The truth is out there.
Posted: October 12, 2008 Filed under: Financial Meltdown, Housing Market 1 Comment »Here is the money quote:
In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today’s problems.
“Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans,” she said. “The CRA has increased the volume of responsible lending to low- and moderate-income households.”
In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he wrote, “that this new lending is good business.”
Good luck hearing any of that on Talk Radio.
I know a REAL HOUSING FINANCE EXPERT!
Posted: September 30, 2008 Filed under: Housing Market, KJ's Crib Notes 7 Comments »My game is shameless. I have a good friend who is a Housing Expert and I shamelessly Jacked her comment from my post yesterday and Used it to make a post.
You should go show her some love
As a housing finance expert, I am really annoyed at this whole notion that a whole bunch of Muufuucas went out and blatently bought houses they could not afford. While there was some of that, the data has never demonstrated that shit to be true. As a matter of fact 2006 and 2007 data demonstrate that nearly 40% of mortgages delinquent were held by owner/investors. i.e. folks who just want to get paid. Additionally, the reason a lot of folks homes are unsellable or have mortgages that are upside down is because they were overvalued by who? The banks and mortgage brokers. Appraisers have been warning about pressure to appraise upward and the problem it might cause as the market got to costly for new buyers to enter. This is especially true in hot markets.
Many people are losing their shirts because of over valuation not imprudent home purchases. As a matter of fact nearly 25% of the folks who are currently in pre or foreclosure are there because of other economic conditions–not sub-prime loans.
Lastly, once again this thing most vastly effects minority homeowners. Financial literacy is key to buying a home. It is easy to say, that people were being greedy. But once again, financial literacy among minorities and lowincome individuals makes it difficult for homeowners to understand how to work it out when they get into trouble. Its always easy when you have the knowledge to think that others should too.
