Sunday, September 21, 2008

Speaking The Unspeakable: Subprime Debacle Has A Lot To Do With Pro-Diversity Re:Illegals

On VFR where the following is posted :
"A. Zarkov writes:
To understand the roots of our current financial crisis, one cannot ignore how the Community Reinvestment Act (CRA) got the ball rolling. There is tremendous resistance to this story because of its racial aspects, but a few brave souls have dared. Stan Leibowitz was one of the first with his New York Post essay last February called 'The Real Scandal.' It's all very simple. You can't have a sub-prime loan problem if there are no sub-prime loans, and those loans could not exist without lax underwriting standards. To understand the mentality behind reduced underwriting standards one simply has to browse the handbook published by the Fannie Mae Foundation (yes that Fannie Mae) called "Reaching the Immigrant Market: Creating Home Ownership Opportunities for New Americans." Here you can see first hand the bizarre thinking that led to loaning people large sums of money they couldn't ever repay. For example, the handbook authors write about 'barriers to immigrant homeownership.' What are the barriers? Once you decode the Orwellian language, the barriers are obvious: 1. Lack of a verifiable income; 2. Lack of a credit history that demonstrates the will and ability to repay loans; 3. Lack of ability to speak and read English, the language loan contracts are written in; 4. Lack of a valid Social Security Number; 5. Inability to make down payments and closing costs. The handbook advises financial institutions on how to reach the immigrant market by using "nontraditional" measures of immigrant creditworthiness. Translation: no creditworthiness. You can find the whole prescription for lax underwriting in Chapter 6. Here they are. Again I decode the Newspeak:
1.Latitude in proving legal residence--give mortgages to illegal aliens
2. Low down payment--no down payment.
3. Higher qualifying ratios--ignore the fact that the borrower will spend most of his income on mortgage payments.
4. Alternative and nontraditional credit--ignore the borrower's dismal credit score if he even has one. Substitute meaningless or easily faked documents.
5. Waive the mortgage insurance requirement (page 55)--the killer item! As the handbook explains, this give the lender the ultimate say in the underwriting decision because the mortgage insurance company is out of the loop. This important safeguard is gutted. Is it any wonder you get a worthless loan? Americans are forced to pay for mortgage insurance, but illegal Mexicans aren't. [...] Chapter six also provides the names of various special loan programs for aliens. We have the Wells Fargo Community Homeownership Program--no mortgage insurance. How about the National of La Raza Home to Own Program. The table on page 58 gives others.
It's now obvious how approximately half a trillion dollars in bad loans got created. It started with blacks and the CRA, [...] the hordes of illegal aliens that had spread throughout the U.S. Financial engineering gave them the means to sell off this toxic junk and make money on the loan origination fees. Then you wrap the whole thing in a racism-xenophobia security blanket to immunize it against criticism.
Now the federal government proposes to buy all these bad loans and charge it off to the taxpayer! Once the feds own the homes, will they simply let the borrowers live in them indefinitely? A gift to Mexicans courtesy of the U.S. taxpayer.
You can read the Leibowitz article here.
You can download the Fannie Mae Foundation handbook here. I encourage everyone to download (before this embarrassing document disappears) and at least browse the handbook. "
It is also at least somewhat misleading to describe this extended bad-mortgage slump, which has years behind it and ahead of it, as a crisis. There is a series of crises for the firms, as they get taken out one by one, each on its own day of 'crisis'; but the overall slumping pattern is a slow-motion wave of defaults caused by valuing openness to diversity of ever-lower and more fraudulent credit extensions. The non-diverse have to pay mortgage insurance, the diversity doesn't. Often they need not give valid ID to obtain hundreds of thousands in mortgage credit to buy, or squat in, a property. That problem remains unsolved, and to solve it requires restricting eligibility for mortgages, at the same time that the public desire is to get a larger share of the population into mortgages. The only way to do that now is to recruit teenagers into mortgages, as was done in Oklahoma in the heyday of the Penn Square beer-out-of-a-boot bankers. Beyond that market would be negative down payments.
Added 9-26-08 from Saturday, September 20, 2008

Forcing Openness To Diversity Can Bring Down The High & Mighty
As this quote explains:"Freddie Mac warned of the logical pitfalls of pursuing loans on the basis of skin color and not credit history.The Washington Post reported that the company conducted a study in which it was found that far more black people have bad credit than white people, even when both have the same incomes. In fact, the study showed a higher percentage of African Americans with incomes of $65,000 to $75,000 had bad credit than white Americans with incomes of below $25,000.Such data demonstrated that when federal regulators demanded parity between racial groups in lending, the only way to achieve a quota would be to begin making intentionally bad lending decisions.The study, however, came under brutal attack in the U.S. Congress and was ridiculed with charges of racism."This quotation was found on VFR, where one may find MORE…Sailer's article on The Diversity Recession gives indispensable background: … [Read More]Oddly enough, here one finds that following the money trail, leads on toward losses, even the bankruptcy of some of the most elite firms. One does find, though, that the basic elements associated with contemporary (race-exploiting) power-greed are very much to the forefront.Politicians bully the money-men, crying racism, and those power-seekers gain power, even rising from obscurity like Obama, to the Democratic presidential nomination.The smearing approach is conspicuously used, where opponents are expected to prove that they have motivations other than racial hatred against disadvantaged minorities. The only answer to this, is to keep pointing out that there is no rational argument for officials to have more power to racially redistribute or any domestic reason, that is why they have only the smearing approach of: prove you're not racist, or give us what we want. The issues are chosen so as to facilitate such an approach, and even when they'rre not deliberately so chosen, an effect like natural selection occurs, such that headway is made when the issue and the method are related as above.If valuing openness to diversity created value all by itself, these officials would not have been able to bankrupt or force the mergers of eminent financial institutions. Heads they win power, tails you lose money and freedom-from-aggression. It's a ratchet, and it's a racket, and it's non-profit, but highly favorable to the accumulation of power.At or under this link or search term---YouTube - Explosive Video, Fannie Mae CEO calling Obama and the ... Dems the "Family" and "Conscience" of Fannie Mae---may be found on Youtube a reference for that claim as to Obama being drawn up on the vortex of politically extracting minority mortgages. This was filched from the formidable GC of GNXP.And for those who delight in following the Benjamins, here's a blaze on one relevant trail of bright breadcrumbs...[FROM]...Bear Stearns... Fannie M... Freddie M... Lehman ... AIG
[To] McCain- $88,050... $6,550... $9,100... $117,500... $36,875
[To] Obama- $570,614... $137,950... $68,750... $370,524... $75,899[paraphrased from this of Pamela Geller's]
Added 9-26-08 from: Wednesday, September 24, 2008

Has the Anti-Discrimination Society Hit Its Final Brick Wall On Wall Street...
or will the patchings hold well enough to let business go back to politics as usual? One point to notice is that the society that prides itself on its enforcement of anti-discrimination, has no possibilities other than to go a-begging, to those that do not pretend to believe in the equality and brotherhood of all mankind, much less try to force such notions on the unwilling by state aggression. Maybe it's not this bad, but what if it is: Anti-discrimination and beggary! Not only is trying to turn us into the U.S. of anti-caucasianism immoral, it is starting to show its long-term impracticality as well.Some more flabbergasting aspects of the subprime fallout are in this article


Anonymous said...


I have a friend that is a loan officer. I'll call him "M".

M has told me that there has been a reform in the "Liar Loan" practice.
M told me that on certain loans the borrower only had to "state" his income, but not confirm it with a W-2 or even a bank statement.

You can see where this leads. If I wanted a loan for 300K, but only had an income that would allow me to buy a home of 150K, I could simply "lie" and say I made twice as much money, get in on an ARM loan, and count on myself to make more money once my taco stand (or whatever) really took off.

In some cases, according M, "home-flippers" look to buy expensive homes with ARM's, and sell them for profit in two years time when the ARM usually starts going way up. IN THIS WAY, THE BORROWER GETS TO LIVE IN A BIG FINE HOME EVERY TWO YEARS----while writing off the interest. If the market goes down and the home is worth LESS in two years, he still owes money---and probably cant make the higher adjustible rate mortgage note. He will usually default.

My friend has also told me of peope WHO ACTUALLY WANT zero-principal loans of the longest possible terms. They write off the interest, invest their extra money on Wall Street, and figure they will be rich in 20 years. I call it gambling. In a bad real estate market, these people can be caught upside down on a home they have no equity whatsoever in. What if their investments dont pan out very well? They are screwed and own no more of the home in five or six years than when they bought the place.

He also related that there are now 40 year terms on large-house loans. Some of these houses are built so shabbily, even though large, out of tree-farmed wood (*tree farmed wood is not very good, I'll get to that in a sec), that they will have aged badly by the time they are paid-off decades from now. Many houses really are poorly built now, out of the cheapest materials available, "slapped up" as quickly as possible. The long term allows the borrower to get in a house he cannot currently afford. Its great if things pan out for him, but if they dont, he hardly owns ANY of it even 20 years down the line. All that interest paid----for nothing.

I could not believe it when M revealed some of these things to me. I had no idea that there were people who "flipped" houses for money, or "flipped ARM loans" so they could live in large houses they couldn't otherwise afford continually. Would you want the stress in your life of beginning to look for a new house every 18 months? Man! me either!

The "liar loan" also had a specific sup-type loan known in the biz as the "drug dealer" loan. If you had a third down, you had to provide basically NOTHING to he lender. If you had 100K in cash, they'd loan you the other 200K for your house, no questions asked.

I did not know that illegals were getting around PMI, which just about everyone has to pay on their first house unless they have a really large down payment. Im no longer paying mine, but then again I own about 80% of my house, and could pay it off if I wanted to (and I might just do that).

*On tree farmed wood. I was dissapointed to hear this, but M has told me that the wood used in a great deal of construction now comes from trees that have been given "miracle-grow"-type growth stimulants. The problem is that the wood's grain is much more spread out and the wood has less of the protective oils therein. The weaker, sparser grains makes for wood that is more susceptible to mold, is weaker, and is much more likely to bow, etc. Its just not as good. M told me that driving a nail through this wood can be done with just two or three whacks with a hammer-----as opposed to naturally grown wood where you pop the nail another swing or two. We have entire subdivisions made of tree-farmed-growth-stimulated lumber and particle board. This stuff isn't as good as the homes in the seventies were built out of.

Post scriptum:
I really think you have hit on the base reason of this current financial situation. If our economy goes south, what are we going to do if a great many of these house-holding Mexicans just pack up and head back to Mexico----not repaying their loans to our banks? It would be a big dip in the price of these houses, and the Mortgage sellers would be even more in the hole than before. Some of these homes were bought by one guy who was counting on renting rooms out to friends and family----if they all left one can consider what an economic mess it will entail. Getting the population in houses and out of renting is a way to reduce crime, and I understand politicians impetus in wanting the citizenry to be "invested" in the nation in this way, but in a roundabout way the average Joe is going to be paying for these borrowers and the millionaire lenders in this situation through his money being cheapened with inflation and higher taxes at some point to pay for all this. Yet again, America screws the average guy and gal----its real backbone.


John S. Bolton said...

Thanks for the information Miles, there's a huge amount of mischief going on due to the political wish to get more of a demand for houses, and the bad part is that it's popular. Maybe I should look at whether Ike crushed a lot of 90's houses. In a few years, though, you have almost no end of 100-year old natural second-growth to cut down. I see the crucial breakdown as having ocurred with the allowance of phony ID users, such as the matricula consular, to get mortgages. Once you scrape that hard down on the bottom of the barrel, you make a hole that has to be fixed. The fixing procedure means that you go through a period when standards are getting a little tighter, and the low-end prices must suffer for a while. Unless, of course, you can get teens into home mortgages, like what I was saying. There aren't any good solutions that will give immediate relief. Whatever they do, the net taxpayer is taking a hit.

Miss Carnivorous said...

Still, the sellers made a lot of money. Here in the San Francisco Bay Area, upper middle class liberals sold craftsman bungalows, which they paid $20,000 for in the 70's, for upwards of $800,000. Nowhere is anyone asking the well off liberals to give money back to buyers they grossly overcharged for property.

I often take down my liberals co-workers, I don't call them friends, by telling them that although they play lip service to "affordable housing" they would never sell their $20,000 houses to a low or moderate income family, for say, $300,000.

"No, they laugh, I wouldn't do that. Everybody wants to make as much money as they can. said...

The system is cruel, not me. It's fun to be liberal with other people's money.