Obama admin pushing banks to offer sub-prime mortgages again...

[H D]

Yeah, you're probably right. This is no different than what caused the collapse in the first place. Banks aren't really interested in their survival, they're just racist. :banghead:



I don't care how you define "subprime." The interest rate is irrelevant. If you give a $100,000 loan to someone who cannot repay that, regardless of the interest rate, the loan is subprime. It doesn't make sense to make those kind of loans. If it appears to be racist, then maybe we should look at why there are so many "groups" that cannot repay home loans if they were to be given to them. Don't blame common sense banking on the lack of availability of loans to certain sections of cities. Get to the root of the problem. Throwing money (private money) at the problem won't fix it and created one heck of a problem. Please do not support such lunacy again.



Nobody can deny that the Obama administration is pushing subprime mortgages again. I clearly laid out in plain facts what is happening. Your changing of your personal definition of "subprime" does not change these facts.

 

[Richard L]

Hugh,

Nobody can deny that the Obama administration is pushing subprime mortgages again. I clearly laid out in plain facts what is happening.

I certainly did not read anything in that article that Obama wanted or is pushing to bring back sub prime loans??

Don't blame common sense banking on the lack of availability of loans to certain sections of cities.

I think each credit application should be viewed individually. I certainly don't feel it's valid to just mark off certain neighborhoods and say they cannot have credit? I never said or implied that it was racist, only that the Redlining was based on neighborhoods that were predominately poor black areas. And it appears that is what Obama was questioning regarding those banking practices. The author of the article kept elluding to Sub Prime mortgages an nobody else mentioned them...That's were the author attempted to make it appear that Obama was pushing for renewing the Sub Prime loans gain...which never happened.



As for the interest rates, you are correct, that the interest rate does not matter if the loan is not repaid. However, the Sub Prime mortgage allowed buyers who did not have good credit to qualify for lower interest loans. Without the sub prime loans, they may have qualified, but at a much higher interest rate, but their payments would have been too high...That the way the system works and that's the safety net that the banks use. Riskier loans deman higher interest rates, and I think that is fair. The problem with the Sub Prime mortgages was that anybody could qualify, applicants were lying, and the banks were not verifying that the applicants information was correct.



The fact that the banks will not even consider a credit application from someone who lives in a zone that the banks have arbitrarily Redlined. I think there should at least be some banking regulations that stipulates the resonable conditions that would allow a bank to Redline any area. I think it is too arbitrary for banks to just decide that they are not going to give credit to anyone living in a certain area of town. While it may not be racially motivated, it does have some racial overtones if the majority of Redlined zones are predominately Black neighborhoods?

Please do not support such lunacy again.

I do not support Sub Prime mortgages, and never did, but I don't support Redlining without justifyable reasons. That just gives people the opportunity and motive to play the race card



...Rich

 

[Tom Schindler]

My parents were redlined by the Nationwide Insurance. My father purchased a house in a decent neignborhood in the 1960's. Aver the years, the neighborhood has slowly gown downhill and is now, almost 100% black.



Nationwide Insurance, after taking premium payments from my parents for over 40 years, sent Dad a letter saying he had some property issues he needed to take care of, or they would drop his coverage.



The list included, the following...



4 junk cars, an abandoned swimming pool, peeling paint, broken windows, and missing garage doors.



The property is not big enough for 4 junk cars and a swimming pool. The house and garage was sided with aluminum siding in the 80's, and there were no broken windows, no garage doors missing from the garage.



When he called the insurance company, they said that an inspector for the insurance company witnesses these things. They said they would send him out again to verify in the next week. Another letter game with the same result. We call our agent and explain the story.



He told us what was really happening. Our neighboorhood was black listed (red lined) by the insurance company and they were going to drop him as a customer, but was making excuses. There was nothing he, or we, could do. We either take the hint and find other insurance or they would drop my parents.



My parents have excellent credit and can pretty much name their intrest rate.



So, by picking a neighborhood that is occupied by a majority of black people is racist. Plain and simple. Equal opportunity lending is the law. If you have a good job and have good credit, it shouldn't make any difference if you live in the Slums of Detroit or in Beverly Hills.



Make the loans out to people, regardless of their color, by their factors that say the type of risk they are.



In case you are wondering, I have very good credit possibly better than 60% of you people commenting on this thread have, but I grew up in the Ghetto. I should not be allowed to get a loan because, if I did, I would be getting a sub-prime loan, if you use the ignorant reasons Hugh is seeing.





Tom

 

[Richard L]

Caymen,

I hear you. I agree that insurance companies are also very arbitrary in deciding how they chose their customers and the rates they pay.



As in the insurance industry, companies must provide insurance to a percentage of High Risk customers (SR22)...They certainly don't give them big discounts but they are required by law to insure a certain percentage.



I think Banks should be required to do the samething. They should be required to make loans.mortgages to some percentage of people inside their so-called Redlined zones. I don't know if that should be 1%, 5%, 10% or 20%. but if it was 10%, they would have to provide 10 loans/mortgages to Redline residents for every 100 loans outside of the Redline area. If they can only find 9 qualified Redline customers, then they can only approve 90 non-Redline zone loans to maintain that 10 to 1 ratio. That's basicly what the insurance companies do for automobile insurance.



At one time I worked for the largest automobile insurer in Texas and wrote the software that monitored the SR22 customer's driving records and one they met the minimun state requirements, they were removed from the SR22 (High Risk, High Premiums) and were permitted to purchase a regular policy at lower rates.



It does appear that we have state insurance boards that can apply certain regulatory controls on the insurnace companies in the state, but only the Fed's can monitor the Banking industry, and the Fed's are not doing a very good job!



...Rich

 

[Thomas Rogers]

Hugh,



I don't see it, not from the article and not from other news of late. Yes, some lenders and their practices and recent lending practices in certain areas (low income, etc) are being looked into, but that is not news. There have always been watchdog agencies (HUD, FHA, ...) under every administration that does such oversight.



I don't see this as: "Obama pushing for sub-prime loans."



I wouldn't even say that these articles are making the case that "Obama is pushing for banks to make bad loans", which I think in more general terms is what you are trying to say.



Again, reviewing lending practices to make sure all is kosher is what agencies SHOULD do. If done properly it will cut both ways. Agencies will see loans that SHOULD NOT be given to some, and might catch examples of loans that were denied byt SHOULD HAVE been granted.



I think you might be taking a bit of a leap in the title of the thread.



Oh, and by all means, all of you interested, watch the documentary: "Inside Job!"



The issue here wasn't so much that there wasn't regulations and agencies. There were. The main issue is that for a system to work, there must be incentives that balances the disincentives (pros that balance cons, risks that balance rewards). CDO (collateralized debt obiligations) are the biggest culprit in the subprime housing crisis, and couple them with the fact that there really was little disincentive for home buyers who couldn't make their payments to simply walk away, and that is why what happened happened. These CDOs were toxic, plain and simple, and sold most often with AAA ratings.



See more...



TJR

 

[H D]

I have never attempted to justify redlining. Each case should be handled on an individual basis. It's the agencies that are noticing a lack of loans in particular areas and they are doing their job to investigate whether unfair lending practices are occurring. I have not criticized the investigations. I am critical of any actions that again force banks to provide sub-prime mortgages.



Just because certain areas are underrepresented by a bank's lending practices does not necessarily mean that they are redlining; can we at least consider the option that perhaps there really are few credit-worthy applicants in that area? Fewer people that live in higher cost areas are receiving new loans and it would only be logical that in the lower cost areas, an ever lower percentage would qualify, regardless of the interest rates or any other factors.



I am only pointing to the groundwork that might possibly be currently being laid for subprime mortgages to be forced on banks again. Has anybody looked at the situation of Fannie Mae and Freddie Mac recently? It's not really in the news, but it is worth looking into.



I also wish that it would stop be pushed on me that I have been connecting President Obama's direct preferences to this situation. I have made it obviously clear that I am talking about his ADMINISTRATION. All of the executive branch falls into this category and all regulatory agencies are part of the executive branch. I have not criticized the president for a single thing in this entire thread and I would prefer that I not be portrayed in such a way.



When the president directly does something stupid, believe me, I will call him out on it. When he deserves praise, I will give due praise. In this thread, though, I have never once praised or criticized President Obama. What some of you may want to ask yourself is why you are so quick to jump to his defense before he has even been called out on anything?

 

[Tom Schindler]

What some of you may want to ask yourself is why you are so quick to jump to his defense before he has even been called out on anything?

The article you posted said NOTHING about the Obama administration is pushing banks into Sub-prime Mortgages. this is not about jumping to Obama's defense, pointing a finger ant someone misleading an article.





Tom

 

[H D]

...some lenders are being cited for failing to operate in minority and low-income census tracts near their branches, even when they have never done business there before. "If you put your branches only in upper-income areas, the regulators are not accepting that anymore,"

Regulators are penalizing banks and telling them where they MUST put branches. They are telling banks that they MUST provide credit access. Inherently, these areas will require the loaning of subprime mortgages.



Does it have to specifically say within the article: "President Obama's administration asks banks to lend to people they know will not repay?" Or can we use a little deductive reasoning?

the stepped-up government scrutiny could backfire if financial institutions decide to shrink their operations rather than yield to pressure to do business in areas that don't make sense for them

I hope the banks do shrink their operations rather than rebuild the shaky tower that already collapsed once.

 

[Richard L]

Hugh,

I have not criticized the investigations. I am critical of any actions that again force banks to provide sub-prime mortgages.

I think we all agree on that point, however the title on your post would indicate that "The Obama Administration was pushing Banks to offer sub-prime loans". But nobody who read the article is jumping to that conclusion, and that is certainly not evident in the article



Then you clearly stated:

Nobody can deny that the Obama administration is pushing subprime mortgages again

.



Where is your proof to back up that statement??? Please take a direct quote from the article that would clearly show that the Obama Administration is pushing for Sub-Primes again! It's simply not there. The author of the article quickly reminded the readers of the Sub-Prime mortgage fiaso, but did not say that anyone was suggesting, considering, urging, or arm twisting the banks to start doing Sub-prime loans again.



The Obama Administration is investigatig arbitrary bank practices that appear to block out certain neighborhoods from getting credit simply because they live in a redlined area. How that was twisted into "Pushing for sub=prime loans" certainly escapes me?



Also, when you speak of the "Obama Administration" you are speaking directly about Obama. All Presidents are responsible for their Administrations, and the actions of their administrations are a direct reflection on them as President. So you really cannot criticize the Administration without including the President.



...Rich

 

[Tom Schindler]

Regulators are penalizing banks and telling them where they MUST put branches.

yea...and? I mean, I grew up in the ghetto and had a neighborhood bank where I did my banking. It was nice to have a local bank where I could walk home from school and deposit my paycheck. I worked for the school board as a student helper.

They are telling banks that they MUST provide credit access.

Absolutly. You can not say that ANYONE that lives in the ghetto is not worthy of credit simply because of where they live.

Inherently, these areas will require the loaning of subprime mortgages.

So, what you are saying is that all sub-prime loans originated at bank branches located in the ghetto and there were no sub-prime loans in the nice part of town?

Does it have to specifically say within the article: "President Obama's administration asks banks to lend to people they know will not repay?" Or can we use a little deductive reasoning?

Actually, yes, it should say something like that.



The banks are not innocent of crimes in this sub-prime mortage scam. And, yes, this was a scam. Banks KNEW they were setting up people to fail. I do agree to never bite off more than you can chew, but the fact remains, a good salesman can sell an Eskimo a deep freezer. The salesman does't give a rats behind if the buyer can pay for it. They only care about the sale and nothing more.



Mortgage brokers are only worrying about the sale. They will do what they have to do to get the buyer to sign on the dotted line.



There is plenty of blame to go around. It was not caused by banks in the ghetto.



The absence of banks in the ghetto is why check cashing/payday loans businesses fourish in the ghettos. Those that live there have no other choice.





Tom

 

[Thomas Rogers]

Sub-prime in itself is not bad, as long as those that sell them are vested in them. The problem comes in when sub-prime loans are sold, then those loan packages are sold in bulk via CDOs and those CDOs are given AAA ratings. What then happens is that people, institutions, etc purchase those supposedly high quality CDOs that are in fact toxic. Whn the marks correct and foreclosures happen, those that sold the mortgages are not harmed, becauase they no longer own or hold the mortgage. Those that invested in the CDOs get screwed. The sad part is that those financial institutions that sold the toxic CDOs knew they were crap and would fail, so they purchased additional derivatives betting on their failure. Not only that, but due to the way these hedge funds worked, anyone could buy them, with thousands of buyers betting against these mortgages... Several getting paid with each single failure. So, when foreclosures happened, those holding the CDOs went broke, while those selling and betting against them got rich.



The problem wasn't subprime loans. The problem was the fact that for many that sold them they never had any innate skin in the game that they wouldn't get defaulted on. The true indicator is whether or not the mortgage lender is dedicated to holding that loan. Find one that does and you will be better served in the long run, IMHO.



TJR

 

[H D]

Please take a direct quote from the article that would clearly show that the Obama Administration is pushing for Sub-Primes again! It's simply not there.

Ok, I'll repost a relevant quote I have already provided...again. If the critical thinking skills are not used and it needs to be directly spelled out by the author, then I guess I have nothing more to write. I usually draw my own conclusions from facts rather than rely on authors of articles to tell me everything I need to know, though. Maybe you have a different interpretation of the following quote. If there is another, please provide it, because I must be missing something.

...some lenders are being cited <b>[by the Obama administration]</b> for failing to operate <b>[provide subprime loans]</b> in minority <b>[perhaps needing investigation]</b> and low-income <b>[no need to investigate smart business practices]</b> census tracts near their branches, even when they have never done business there before <b>[meaning no new change in operations or supposed redlining]</b>. "If you put your branches only in upper-income areas, the regulators are not accepting that anymore," <b>[they must put branches in places that are not conducive to their private business interests]</b> says Warren W. Traiger, a lawyer at BuckleySandler in New York, which advises banks on fair lending issues.

 

[Tom Schindler]

Hugh,



You are seeing this simply as you want to see it and not as it is being shown.



You pretty much added the information to sping it to the direction that you want it to be and are not basing this off of any facts or even slivers of facts.



Banks do NOT have the right to pick and choose where they do business. Fair lending is the law. Banks are NOT allowed to discriminate by color, religon, etc. etc. etc. This can also include black balling neighborhoods because the majority of its citizens are of the non-caucasion persuation.



You see this as simply that black neighborhoods is where sub-prime loans originate and if we get the branches out of the ghetto's, the sub-prime loans will just go away.



It doesn't work that way. Just because the Obama administration is looking for equal opportunity for banking does not mean he wants to give his fellow "ni66as" free loans so dey can live on da hill.



If you are a financial institution, you are bound by the laws enacted by the orginazation that backs the money you sell.



Don't like it or think it is fair? Sell something other than money.





Tom

 

[Thomas Rogers]

There will always be those with an axe to grind that see issues and people to blame when there are none.



Obama is not the boogie man... nor is he a modern day messiah.



TJR

 

[Richard L]

Hugh,

Your so-called proof is based on what was not said, and are clearly the thoughts or assumptions of the author not the reality. I said from the beginning that the author was injecting his opinion into the article and was the only one to imply the sub-prime loans.



The author appears to have assumed that the redline areas meant the banks were not providing Sub-Prime loans as he he put the words brackets in the very first line of your quoted text. ie: [provide subprime loans]. In fact almost everything he highlited with brackets are just his assumptions or leaping to conclusions that are NOT factual



The author planted the seed in your head that the Obama Administration was pushing for sub-prime loans I don't know if it was a deliberate intent to confuse the reader, but I think the article was a hachet job.



....Rich

 

[H D]

I'm still being accused of blaming President Obama. Wow. If a lower court in Wisconsin makes a ruling and I disagree with it, am I also criticizing John Roberts? Please stop putting ignorant words into my mouth. I do understand that every part of our executive branch is not micromanaged by President Obama. That is neither what I have said, nor implied. Attempting to attack me based on false accusations of "just blaming Obama" does not work here. I have called into question the workings of some agencies, not anything President Obama has said or done. I am grinding no axe, thank you.



If the end result of these investigations leads to mortgages being given to people who cannot afford them just because the agencies think the banks are using unfair determinations of credit-worthiness, then everything I have posted is absolutely true. Is it totally impossible that more subprime mortgages will result from these investigations and citations?

 

[Thomas Rogers]

If the end result of these investigations leads to mortgages being given to people who cannot afford them just because the agencies think the banks are using unfair determinations of credit-worthiness, then everything I have posted is absolutely true.

And if my grandma had wheels she would be a wagon.



The title of this thread was alarmist, and sensationalist in nature, IMHO, and not backed up by the article presented. Spade a spade. Playing "what if" after the fact seems like back-peddling.



TJR

 

[H D]

I'm not saying what if. Perhaps poor word choice, I should have used when. I suspect banks would rather just close some branches, though.



Assuming not all banks will close some of the affected branches, again I ask, is it totally impossible that more subprime mortgages will result from these investigations and citations?

 

[Thomas Rogers]

Hugh,



What if more subprime mortgages are the result? Such agencies are just assuring that those that should get loans can get loans. If that means subprime loans for some, then so be it. Subprime loans in and of themselves were not the root cause of the crisis, not alone anyways. As long as subprime loans go to qualifying buyers and are held by the banks that loan them then the crisis of 2008 will be very unlikely in the future.



It is unlikely that the subprime crisis will happen again the way it did in 2008. The reason is that now the financial community is very, very leary and skeptical of CDOs, especially those with a large volume of subprime mortgages contained within. For this reason subprime mortgages are much, much harder to get.



TJR

 

[Richard L]

As TJR said, not only are subprime mortgages all but impossible to get, but any credit is hard to get if you do not have a spotless credit record and a high credit score. That is what the Obama administration is having problems dealing with in getting our economy jump started...The leary banks are not wanting to make any loans, even to well established businesses to expand and grow their business. If businesses can grow they will hire more people and that all helps the economy.



...Rich