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You smack your forehead and say "Wrong!" but all you did was present your own opinions and really have nothing to stand on when taking such a know-it-all attitude. You provided absolutely nothing to back up your contention that the guidelines weren't followed, nor that not following them led to the defaults, nor that the defaults wouldn't have happened anyway if they had been followed. If you're going to take such a superior attitude then you should present something more than unsupported conjecture.
Here you go:
"...Because Fannie Mae and Freddie Mac made a market for subprime mortgages the lenders did not have to worry about of the soundness of the mortgage contract they wrote. Thus the lenders could write the mortgages as adjustable interest rate mortgages knowing full well that an upturn in the interest rates could easily throw the borrower into insolvency. For example, when the interest rate is 6 percent the mortgage payment for a 30-year $200,000 mortgage is $1199 per month. If the interest rate goes up to 7 percent the mortgage payment would increase by $131 per month, an 11 percent increase. For many of the subprime borrowers living on the edge of insolvency this would be enough to push them over the edge. The guilt for the subprime mortgage financial crisis lies both with the lenders who knowingly put borrowers into booby trapped mortgages and the management of Fannie Mae and Freddie Mac for making a market for such booby trapped mortgages thus giving the lenders the incentive for writing them. ..."
Lenders didn't CARE about the credit-worthiness of the borrowers - nor did they CARE if the home appraisels were accurate or that the homes were actually WORTH the asking price. ALL they cared about was making the loan and selling it ASAP. They even went so far as to PRESSURE appraisers to appraise houses at WHATEVER the asking price was. Appraisers who failed to do so were not used again and thus went out of business.
...Mortgage brokers, according to Mr. Reck, would provide appraisers with "predetermined values" of homes, tailored to the proposed loans. If the appraiser wanted to keep getting that broker's business, he would do anything possible to value the home at or above the predetermined value, he said.
Mr. Reck said he would upgrade a property's condition from fair to good and avoid mentioning holes in the walls, a lack of carpeting or plumbing leaks.
"You always try to get the best picture to make it look as good as it possibly can," Mr. Reck told the jury on direct examination by Assistant U.S. Attorney Brendan Conway.
Rather than pick comparable, recently sold properties from nearby blocks, he would try to find the highest priced, vaguely similar properties within a two-mile radius, Mr. Reck said...
Such activity was widespread prior to the housing collapse - and is largely responsible for both the artifical inflation of home prices and the endless stream of unqualified buyers.
Plenty of articles out there on this subject. Some people just don't CARE to look deeper at the problem to see the REAL cause. It's just easier on them to simply say "It was the fault of Clinton or Bush because they pushed for loans for low income people". BOTH Presidents DID do that, but that need not have turned into the disaster it was IF THE RULES HAD BEEN FOLLOWED.
Regarding "whether the crash would have happened had the guidelines been followed" - we'll never know, because the guidelines were NOT followed. The loan originators simply did not care about due diligence because they had NO INCENTIVE to do so - and EVERY INCENTIVE to NOT CARE about due diligence.
Ken
No it wouldn't. Many banks were allowed to fail. Life went on. Nothing makes one bank more special than another outside of who you know and where they are placed.
Nonsense.
It wasn't just ONE BANK that was in danger of collapse - it was nearly ALL OF THEM.
Look at what JUST THE COLLAPSE of Leiman Bros did - and was just ONE major bank. ALL THE MAJOR BANKS had pretty the same problems. One big banks collapsing we can handle. ALL the big banks collapsing is another story completely.
The problem is MBS had proliferated nearly EVERYWHERE.
"...Because Fannie Mae and Freddie Mac made a market for subprime mortgages the lenders did not have to worry about of the soundness of the mortgage contract they wrote. Thus the lenders could write the mortgages as adjustable interest rate mortgages knowing full well that an upturn in the interest rates could easily throw the borrower into insolvency. For example, when the interest rate is 6 percent the mortgage payment for a 30-year $200,000 mortgage is $1199 per month. If the interest rate goes up to 7 percent the mortgage payment would increase by $131 per month, an 11 percent increase. For many of the subprime borrowers living on the edge of insolvency this would be enough to push them over the edge. The guilt for the subprime mortgage financial crisis lies both with the lenders who knowingly put borrowers into booby trapped mortgages and the management of Fannie Mae and Freddie Mac for making a market for such booby trapped mortgages thus giving the lenders the incentive for writing them. ..."
Lenders didn't CARE about the credit-worthiness of the borrowers - nor did they CARE if the home appraisels were accurate or that the homes were actually WORTH the asking price. ALL they cared about was making the loan and selling it ASAP. They even went so far as to PRESSURE appraisers to appraise houses at WHATEVER the asking price was. Appraisers who failed to do so were not used again and thus went out of business.
...Mortgage brokers, according to Mr. Reck, would provide appraisers with "predetermined values" of homes, tailored to the proposed loans. If the appraiser wanted to keep getting that broker's business, he would do anything possible to value the home at or above the predetermined value, he said.
Mr. Reck said he would upgrade a property's condition from fair to good and avoid mentioning holes in the walls, a lack of carpeting or plumbing leaks.
"You always try to get the best picture to make it look as good as it possibly can," Mr. Reck told the jury on direct examination by Assistant U.S. Attorney Brendan Conway.
Rather than pick comparable, recently sold properties from nearby blocks, he would try to find the highest priced, vaguely similar properties within a two-mile radius, Mr. Reck said...
Such activity was widespread prior to the housing collapse - and is largely responsible for both the artifical inflation of home prices and the endless stream of unqualified buyers.
Plenty of articles out there on this subject. Some people just don't CARE to look deeper at the problem to see the REAL cause. It's just easier on them to simply say "It was the fault of Clinton or Bush because they pushed for loans for low income people". BOTH Presidents DID do that, but that need not have turned into the disaster it was IF THE RULES HAD BEEN FOLLOWED.
Regarding "whether the crash would have happened had the guidelines been followed" - we'll never know, because the guidelines were NOT followed. The loan originators simply did not care about due diligence because they had NO INCENTIVE to do so - and EVERY INCENTIVE to NOT CARE about due diligence.
Ken
Which was the fault of Congress for bypassing the free market. Keep treating symptoms and don't address the cause and you'll continue to miss the point, yet again.
You're talking about a symptom. The Fed didnt pass a rule telling lenders to make little to no down payment loans to people who didn't qualify.
Fanny and Freddie indeed did tell lenders to loan money to people who didnt qualify, they did this buy agreeing to buy that debt and putting the taxpayer on the hook.
i'll give a loan to a homeless bum if i can make 2-3% overnight and put the risk on someone else.. One would be stupid not to
"...Because Fannie Mae and Freddie Mac made a market for subprime mortgages the lenders did not have to worry about of the soundness of the mortgage contract they wrote. Thus the lenders could write the mortgages as adjustable interest rate mortgages knowing full well that an upturn in the interest rates could easily throw the borrower into insolvency. For example, when the interest rate is 6 percent the mortgage payment for a 30-year $200,000 mortgage is $1199 per month. If the interest rate goes up to 7 percent the mortgage payment would increase by $131 per month, an 11 percent increase. For many of the subprime borrowers living on the edge of insolvency this would be enough to push them over the edge. The guilt for the subprime mortgage financial crisis lies both with the lenders who knowingly put borrowers into booby trapped mortgages and the management of Fannie Mae and Freddie Mac for making a market for such booby trapped mortgages thus giving the lenders the incentive for writing them. ..."
What I said was the words calmed the markets and they went back up.
So, TODAY an ACTUAL VOTING MEMBER of the Fed spoke - and what did he say?
The FED will continue to prop up the markets. I've asked you this over and over with no reply. Why does a market at record or near record levels need propped up at all?
They are NOT PROPPING IT UP - certainly NOT with QE.
Despite what many claim, QE has done little to "prop the markets up" - and when QE ends (probably next week) the markets will survive - and will NOT give up the massive gains of the last 5 years.
Will the market go down some?
Quite possibly. The market bounces around all the time - often for pretty minor reasons (sometimes just because of "rumors"). It's just a short-term reaction and generally such moves are reversed within a couple of weeks. The market has had a very very long run (one of the longest in its' history) and was due for some sort of correction. Such situations arise from time to time whether there is QE or not.
The fact is a VOTING member of the Fed said that QE will end as planned and the market actually ended up RISING (quite a bit) so clearly the potential end of QE is not something destined to crush the markets - in part because Interest rates WILL remain low even with the end of QE.
Does that help the markets?
Sure - but it's not being done just to "prop up the markets". Low interests are there to help the ECONOMY - to make it easier for people and businesses to get loans so that they can spend money and boost the economy. Any boost to the stock market is pretty much secondary. Does it happen? Sure - but it's NOT the primary reason for keeping rates low. The primary reason for keeping rates low is to make it easier for people and businesses to get the money they need for expansion. QE is just ONE TOOL to help do that - and the Fed has made clear that the time for that tool is coming to an end. That doesn't mean the Fed will not use other (more traditional) tools to keep borrowing costs low - it just means that the economy has revived to the point where the exceptional circumstances that led to the introduction of QE are no longer present - and thus QE is no longer needed.
QE will be done by the end of the year.
Fanny and Freddie indeed did tell lenders to loan money to people who didnt qualify, they did this buy agreeing to buy that debt and putting the taxpayer on the hook.
i'll give a loan to a homeless bum if i can make 2-3% overnight and put the risk on someone else. One would be stupid not to
Right, but they never would have if Congress didn't pass the Housing Bill to do so. That's where it starts. They didn't learn from the "free money" boom/bust during the dot com bubble.
do you sheeplely follow what the government says of 1-2% per year over the last 6 years???
or do you go to the store and compare prices, and see how much things have gone up???
inflation has been near 10-15% for the last 6years
look at the prices in the stores
have you been to the store
prices are going up, and up
coffee is double what it was just 6 years ago in 2008...over 100% in that 6 years....or 20%per year average
coffee up
sugar up
cotton up
corn up
all other vegetables up
all meats up
almost everything us up
REAL INFALTION IS CURRENTLY ABOUT 10-15% or more...unfortunately the government(from either party) doesnt give us the REAL numbers
it certainly is for every working class person or old person
you think that your utility cost being up is not inflation???
you think your medical/pharm costs being up is not inflation???
you think your clothing costs being up is not inflation???
you think your housing (rent and realestate taxes) being up is not inflation???
you think food costs going up is not inflation???
you think building supply costs (ie home depot) being UP is not inflation???
almost EVERYTHING we use has gone up by at least 10% to in some cases 30% in the last 5 years...and you are going to tell me inflation is "only 2% or less"
have you been to the store???...have you SEEN THE PRICES???? milk is nearly $4 a gallon...meats have gone though the roof...in 2004 a 3lb can of coffee was about $3...today its a 2.2lb can of coffee and its $10...over a 300% increase in less than 10 years
sorry you are too blind to see
you certainly do prove that the sheeple are out there for the slaughter
so are you going to tell me YOU BELIEVE the government TELLING YOU that inflation is at 0-3% when PRICES in nearly everything have risen 10-20% or more????
the 'inflation rate' is not REAL INFLATION (ie COST inflation) that real americans (and seniors) feel with almost everything we buy
costs are going up on almost everything..especially food (which is NOT counted in the 'inflation rate')
Junk fish called Tauplia which was selling in 2008 for 1.28 a pound is now close to 6.00 a pound...Catfish that averaged between 3.49 and 3.99 at 6.00 plus.... Not just one store, they are all similar in price. Paper towels are highway robbery.....deli ham/turkey which I used to get for 2-3 a pound...now 6-9 a pound
couple of Thanksgiving ago ,,Sweet potatoes they were 49 cent/pound...now $1.79/pound
breyers icecream HALF GALLON, was (2008) 2for 5...now its 1.5 quarts and its 4/each(on sale)
Even cooking oil 48 fl oz... went from $2.99 (reg. p about 18 months ago) to $3.69 (sale)... and $4.79 (reg. price)....the 64oz is well over $7 now
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let me guess you will next say food doesn't count
Actually, real economists are worried more about deflation in the near future as global demand weakens. Do you think part of the costs going up was due to global boom we have been experiencing for the past 2 decades? Of course inflation plays a part, but what was predicted hasn't come to fruition.
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