for a house NOW.

My RE agent was telling me that here, when a house goes on the market, its got viewings scheduled within hours. She told me a house went on the market last Tuesday, and that afternoon she had shown it three times.

Dont know about the rest of the country, but its most definitely a sellers market here.

My neighborhood is the same. People hear that a house is going up for sale and competitive bids are offered before it even gets listed.

It's insane to give a mortgage to anyone with a sub 700 score. Instead they should be counseling people on how to raise their score (i.e. pay bills on time, reduce debt) and tell them to re-apply once their score is above 700.

[ALBballer]

Housing crash part 2 coming up. Not from this story necessarily but prices in many areas have reached the levels around 2004-2007 prices and these low interest rates are only propping up prices.

[Dresta]

Well, i'm sure it will "boost" the idiotic GDP stat, and so we'll have "growth"--to hell with the eventual and inevitable consequences of it all!!

Government of quacks and imbeciles.

[FillJackson]

It's insane to give a mortgage to anyone with a sub 700 score. Instead they should be counseling people on how to raise their score (i.e. pay bills on time, reduce debt) and tell them to re-apply once their score is above 700.

700 is about Midpoint of credit score. You can easily have a sub 700 credit score AND have the other factors that make for a good loan. Not saying everyone under 700 would be a good loan risk, but many, many would. The type of mortgage is critical. Option ARMS and NINJA loans are dead.


Also if you think this is 2005 all over again, you haven't really understood the crisis. Home loans were the very beginning, but you need much more to cause a financial crisis.

It was what Wall Street did with the loans that turned a housing bubble that only affected a few regions into a full blown financial crisis. The housing bubbles mainly occurred in 4 states: California, Florida, Arizona, and Nevada and these states also had the highest level bad mortgages. You need something to go from these 4 states to a worldwide financial crisis. And that something is Wall Street and global buyers of Wall Street's products.


To get to a full blown financial crisis you need

Willingness of Wall Street to buy any loan imaginable.....this is critical, if you can't sell these loans to someone else, these loans don't get made. This is the engine driving the whole system. This hunger for more and more loans to sell is what caused the collapse if loan standards. 2000-2003 loans performed much, much better than 2005 loans which performed much, much better than 2006 loans. (Recent mortgage default rates are miniscule.) This hunger was caused by record Wall Street fees selling mortgage securities.



This is helped by Credit Agencies's malfeasance giving out AAA ratings like Halloween candy. It's only with these AAA ratings that caused the world to invest in the US housing market.
Massive mispricing of risk throughout the financial sector....both buyers and sellers believing these AAA rated mortgage securities
High leverage used by banks capable of affecting the system......the kind of thing that is prevented now.
Loans given out with very little documentation of borrower's worthiness aka 2004-2006 loans.

A giant part of the crisis was JUMBO home loans. That is upper income folks buying very big houses. Another part was mortgage refinancing


We have a seller's market because the availability of appropriate houses for first time buyers is so small. Since it's harder to get loans right now, less houses for this market are being built.

If we get back to 2001 type mortgages without origination fraud (much harder to do with this type of loan) we would be totally fine.