Anatomy of a Train Wreck

[dannyboy]

couple of things

first, the example you gave still had a 10% down payment with a 10% loan to cover the 10% down requirements. this has been done for the last 30 years to avoid the insurance, nothing new.

secondly, interesting quote there by bush. but i still fail to see where he is supporting home loans to illegal aliens, as you stated.

i am glad you did post that it is not just a bush issue, it has been brewing for many years before his election. and congress is just as much to blame as any president. after all, many of the high ranking members have recieved millions from fanny and freddie, obama being the second highest recipient, with the most dollar amount in the shortest time. wonder why?

i still think that the bailout is a knee jerk reaction to cover their greed in congress, and only with professional assistance by professionals in the economic field should any action take place. and members of our goober,ent are not the professionals in this field.

d

 

[wkmac]

Er Bu.(cough)..it. Please show us where GW encouraged illegal alien purhasing.

Well Tie, there are some facts that would suggest this might be more fact than fiction.

Otherside pointed out the June 2002' speech but Bush gave another speech on Oct. 15, 2002 at George Washington University in which he himself was hosting a conference on promoting minority homeownership.
From White House webpage of the speech itself entitled, President Hosts Conference on Minority Homeownership

From the speech:

More and more people own their homes in America today. Two-thirds of all Americans own their homes, yet we have a problem here in America because few than half of the Hispanics and half the African Americans own the home. That's a homeownership gap. It's a -- it's a gap that we've got to work together to close for the good of our country, for the sake of a more hopeful future. We've got to work to knock down the barriers that have created a homeownership gap. I set an ambitious goal. It's one that I believe we can achieve. It's a clear goal, that by the end of this decade we'll increase the number of minority homeowners by at least 5.5 million families.

Rightly or wrongly, many point to this statement by the President that lay the seedbed that led to system abuses allowing illegal aliens to borrow money. Now to take this one step further, Michelle Malkin, a darling of the republican party and the conservative right in this country has written an op-ed piece pointing out the problems in the mortgage crisis relating to illegal aliens and this is what she had to say on this:

But there's one giant paternal elephant in the room that has slipped notice: how illegal immigration, crime-enabling banks and open-borders Bush policies fueled the mortgage crisis.

and

It's the tip of the iceberg. Thanks to lax Bush administration-approved policies allowing illegal aliens to use "matricula consular cards" and taxpayer identification numbers to open bank accounts, more forms of mortgage fraud have burgeoned. Moneylenders still have no access to a verification system to check Social Security numbers before approving loans.

entire piece found here: https://web.archive.org/web/20081208050102/http://www.vdare.com/malkin/080923_immigration.htm

I would suggest you read her piece for even more on the subject.

Did Bush say directly to lend to illegals? No. Never did he even suggest such a thing but the fact is a blowback of his interventionist economic policies has been a sharpe increase in home loans to illegal aliens in certain areas of the country that are now a drag on the national economic balance sheet. Couple that with the fact that he never lifted a finger to do a thing about illegal immigration and a real thinking person can only come to the conclusion that 2+2=4.

Anyway, the point is, there is some meat for that sandwich out there depending on how you view it. Otherside of course sees this as a means to convince everyone that the democrat party are the Cherubim of God's Heaven. ME? I'm Satan himself and I hate everybody so who you gonna believe and trust to tell ya the truth in this!


BTW: If you understand the hebrew language, you'll appreciate me calling myself Satan'el or ha-Satan!

 

[av8torntn]

‘You’ve got only a couple thousand bucks in the bank. Your job pays you dog-food wages. Your credit history has been bent, stapled, and mutilated. You declared bankruptcy in 1989. Don’t despair: You can still buy a house.” So began an April 1995 article in the Chicago Sun-Times that went on to direct prospective home-buyers fitting this profile to a group of far-left “community organizers” called ACORN, for assistance. In retrospect, of course, encouraging customers like this to buy homes seems little short of madness

 

[tieguy]

Er Bu.(cough)..it. Please show us where GW encouraged illegal alien purhasing.

"Creating new mortgage products to meet the unique needs of recent immigrants":

talking point, from a speech given by GW BUSH on June 17th 2002"


All you have to do is read this whole page.

Recent immigrants does not equate to illegal immigrants. Your doing quite a stretch on the truth here.

 

[tieguy]

"Did you not understand the issue when you posted it? Why would you post something as if it were fact if you're not prepared to stand behind it? Zero down payments does not put anyone behind any eight ball if they can afford to make the monthly morgage payment. Did you not understand this simple point when you posted it as gospel?"

"After the government succeeded in weakening
underwriting standards, mortgages seemed to require
virtually no down payment, which is the main
key to the problem"

This is the exact quote from the author of this report cited by WKMAC.

He is speaking directly about the current mortgage crisis.

I understand all too well. The majority of FAILED loans are zero downpayment and variable rate loans to low to moderately low income buyers.

The author cites this fact as well as the goverment currently.

It is a fact that a person who can afford a mortgage payment with zero down is the right candidate for this type of loan, however, this is not the majority.

The Bush administration pushed hard to get minority low income buyers into the market with zero downpayment loans.

FACT: President Bush mandated HUD to push zero downpayment loans with variable rates to minorities.

These are the very highest percentage of failed loans. The author cites the "easing" of standards to achieve the cited goals of Pres Bush (5.5 million homes by 2010) as the point where this crisis began.

It went all wrong when all guidelines went into deregulation.

Let me make myself clear on this issue, there are responsible parties all the way from Wall Street to main street. Both Democrats and Republicans alike.

Money corrupts, and as long as people were making money during the boom, everyone was looking the other way.

This is what happens with corruption and greed.

What happens next is whats important here, what direction does the Goverment and Wall Street take to stabilize the country, many jobs are at risk right now.

How many people do we all know who will be unemployed next year at this time???

The Bush "Home Ownership Society" was a noble idea and this I agree with the author, it was the lack of safeguards that caused this crisis to grow to a disaster.

In the begining, the home ownership society was to build single family homes around the country in the 100K to 200K price range, and Bush ordered Fannie mae to set aside 400 billion dollars to back these loans.

The problem started when the builders began to make homes larger than what was suggested by the Bush Administration.

Both Fannie Mae and Freddie Mac were not designed to cover loans greater than 200K and they ended up backing loans as much as 800K with zero down and variable interest rates.

People who bought in these circumstances have walked away from homes when the rate changes to prime plus 2 percent or (ex: 6.75% prime 2006 plus 2% = 8.75%) on a first mortgage! The difference on the first would jump to a level that people just couldnt afford.

The second made it worse. The second is always 1.5% higher to begin with, so a second at 7.85% would be 9.85%!

A 100 percent loan is structured at 80/20

Folks who bought a 800K home at 80/20 with an adjustment in 3 or 5 years were destroyed when they could'nt re-fi or sell the home.

Fannie and Freddie were not designed to cover this.

This is the point I am making. The banks were selling these junk loans to foreign banks just to get them off the books.

At the end of the day, is this all GW Bush's fault? NO.

He merely planted the seeds for failure, the system just exploited the idea.

Better talk to Bill Clinton he planted the seeds by loosening up the lending rules. Bush encouraging home ownership does not your case make.

 

[tieguy]

The Homeowner's Protection Act (HPA) of 1998
What Loans Are Covered?
Generally, the HPA applies to residential mortgage transactions obtained on or after July 29, 1999, but it also has requirements for loans obtained before that date. This new law does not cover VA and FHA government-guaranteed loans. In addition, the new law has different requirements for loans classified as "high-risk." Although the HPA does not provide the standards for what constitutes a "high risk" loan, it permits Fannie Mae and Freddie Mac to issue guidance for mortgages that conform to secondary market loan limits. Fannie Mae and Freddie Mac are corporations chartered by Congress to create a continuous flow of funds to mortgage lenders in support of homeownership. As of January 1, 2000, mortgages in amounts of $252,700 or less are considered conforming loans. For non-conforming mortgages, the lender may designate mortgage loans as "high risk."

Ways to avoid PMI
In today's market, there are some new ways to avoid mortgage insurance even when you don't have the standard 20 percent down payment.
Pay more interest: Some lenders will waive the mortgage insurance requirement if the buyer accepts a higher interest rate on the mortgage loan. The rate increases generally range from .75 percent to 1 percent, depending on the down payment. The advantage is that mortgage interest is tax deductible. (Use the mortgage calculator to see what your payment would be.)
Using an "80-10-10" loan: This program involves two loans and a 10 percent down payment. The 90 percent loan is financed with a first mortgage equal to 80 percent of the sale price, and a second mortgage for the remaining 10 percent of the sale price. The second mortgage has a higher interest rate but since it applies to only 10 percent of the total loan, the monthly payments on the two mortgages are still lower than paying one mortgage with mortgage insurance. Plus, again, there is the advantage of mortgage interest being tax deductible.
Example: If we compare the purchase of a $100,000 home under the "80-10-10" plan with a standard fixed mortgage including PMI, we find that the former is $17.45 cheaper each month.
Here's how it works. Under the "80-10-10" plan, the 10 percent down payment on a $100,000 house is $10,000. The first mortgage is $80,000 at 7.50 percent, which comes to a monthly payment of $559. The second mortgage for $10,000 has a 9.50 percent interest rate, making a monthly payment of $84. Total monthly payments of the two loans: $643.
With a $10,000 down payment, one mortgage of $90,000 at 7.50 percent has a monthly payment of $629, plus PMI of $31.45, making a total payment of $660.45.
*****************

Many of the loans in default did not carry the PMI insurance requirement because of the structuring of the loans. Creative loan structure is just one element in the collapse of the home market.

If the lending institution assures the person can afford to make the monthly payment then it really does not matter what type of loan is offered. creativity by itself has nothing to do with it. creativity will always be out there. The fundamental process of ensuring the borrower can afford to make the payment did not occur thus the defaults and collapse.

 

[tieguy]

On December 20 2007, Bush said this:

"The Federal Government must not prolong necessary corrections in the housing market, bail out lenders, or subsidize irresponsible borrowing and lending, at the expense of hard-working people who have played by the rules. GSE reform and FHA Modernization represent the appropriate next steps to address the housing downturn by creating a stronger and more effective regulatory regime for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. More effective regulations would help ensure that these firms do not take actions that place taxpayers or the financial system at increased risk."

This is exactly what we saw last week when congress and the senate approved a bailout.

??? Amazing.

your right Bush saw the impending crisis and tried to take action but was thwarted by bleeding heart liberals in congress.

 

[tieguy]

Well Tie, there are some facts that would suggest this might be more fact than fiction.

Otherside pointed out the June 2002' speech but Bush gave another speech on Oct. 15, 2002 at George Washington University in which he himself was hosting a conference on promoting minority homeownership.

President Hosts Conference on Minority Homeownership

From the speech:


Rightly or wrongly, many point to this statement by the President that lay the seedbed that led to system abuses allowing illegal aliens to borrow money. Now to take this one step further, Michelle Malkin, a darling of the republican party and the conservative right in this country has written an op-ed piece pointing out the problems in the mortgage crisis relating to illegal aliens and this is what she had to say on this:

I would suggest you read her piece for even more on the subject.

Did Bush say directly to lend to illegals? No. Never did he even suggest such a thing but the fact is a blowback of his interventionist economic policies has been a sharpe increase in home loans to illegal aliens in certain areas of the country that are now a drag on the national economic balance sheet. Couple that with the fact that he never lifted a finger to do a thing about illegal immigration and a real thinking person can only come to the conclusion that 2+2=4.

Anyway, the point is, there is some meat for that sandwich out there depending on how you view it. Otherside of course sees this as a means to convince everyone that the democrat party are the Cherubim of God's Heaven. ME? I'm Satan himself and I hate everybody so who you gonna believe and trust to tell ya the truth in this!


BTW: If you understand the hebrew language, you'll appreciate me calling myself Satan'el or ha-Satan!

er umm Bu( cough ) ....it. three hundred thousand pages of BS and you still did not address the original pont. Show me Bushs quote that says George Bush mandated home ownership amongst illegal aliens. This post of yours was a complete waste of my time.

Now you just stuck your nose into this and tried to distract me with all this prose that never produced.

Other side I'm calling you out . Show me where Bush actively pushed to mandate home ownership amongst illegal aliens. Not minorities. Not vague references to the hispanic community but Illegal aliens.

Put up or retract time.

 

[toonertoo]

Thank you to the other side for clarification.

 

[The Other Side]

I wont play the taunting, name calling bullying role as you do Tie. This is a point/counterpoint forum and if you disagree with my opinions or information, then post a counterpoint rather than trying to bully me out of my opinion.

It is true that the President will never say "ILLEGAL ALIENS" should buy homes, but thats why there are other words in the english language. "Reading between the lines" is a basic concept in Washington Politics.

The fact remains, thousands of "illegal aliens" bought homes during the bush administration after he introduced the home ownership society.

A little loophole was exploited called the ITIN. The rules for home purchasing were "eased" by this administration and the mortgage writers, banks and realtors took advantage of it.

This quest for greed knew no bounds.

Here is a story about the ITIN.

Many illegal immigrants come to the United States to achieve the American dream. Part of the American dream is to purchase a home and to increase one’s financial well-being. In the past, some immigrants may have turned to family members or close friends who were in the United States legally to take out a mortgage for them. Today more immigrants can take out mortgages on their own without having to turn to the assistance of family and friends. Mortgage companies do not require buyers to have a Social Security number to purchase a home in the United States. Immigrants wanting to buy a home need to have a special tax ID referred to as the ITIN. The ITIN or individual tax identification number is proof that an individual pays taxes to the IRS or Internal Revenue Service. The IRS began issuing ITINs in the mid 1990s for individuals who were not eligible to obtain a Social Security number but that needed to declare their income and pay taxes. Obtaining an ITIN, a nine digit number for tax purposes, is a relatively easy process since legal residency in the Unites States is not a requirement. A large number of illegal immigrants seeking to become permanent residents obtain ITINs in order to show the USCIS in the future that they have been paying taxes while residing in the United States.

Immigrants may qualify for a mortgage, but this opportunity does not necessarily translate into an easy process for them. Mortgage companies typically use Social Security numbers of applicants to run credit histories. However, many who apply with an ITIN do not have an established credit history or any credit history at all. Cash is widely used by immigrants and most of their transactions will most likely not involve credit. As a result, the approval for a mortgage loan may take longer and be more expensive. Immigrants applying for a loan must show proof of income. In addition, they have to prove that they have been consistent when it comes to paying bills. Mortgage companies tend to take higher risks with immigrants and this risk may be leveled off with a higher mortgage interest rate. Illegal immigrants cannot obtain loans that qualify for repurchase or are insured at the federal level by corporations sponsored by the government. These types of loans tend to offer the lowest interest rates available and lower down payments. Even though illegal immigrants usually end up paying a higher interest rate when using an ITIN, a larger down payment is usually not required on their behalf. However, some mortgage companies may require 20% to 30% of a home’s price as down payment. Such a high rate makes buying a home for many immigrants out of their reach. It is also possible that some immigrants may get lucky and be able to obtain a favorable interest rate.

Some of the companies that are offering mortgages using ITINs instead of a social security number are Citibank, Washington Mutual and American Home Mortgage. For example, Citibank requires an ITIN, a bank account, credit references for two years and verification of residency in the U.S. for a period of two years. There is large potential for profitability for mortgage companies and banks due to the high number of illegal immigrants desiring to buy a home. Offering such loans also allows companies to start building relationships with immigrants who may become potential customers for other services in the future. However, the downfall is that these loans entail greater risks to the companies due to the lack of credit history of immigrants. More applicants using ITINs as compared to using SSNs (Social Security Numbers) may be rejected for mortgage loans because of the additional requirements in place of the normally established credit history. Illegal immigrants must also keep in mind that while they can obtain an ITIN number, they are still not eligible to obtain a SSN. As mentioned before, obtaining an ITIN may be useful in the future when applying for permanent residency in the United States. Having an ITIN shows that an individual has been paying taxes on their income earned in the United States, which is one of the criteria that is looked at by the USCIS if applying for citizenship in the future.