Subprime lenders and their borrowers have
made some bad business decisions in the
last few years. But A) Subprime lenders
did VERY well in the mid 90’s to early
2000’s and B) borrowers enjoyed cash flow
and real estate appreciation during that
same time. Subprime lenders recently got
out of the misjudged real estate market
and some borrowers lack of common sense
with their asset appreciation found
current interest rates and payments on
those adjustibles out of their price
range. Enough said. That’s private
enterprise and consumer spending habits.

The REAL story here that Spencer doesn’t
tell you about is the REAL
injustice where Colorado real estate is
concerned. And that’s the foreclosures
YOU as the U.S. taxpayer foot the bill
for.

Never mentioned is the vast number of
Federally insured residential home loans
defaulted on by borrowers who in past
years never would have qualified for a
mortgage.

The taxpayer scam which
continues even to this day regardless of
real estate values or economic conditions
is
the virtual racket associated with
Federally insured home loans by FHA and
VA. And WE the American people pay when
they default. NOTHING IS BEING SAID!
It’s the dirty little secret the
beneficiaries don’t want you the taxpayer
to know about.

You see, about 10 or 15 years ago our
elected leaders in Washington decided
EVERYBODY regardless of their financial
ability should own a home. ESPECIALLY
minorities. I would like to hear about
how many BILLIONS of taxpayer dollars
have been used to float the housing
operation called the Federal Housing
Authority and it’s giveaway home loans
programs which are nothing more than
subsidized housing for the poor.

I’d like to know of the thousands of
foreclosures in the state how many of
these loans are insured by YOU the
taxpayer and have NOTHING TO DO WITH
THE SUBPRIME INDUSTRY. The convenient
boogy man for advocates for the “common
good” meaning screw the taxpayer we want
to push our social agendas, one of which
is free housing for the poor called
FHA.

Noidea, what’s “riskier” than 100% +
financing achieved with with premium priced
financing, settlement costs counted toward
the 3% “down payment requirement”
grant and community homebuyer assistance
monies (which is nothing more than a shell
game for a fee utilizing an illegal inflated
real estate appraisal and on top of that
seller concessions, resulting in a CHECK to
the buys at closing who are first time
home buyers with poor credit and sporatic
job histories.

That’s the current state of FHA home loan
financing. In essense a “CASH OUT” home
purchase for unqualified borrowers.

Some of THESE loans go into default without
a single payment being made. Gee I wonder
why? This is called CRAZY underwriting.

Then: to top it off when these borrowers
get three months behind the lender and
realtor can approach them with the FHA
“PRE FORECLOSURE” program which allows
the soon to be foreclosed seller a $500
INCENTIVE to sell pre foreclosure and NOT
have the foreclosure appear on their credit,
(so they can qualify in only three years
to get another FHA loan) and the loan
can be “Paid off” for 82% of the current
appraised value, with the TAXPAYER picking
up the deficiency. Many home are worth less
now than the loan balance from a year ago.
That deficiency could be 25 30 or 40%
or at worst $80,000 on a $200,000 mortgage.
All paid for by the TAXPAYER through HUD.

All the lenders and Realtors have to do is
find a steady stream of human beings with
pulses and they can “CHURN” the local
inventory of foreclosure properties
adinfinitum. Making their commission each
time all on the tax payers dime.

And your talking about RISK in the private
sector SUB PRIME market???? Those people
HAVE to make a profit or their out of
business. The Federal government is in the
BUSINESS of waisting the taxpayers dollars
with their GIVEAWAY PROGRAMS. And you
talk about RISK. GIVE ME A BREAK!

….and how does a lender know if the person that they are lending to is unreasonable……only after the fact when they don’t pay. It is easy for a person like you, Jim, to criticize. If credit is restricted, especially from minority groups, you are singing a different tune. You get a grip too and learn. The markets will determine who has access to capital, and liberals (progressives) like you will complain when there is not a free flow of lending capital to under capitalized minority and “under served” areas.

noidea, I didn’t see the “study” which
included creditors other than Sub Prime
mortgage companies, but the common
complaint and being the political season
there always a hidden political agenda.
Hedge funds whatever. Believe (whether
you care to or not) I know of what I speak.
I don’t think consumer credit issues are
the problem here. And it’s a fact that
the press does not the discuss the racket
going on with government insured loans
and the multitude of programs which help
unqualified borrowers buy homes as a
directive of Washinton ideology. It’s a
fact moron. Not all subprime lending is
“stated” and generally loan to values
provide for a cushion in the case of
forclosure. Same deal with interet only
products. People who have equity SELL
MORON! they don’t go into foreclosure.
You’re the one rambling.

OK, guys, you’ve had your little debate. Hammond, as usual, you manage to demagogue the issue. Noidea is right. FHA, VA, et al, require the borrower to establish that he/she is qualified for the deeply discounted loan. That it is deeply discounted also makes it more likely that the loan will be paid. I don’t think you can cite any statistics that the default rate on VA and FHA loans is at all higher than on any other kind of loans. And, please, for the love of God, stop perpetuating the myth of “sub-prime loans.” They’re high risk, damn it, and if anyone ever had called them what they really are, it is doubtful that the masters of the universe who populate Wall Street would have been able to do what they did.

There is a tremendous amount of misinformation on the housing market, much of it because the mainstream media have so few decent reporters who know anything that they all play the same story, blathering about the poor working class people who are losing their homes. Seldom do we get to read how the mortgage broker assured them the deal was “good” or the appraiser came back with a ridiculously high valuation just to make the loan qualify. Most of the defaults around the country are by people who planned to flip the property and make money on the increase in value. Surprise, the original value was unrealistic and the increase didn’t manifest itself. When the mortgage reset at a higher rate that the borrower never planned to have to pay, boom, into the dumper goes that mortgage.

Hammond and Noidea, there is enough blame in this fiasco for everyone to get his or her share. What we don’t need is more blather (Hammond) against FHA and VA programs, which for more than 50 years have helped put more working-class Americans into homes of their own. Try thinking before typing, and open the mind, you never know what might fly in or out.

Sometimes I type and send before thinking, and then wish that I had a yo yo that I could pull it back. That being said, I know quite a bit about this particular subject. That night that I sent my remarks to Dennis, I had thrown more than a few back and my delivery was poor. Especially with respect to calling Jim Spencer a simpleton, which certainly he is not (Sorry Jim for being a jacka..). Dennis, on the other hand, although not a simpleton has a one track mind.

The credit breakdown with respect to mortgages is a MAJOR issue. The House moved to correct some of the problems yesterday but went into areas that the free market economy on it’s own is correcting. “Do goodism” on the part of the majority of Democrats who sponsored and voted for the bill are going to deepen the problem…..Specifically with respect to homeowners trying to refinance not being able to use their equity for closing costs on refinances. Although this sounds noble on paper, the poor will not be able to do so and this will deepen their problems in getting out of their subprime loans or to refinance in general. The wage earner will not be able to save up the money to do so and will basically be SOL. I personally need to refinance an ARM and I do not relish paying money out of my pocket to do so rather than using my own equity.

Rather than stopping the hemorrage of foreclosures it is, if the bill passes the Senate, going to deepen even more. The stricter licensing etc. are all good parts of the bill but the Democratic supported bill reaches it’s mis-guided hand into an arena that the markets will correct on it’s own. Nannyism as Harsanyi would put it.

If the House is concerned about equity predators, they perhaps should revise the HOEPA ACT limiting the percentage of fees charged on a loan and perhaps have some sort of protection against multiple refinances within a time frame from a single originating source. This, in my opinion, would help remove some of the predators that have created this debacle.

That being said, there are some excellent aspects of the bill with controlling the “type” of person, and qualifications, that are able to originate mortgage loans and this is long over due.. There are also more disclosure provisions etc. So overall, a lot of good was done. But if we go overboard, watch out. This will be just the beginning as borrowers will not be able to unwind the mess that they have gotten themselves into.

And yes, you are correct.>>> Subprime loans ARE risky. Regardless of what Dennis says. Or let me clarify, Subprime AND 100% financing in the same sentence are risky…Subprime has it’s place in a free market economy, but disclosure is the key.