Community Reinvestment Act

[hoglahoo]

Nobody can predict the future, you don't have to explain that to anyone - no bank was ever able to do that anyway, you are just muddying the discussion with irrelevant and overcomplicated nonsense to the point at hand. The fact remains that anyone who makes a living doing anything ought to know how much they make and how much can be used for a known mortgage payment. Betting on the future and losing isn't criminal, sometimes it pays off and sometimes it doesn't so I won't say it's stupid but it is risky - either way it doesn't negate the simple and straightforward approach of saying here is what comes into my wallet every month, and here is what goes out, and here's what is left I can use to make monthly payments on a mortgage.

[Kantian Pragmatist]

Nobody can predict the future, you don't have to explain that to anyone - no bank was ever able to do that anyway, you are just muddying the discussion with irrelevant and overcomplicated nonsense to the point at hand. The fact remains that anyone who makes a living doing anything ought to know how much they make and how much can be used for a known mortgage payment. Betting on the future and losing isn't criminal, sometimes it pays off and sometimes it doesn't so I won't say it's stupid but it is risky - either way it doesn't negate the simple and straightforward approach of saying here is what comes into my wallet every month, and here is what goes out, and here's what is left I can use to make monthly payments on a mortgage.

Except that most workers don't know whether they'll have the same job in 5 years, because they don't know if their bosses are gonna outsource their job to China or India, and they don't know whether they're gonna get a raise or get promoted, though most people, if you ask them, will say that they will, and those loans and mortgages they've agreed to initially have very affordable payments and zero down, or whatever other terms were used to sucker people in, and even though the loan officer mentions something about the payments doubling he also mentions something about refinancing and you're gonna get that raise or promotion anyway, and then goes through about a dozen different fees, some of which are mandatory and some of which are conditional. Most people barely know how to calculate their income tax, let alone provide a reasonable estimate of future income. And most people barely manage to keep track of their past income and expenses either, if they do at all.

I find it hard to believe that you think the poor and middle class folks who got suckered into taking out more credit than they could afford and who failed to realize that on average they were gonna be eating a pay cut due to economic circumstances largely beyond their control are the ones at fault here, and not the people who did the suckering and rigged the economic circumstances, and who, so far, have walked away with hundreds of millions, if not billions apiece of what used to be the money in the average American's IRAs and tax-payer backed insurance funds.

[hoglahoo]

most workers don't know whether they'll have the same job in 5 years

Nobody can know that, not even banks

I find it hard to believe that you think the poor and middle class folks who got suckered into taking out more credit than they could afford and who failed to realize that on average they were gonna be eating a pay cut due to economic circumstances largely beyond their control are the ones at fault here, and not the people who did the suckering and rigged the economic circumstances, and who, so far, have walked away with hundreds of millions, if not billions apiece of what used to be the money in the average American's IRAs and tax-payer backed insurance funds.

I do not think they are the "ones" at fault, but I do think that some of them are some of the ones at fault. But though related, that is beside the point - it is perfectly reasonable to expect someone who wants to buy a house to be independently able and willing to subtract their obligations from their income, and purchase accordingly. The banks can be the devil itself, and I don't excuse them, but it doesn't take away from the fact that nobody put a gun to the buyers' heads and that many buyers knowingly made risky decisions of their own accord and some came out ok and others suffered for it later

[Jasongreat]

Wrong, I work in construction, there are alot of workers in construction, we are lucky to have a job that lasts more than a number of months. I have probably had over a hundred jobs in my life, two or three lasted over a year and never have I had a job lasting over three.

To your second point, believe it or not but alot of people live on their overtime earnings, they will build up their credit profile to the point that regular pay doesnt cover it, they begin to rely on overtime. When things go south, overtime pay goes away and they have no way to make ends meet. To make matters worse the government lowers interest rates to the level that people will spend more for a house than it is worth, making a bubble. When everyone catches on it is too late and they have lost 10-100,000's of dollars, although it no ones fault but their own.

Edit: sorry hoglahloo I was replying to kant.

[MinATX]

I've been around so many types of people, rich and poor, and in so many different situations. I started out as conservative, then saw things that challenged what I took for granted, and have come back around again. I believe we miss what's going on to just point the finger at one group or the other. That's what Congress does, and I think we've seen how far that gets us all. They've been pointing their fingers at each other for the last few administrations. I don't see the improvement.

Do you blame the banks or the poor people for the mortgage crisis? Both parties were anxious to get easy money off those bad loans. With all this crap that's still going on, I STILL see ads on TV, at least one every commercial break, for predatory payday loans, car title loans, and easy lawsuits. It seems there's a sucker for every predator and a predator for every sucker. People never seem to learn.

In the drug problem, do you blame the junky or the pusher?

I'm not trying to give an answer, because at this point it really doesn't matter anymore. We've dug ourselves into a financial hole as a society, and we're all responsible. Some participated in the digging, others stood by and let it happen for whatever reason.

So many people have their hands dirty with this, that it could take another ten years to accurately assign blame. Like the guy in the video said, I'm tired of hearing ABOUT it. I want to know what we can do to FIX the problem. Maybe one of the first ways to is to make it clear that people will be held responsible for their bad decisions. No more help for stupidity, irresponsibility or greed. Your bank or hedge fund went under because you financed it with shaky, volatile investments - tough. You bought a house worth $500,000 for zero down and hardly a penny to spare to make payments on a 30 year mortgage, just betting on keeping that job until the day you die; but next year, things don't go right - tough. You stretched yourself too thin.

I've payed my own way, only borrowed as much as I KNOW I can pay, even if things were to get bad, and choose to share a tiny rent house with a roommate. I've forced myself to make tough decisions voluntarily, in advance, so that I don't end up with my back to the wall. Any idiot can figure out how to do that too. But I WILL maintain my independence and integrity. With the exception of the minority of people who have been the victim of catastrophic diseases or natural disasters, if you've financed yourself into a hole, by taking bad loans or making bad loans - tough.

[Jasongreat]

Great post, but I do blame the users over the pushers. If the demand is there who is to blame the supplier? I agree there is plenty of blame to go around, from the low interest loans which begged people to pay more than a house was worth since it wouldnt cost them much more than a regularly priced home and regular interest. Local governments who raised the valuation of the home to collect more tax revenue, the people who thought a home an asset instead of a liability, which it is unless you can convince people that something you use, gains value instead of depreciates.

Personally I keep my expenditures under check, I have a volatile job, sometimes times are great, sometimes times are not so great. I always keep my expenditures tamed to where if I did lose my job, I can easily and comfortably live on unemployment. Even though I make plenty of money to buy a house, I realized the market was over-inflated, I kept my money to myself. I paid cash for my used truck, then paid cash to upgrade it to my specifications, i have no bills. I always enjoy a three month vacation at the tax payers expense and I live lavishisly, it is someone elses money after all. I do think safety nets are ridiculous, but as long as they are there and I pay an excessive amount of my pay to taxes, I WILL get that money back, it is only human nature.

[Kantian Pragmatist]

A guy can't default on a loan he's not offered. The cause of the crash in 07 was not just that loans were offered to people that should never have been offered to them in the first place, it was that the value of those loans was misrepresented to investors when the banks bundled those loans with others and sold off pieces of interest in those bundles and insurance on the bundles, both their own bundles and other banks' bundles. In fact, if the value of those underlying loans was accurately represented to investors, the crash wouldn't have happened at all. Loan originators, bundlers, raters and insurers all failed to communicate the risk involved in the investments they were creating and offering for sale to investors and to each other. It's their job to know the risks involved in making a loan and how those risks multiply when bundled with other like loans; they have access to all the actuarial data that lets them know the rates of default and repayment and they have enough money to pay people to do the math to figure up the risks. If the pieces of those bundles had been accurately valued, investors would have been able to buy the pieces of those bundles, or not, and adequately hedge against the risk therein. Because they were lied to about the risk, by the banks, they weren't adequately hedged, and American's IRAs, which were, of course, managed by these self-same banks and which bought up the pieces of the bundles like they were a fat kid and it was a 5 cent candy bucket, lost between a third to half of their average values.

[Jasongreat]

A guy cant default on a loan he never takes. I agree with the missrepresentation thing, like I said a house is a liability, not an asset. Too many people believed that prices were going to continue to raise, dispite the fact that houses were incredibily over priced. So overpriced one would never think about buying except for the low interest and the belief thing were going to continue to go up. There are sooooooo many americans upside down in their loans the day of reconing is yet to come. Although we are alot closer to the true value of things than we were years ago, the true value is yet to come, even if government keeps proppping up the market. The true price will show up sooner or later, which side do you want to be on? The one who is expectant the government will continue to apply money to a losing effort, or the one who takes things as they are, accepts their loss and never make that mistake again? It is a life lesson.

[gugi]

Democracy is the worst form of government except for all those other forms that have been tried

Ah yeah, the famous epitaph to an empire, though I certainly expected that you'll use the occasion to recite it.

I want to know what we can do to FIX the problem. Maybe one of the first ways to is to make it clear that people will be held responsible for their bad decisions. No more help for stupidity, irresponsibility or greed.

Well, the problem is that this is not possible. The reality is that if one is smart enough they can benefit a lot from their good decisions and they can benefit a lot from their bad decisions.
Apparently there are always plenty of people who have been made to believe that everything legal is also right, and making almost anything legal is pretty straightforward, and not all that expensive.

[Mvcrash]

No, just the democrats, the republicans are the ones trying to fix everything that's wrong, but they can only fight the good fight and can't really win by controlling just one chamber of congress.
It is an election year though, time to test how the great democracy system works.

You are kidding about the Republicans right?