Days Black People Not Re-Enslaved By Trump

Friday, April 08, 2016

As if 2008 Never Happened

I was shocked. Really, when I read the following from the Washington Post:
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
This is what happens when people believe their own hype. The whole "To big to fail" was the last stage of the cancer that dumped the economy in 2008, the first, foundational stage was the granting of mortgages to people who could not afford them or were too damn irresponsible to pay for them. The no income verification loans. The only 5% or whatever down loans. It's as if there is a class of "leadership" who think people get bad credit by accident.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
Hey look. If you're young, you probably haven't gained enough gainful employment to have saved a downpayment. Also in this society if you're young you are probably wasting loads of money "hanging out" rather than finding a spouse, living together and saving together which is the fastest way to build wealth. To the "credit weakened by the recession" point, if your credit is bad because of the 2008 recession, that sucks, but you don't get to get a house on shaky grounds because of it. If you can't recover you stay in the land of renters. As it should be. That doesn't make 'em bad people, just bad risks.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
You mean the taxpayer should be on the hook again for mortgages handed out to people who shouldn't get them? Did 2008 NOT EVER HAPPEN?
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Essentially they want to legalize what is now considered mortgage fraud and predatory lending? Really?
Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.
As others in the blogosphere have pointed out, wasn't the point of uniform rules to get rid of discrimination that having "subjective judgment" enabled?
Administration officials say they are looking only to allay unnecessary hesi­ta­tion among banks and encourage safe lending to borrowers who have the financial wherewithal to pay.
Which is what lenders are (or ought to be) doing now. Those persons who have fucked up their credit or by circumstances beyond their control have messed up credit lose out. It happens. Life is not fair.
“If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads,”
Anyone who is "low income" ought not even be asked about home ownership. Low income persons shouldn't be looking to get into a mortgage. Low income persons ought to be looking into increasing their income. And there are plenty of people in "communities of color" who are and have been buying houses. They aren't "low income". Yes those people of color exist.
“It is very difficult for people of low and moderate incomes to refinance or buy homes.”
I repeat: Low income people ought not even HAVE a mortgage much less refinancing one.
But they declined 90 percent for people with scores between 680 and 620 — historically a respectable range for a credit score.
I had no idea anything below 700 was considered "respectable" when looking to borrow hundreds of thousands of dollars for something that takes quite a bit to maintain.
“If the only people who can get a loan have near-perfect credit and are putting down 25 percent, you’re leaving out of the market an entire population of creditworthy folks, which constrains demand and slows the recovery,”
Now I will agree with this. Asking for 25% down is too much. With decent houses in some locations easily going to 300-400k, 25% is 60-100K. That is very hard to save for many people.
The FHA historically has been dedicated to making homeownership affordable for people of moderate means. Under FHA terms, a borrower can get a home loan with a credit score as low as 500 or a down payment as small as 3.5 percent.
Credit score of 500? I wouldn't lend someone with that score 5 bucks much less a couple hundred thousand. No. They need to up that credit to 650 minimum. And I'm not even comfortable with that. I also think 3.5% is too little. 10% should be the line.
“My view is that there are lots of creditworthy borrowers that are below 720 or 700 — all the way down the credit-score spectrum,” Galante said. “It’s important you look at the totality of that borrower’s ability to pay.”
Guess what? The borrower's ability and responsibility to pay is reflected in their credit score. The only mitigating circumstance would be medical emergencies and identity theft which includes parents and other relatives using ones identity when one is a child.

It's really sad to see these government folks disregard the 2008 financial crisis in their zeal to enact some social justice program.