And the feds will force the bank to give you your loan! No matter how insanely horrendous a credit risk you are! And when you default, the feds will force your fellow taxpayers to pick up the tab! It's the Obamerikastani way!
One might even call it...."fundamentally transformative":
America needs more low-down-payment loans.
Like a hole in the head.
That seems to be the opinion of our government, anyway.
aka Of Barack Hussein Obama and the Democrat Party.
The government agencies that drive most of the housing market....
Feeling warmly and fuzzily reassured yet?
....are pushing for lower down-payment standards on mortgages, easing the 20% requirement that has become standard for much of the market.
The Center for American Progress approves....
Of course they do. Because the problem with the Panic of 2008 was that there weren't enough bad mortgages floating around out there.
"We shouldn't obsess about down payments," said Julia Gordon, director of housing policy.
Yeah! We shouldn't obsess about people falling behind on their mortgage payments, either. Or defaulting altogether. Because the other problem with the Panic of 2008 is that there weren't enough mortgaged back securities spread throughout the U.S. financial system like ebola viruses.
"Research confirms that low-down-payment loans to lower-wealth borrowers perform very well if the mortgages are well-underwritten, safe and sustainable."
This depends, of course, on what you think "perform very well" means. A low-down-payment loan made to someone with a good credit rating and a low debt-to-income ratio will perform better than a low-down-payment loan made to someone with terrible credit and a lot of debt. But it has a higher default risk than a mortgage made to a similar borrower with an adequate down payment, because when you start out with little equity, you're apt to find yourself in foreclosure if you get into financial trouble.
There is simply no way to make low-down-payment lending stable in any environment other than in a rising house price environment. [The Center of American Progress's] study says it covers the last decade. If you made a low-down-payment loan in 2001, there was enough of a price increase after that you're probably fine. But it only works in that environment and it creates this cycle of a boom as house prices are rising, and then once they stop rising everybody crashes. You get this epidemic of foreclosures. It destabilizes the entire market.
Is there a good public-policy reason to encourage people to make a heavily leveraged bet on continued upward movement in home prices?
Well, it destroyed the Republican Party (for a biennium, anyway), put Barack Obama in the White House (forever), sixty Democrats in the Senate, and 256 Democrats in the House, which paved the way for the fatal lurch to the Left that locked in a permanent economic depression, nationalized several entire industries, most especially health care, decimated the remaining surviving portions of American culture and global power, prestige and respect, and otherwise murdered the Old American Republic. Seeing as how the Democrats consider all of the above to be the only "good public policy" that matters, I would venture to say to Miss McArdle, "Yes! There! Is!"
Predictably, one of the architects of the aforementioned nationalization - or "fascization," if you prefer - of the financial sector - which is, amazingly enough, not producing the predicted selling-point results, is trying to pass the buck, even though he's no longer in Congress:
Back in the day, mortgage lenders were very careful in making loans, since they bore the entire risk of default.
For decades, this principle was eviscerated....
By Democrats in the Carter and Clinton Regimes and their bureaucratic moles, and protected from Capitol Hill by animals like My Boy Lollipop.
....leading to the global financial and economic collapse in 2007 and 2008.
aka The Democrat Financial Logic Bomb that successfully "re-FDR-ized" America, rumpizing the GOP and entrenching Barack Obama in sole power as a de facto imperial monarch.
The securitization process permitted lenders to sell risky loans to unsuspecting investors in the form of derivative securities, thereby preserving an immediate profit for themselves while transferring potential risk and losses to the investing public.
And guess who some of the biggest financial backers of Barack Obama and the Democrat Party have been in and since the 2008 campaign? Just so.
Dodd-Frank was the formalization of the Democrat Financial Logic Bomb in permanent public policy. You can tell this because Dodd-Frank promised the diametric opposite result. Now that it has, "astonishingly," performed completely bass-ackwards of its professed billing and has the financial sector steaming full-speed ahead towards another market calamity, B.F. Worthless is blaming....the Obama Regime?:
Former Representative Barney Frank (D-MA4) the co-author of this legislation and the former chairman of the House Financial Services Committee, rightfully believed lenders needed to have their own capital at risk to better guarantee the soundness of their loans.
Unfortunately, his legislation did not stipulate what the proper lending parameters would be. The bill relied on regulators to subsequently draw up prudent rules. Four years after this legislation was passed and signed into law, rules governing this practice were recently approved. [emphasis added]
"Oh, those cwazy Obamunists! If only they had wegiswated pwudent wules like Senator Dodd and I spent yeaws opposing and smeawing Wepubwicans as wacists fow insisting upon, we wouldn't be in this mess!" (Okay, Frank doesn't sound much like Elmer Fudd, but it still seems to fit, for some highly amusing reason.)
If "Mr. Ready" really believed the codswallop he's trying to sell now, and taken his lawmaking duties remotely seriously than, he wouldn't have left the determination of what constitutes "proper lending parameters" to the Regime that owes its existence to their prior "evisceration". But then, if he, and all his colleagues, had ever taken their Article I constitutional responsibilities seriously, they never would have even proposed Dodd-Frank, nor illegally intervened in and corruptly manipulated financial markets, in the first place.
Exit fun fact: When my wife and I obtained our (FHA) mortgage twenty years ago, our down payment was....3%. We're still current on that same mortgage, and should be able to pay it off on-schedule, even if I never work again.
I do so enjoy being the exception that proves the rule.
No comments:
Post a Comment