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Posted by: djn3nunez3 1 year, 2 months ago

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djn3nunez31 year, 2 months ago

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The Community Reinvestment Act, passed in 1977, requires banks to lend in the low-income neighborhoods where they take deposits. Just the idea that a lending crisis created from 2004 to 2007 was caused by a 1977 law is silly. But it’s even more ridiculous when you consider that most subprime loans were made by firms that aren’t subject to the CRA. University of Michigan law professor Michael Barr testified back in February before the House Committee on Financial Services that 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations.

http://www.businessweek.com/investing/insights/blo...

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  Endoscopy1 year, 2 months ago
  
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  You are ignoring what happened to the act in 1992. It was put on steroids by the Clinton Administration in 1992 and went into effect in 1995. You also ignore a cause and effect. It is not the foreclosures that are the problem. They only sparked the real problem. The housing bubble burst.
  
  http://mysite.verizon.net/vodkajim/housingbubble/
  
  Do you think about what you write?
  "requires banks to lend in the low-income neighborhoods where they take deposits.
  That is the place where the people who can afford a 20% down with no more than 2 weeks pay for the mortgage right? This is the heart of where the compassionate sub prime loans were born.
  
  1995 $48 billion sub prime loans from minorities and today $1 trillion from everybody. Lots of loans and the housing industry could not keep up with demand and up shot the price of homes. In 2006 the foreclosures were starting to climb. The bubble was bursting. Down it came. Lots of empty homes now. 14.3% of homes in the US are vacant. Mortgages value to banks are based on the current resale value of the real estate. 20%+ drop in prices of homes. mortgages turned from black ink to red ink in two plus years and the institutions that held the paper backed by mortgages had the money disappear out of them.
  
  The CRA rating of loans required in poor neighborhoods cause the sub prime loans.
  It was saturation of those more able to pay that caused the riskier loans.
  It was the riskier sub prime loans that caused the foreclosures to increase.
  It was the high foreclosure rate starting a little before 2006 that caused the housing prices to fall.
  The fall of the housing prices caused the papers issued backed by mortgages to go from black to red ink.
  It was the loss of money in the papers for mortgages that caused the crash of the institutions.
  
  Is that cause and effect simple enough for you?
  
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