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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Brumar89 who wrote (436750)	11/26/2008 1:42:35 AM
From: tejek	Read Replies (1) \| Respond to of 1574809

No, normal underwriting procedures were changed and standards lowered back during the time when subprime loans began being securitized. It is correct to say the practices continued under Bush and that over time the number of subprime mortgages grew. YES, HAD THEY BEEN WRITTEN UNDER CLINTON, DEFAULTS WOULD HAVE STARTED RISING IN 2000, A YEAR AFTER THE INTEREST RATE RESETS. Adjustable rate mortgages are usually fixed for 3-5 years and then reset (either annually or on some other interval) to something like the LIBOR plus some premium, though there may be caps on how much it can change at any one point. Different mortgages are different. There was nothing magic about the year 2000. A borrower could usually refinance or even sell the house if he was unable to handle the reset mortgage payment until the real estate bubble burst. After the real estate market broke, a lot of borrowers in many parts of the country found themselves with a mortgage greater than the market value of their home - therefore refinancing or selling was no longer a way out. A key factor in when defaults started rising was thus after the real estate crash. Yes, there would be something magic about the year 2000. That was the last year of the Clinton administration....and foreclosure activity was normal throughout the country. The subprime mortgages of the 21st century were different from the loans made during the Clinton administration. Most of the subprime mortgages of the 21st century had interest rates that reset at the end of one year. The only way these people could afford to make the payment for the first month after they closed escrow was by lowering interest rates as well as the principal to essentially nothing. That made the payment affordable. However, at the end of a year, the interest rates were reset higher to make up for lost time which, in turn, made the mo. payments much higher. After struggling for a while, the homeowner typically could not keep making the payments. People have tracked origination of these loans and when they went into default....in many cases, the default occurred a year to a year and half from the date escrow closed. All of these crap loans were written starting in 2005 as the housing boom began to slow down. -------------------------------- Particularly when the economy turns down, interest rates reset upward, and real estate prices begin falling. BUT THE ECONOMY DID NOT TURN DOWN UNTIL THIS PAST SPRING/SUMMER. SO THE DEFAULTS AND FORECLOSURES THAT STARTED IN 2007 FOR THE MOST PART WERE NOT DUE TO THE BAD ECONOMY. Notice I said "and real estate prices begin falling" above. also see the previous paragraph. The problem wasn't that prices had started falling.....in fact, prices held up until the Fall of 2007. It was that these people could not afford their monthly nut. They didn't make enough money to service the note on their loan. ------------------------------- Pretending that the subprime loans made under one President or another were 'okay' is nothing but projection of partisan spin. OH SHIT! YOU DON'T KNOW WHAT THE HELL YOU ARE SAYING. The bad loans were written because they knew the Bush administration was not paying any attention and doing none of its fudiciary regulation; that in fact, the Bushies could care less what they were doing. There is plenty of evidence that shows the Bush administration was looking the other way.......and not just with housing regulations. Chis Cox, Bush's appointee to the SEC, has been a disaster for the markets.....ignoring some important regulations while loosening others. Lack of regulatory supervision has been endemic to the Bush administration on almost every level of the gov't from the get go. Its not news. Well, the documented fact that the Bush administration made (unsuccessful) efforts to reform oversight of the mortgage industry show they did care. They simply didn't push hard enough. I provided evidence the Bush administration did make unsuccessful efforts to reform the system. They didn't push hard enough to make anything happen. Meanwhile many Congressional Democrats were pushing hard against tightening regulation in the mortgage field. I posted proof of this too. Here are links again so anyone can see I back up the things I claim: gatewaypundit.blogspot.com; Screw gateway pundit......several times, I have documented and posted from the MSM how Bush had encouraged housing ownership among the poorest people in the country throughout his administration. I am not posting it again because you refuse to learn what this problem is really all about.......instead you continue to listen to the misinformation provided winger pundits and bloggers.