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Originally Posted by forrestlayne  I always wondered WHY banks would write these loans.. once again it is "big" government. Banks have to follow the rules from the government and the Fed. THE REAL SCANDAL
(Congress) "A 1995 strengthening of the Community Reinvestment Act required banks to find ways to provide mortgages to their poorer communities."
"PERHAPS the greatest scandal of the mortgage crisis is that it is a direct result of an intentional loosening of underwriting standards - done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults.
At the crisis' core are loans that were made with virtually nonexistent underwriting standards - no verification of income or assets; little consideration of the applicant's ability to make payments; no down payment"
"From the current hand-wringing, you'd think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and "progressive" political forces. |
What you quote above is entirely false. The standards under the Community Reinvestment Act are quite rigid. Applicants must have the ability to repay. They can have had some credit problems but they would have to have been cleareds. There are absolutely no fees allowed, not even real estate commissions. This program involves is sponsored by the larger banks and might comprise 1/10 th. of 1% of their mortgage lending.
Banks did come up with the loose underwriting standards all on their own. It has absolutely nothing to do with government. Your assertions are absurd.