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Old 08-07-2013, 11:42 AM   #1
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Obama Calls For Eased Restrictions on Home Mortages : Bubble Here We Come!!!

http://dailycaller.com/2013/08/06/ob...gage-policies/

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President Barack Obama today urged a revival of two devastating mortgage policies that helped inflate the real estate bubble before the economic crash of 2008.

“Let’s make it easier for qualified buyers to buy homes they can,” he said in a campaign-style speech in Phoenix, Arizona, today.

“We should simplify overlapping regulations and cut red tape for responsible families who want to get a mortgage, but who keep getting rejected by banks,” he said, echoing President George W. Bush’s support in 2002 for lower lending standards.

Obama, like Bush, also urged greater immigration. Conceding that this totally unrelated item from his laundry list was “something you don’t always hear about when it comes to the housing market,” the president claimed an influx of new and in many cases low-skill immigrants will spur home buying and house prices.


“It’s pretty simple: when more people buy homes, and play by the rules, home values go up for everybody,” he told a cheering audience of local Democratic activists. “The Senate has already passed a bipartisan immigration bill that’s got the support of CEOs, labor, and law enforcement… let’s get this done.”

This time around, Obama insisted, massive government interference in the private real estate market would not produce the catastrophe Americans endured in the last decade.


“I hope everybody here learned some hard lessons from what happened… It was kind of crazy,” Obama told his Phoenix audience. “So what we want to do is something stable and steady,” he said.

Obama’s proposal to stimulate the real estate sector echoes Bush’s call in 2002 to spur home-buying by immigrants and African-Americans.

“When we meet this project, this goal… we will have added an additional $256 billion to the economy by encouraging 5.5 million new home owners in America… [and] the additional demand will be upwards of $256 billion,” said Bush, at a 2002 event at George Washington University.

“A lot of folks can’t make a down payment,” Bush said at the time. “They may be qualified. They may desire to buy a home, but they don’t have the money to make a down payment… One way to address that is to have the federal government participate,” he said.

Through 2006, increasing federal guarantees of debt, combined with higher-risk lending policies established by President Bill Clinton, drove up personal debt rates and created a real-estate bubble. When real estate demand cooled in mid-2006, overextended borrowers began defaulting at record rates, demolishing the thriving market for debt and wiping out at least $17 trillion in household net worth, according to the Federal Reserve.

The bubble was strongest in southern and western states with many low-wage immigrants, such as California and Nevada. Between 2000 and 2010, immigrants accounted for almost 40 percent of new homeowners nationwide, said White House statement Tuesday.

The 2007 crash took down much of Wall Street, roughly halved the median wealth of Hispanic and African-American households, helped Obama win election in 2008, and has boosted unemployment to a new highs. Since then, wages have also fallen steadily, making it more difficult for many people to buy homes.


Obama played a minor role in the Bush-era bubble. While working as a lawyer and state Senator in Chicago, he encouraged African-Americans to get mortgages, even if they had little income and bad credit ratings. A 2012 investigation by the Daily Caller showed that half of his clients foreclosed or declared bankruptcy.

Since 2008, agencies have rolled back some of the Clinton and Bush rules. For example, home buyers must now show banks they have some savings and a good credit-record before they can get a federally-backed mortgage.

However, Obama’s regulators are now pushing banks to make more loans to people with poor credit scores.

In a set of talking points sent to reporters prior to the speech, Obama’s staff suggested that people with credit scores as low as 620 should get loans.

“There are still millions of families with strong enough credit profiles to qualify for a mortgage but who are nonetheless being denied loans… [and] lending to borrowers with credit scores between 620-680 declined by roughly 90%,” said the statement.

“For many of these borrowers, they are denied a loan because lenders are unclear of the rules of the road for lending and are protecting themselves by only lending to those with the most pristine credit,’ said the talking points.

The president’s comments fly in the face of all accepted lending practices and abundant data showing the chances of default consistently rise as borrowers’ FICO scores decline.

“People with very low scores have very high delinquency rates,” said Glenn B. Canner, a co-author of a 2007 report to Congress by the Federal Reserve on credit-scores and foreclosures.

A credit score of “680 is an OK risk, but not great…. [at] 620 is where you start getting into risk populations,” Canner told The Daily Caller.

The evidence is “pretty unambiguous,” Robert Avery, another economist at the Federal Reserve, told TheDC. “The higher the score, the fewer delinquencies,” he said.

Obama’s Phoenix speech is part of a series of “cornerstone speeches” in which he blames the GOP-led Congress for the stalled economy.

Obama was inaugurated in 2009, but the nation still hasn’t regained the jobs lost during 2008 and 2009. Job creation under the Obama administration is the worst the United States has experienced since at least the end of World War II.

The speeches are intended to shape public attitudes prior to the fall budget debates and the 2014 election, when Obama is expected to urged voters to punish Republicans for stymying economic growth.

“If we follow the strategy I am laying out for our entire economy: for jobs, housing, education, healthcare, retirement, and climbing the ladders of opportunity, then I have no doubt we will secure that better bargain where hard work is once again rewarded with a shot at a middle-class life,” he claimed.

Even as he promised a greater role for government in the real-estate sector, he ridiculed critics for saying he wants a greater role in the nation’s real-estate sector.

“I know that must sound confusing to the folks who call me a socialist… [but] I believe … our housing system must have a limited government role,” he said.


He also suggested that the Bush-era bubble was caused by the two government-backed private companies, Fannie Mae and Freddie Mac.

“We’re ending those days, we’re not going to do that any more,” he insisted.

In fact, Fannie Mae and Freddie Mac have an even larger role in the mortgage market today and guarantee more mortgages than they did during the Bush administration.
Mayyyybe I'm crazy, but I see a whole lot of self-contradiction these days from the President. We need less government.. but more government involvement. We need to not make loans to those with poor credit, but we do. Immigrant and black home ownership was a disproportionately large portion fo the housing bubble.. but we need to ensure those individuals can now buy homes.

At what point is the nanny state over-extending its usefulness? I know many will see decreased lending restrictions as a good thing.. but when it completely mirrors the very mistakes that caused the collapse of 2007/2008, are you not worried? Then again, I suppose further government involvement that leads to greater levels of unemployment, homelessness, and food stamps can only bolster support for the very party that wishes to extend those benefits beyond their current levels.
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Old 08-07-2013, 11:48 AM   #2
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If you don't have the down payment, you aren't qualified!
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Old 08-07-2013, 11:58 AM   #3
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^This.
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Old 08-07-2013, 12:05 PM   #4
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If the bubble pops, I win. If the bubble grows, I win. Let Obama do whatever he wants, I say.
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Old 08-07-2013, 12:29 PM   #5
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"Everyone should be able to own a house." Bill Clinton

Most destructive statement in the last 50 years. Good thing Obama learned from that mistake.
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Old 08-07-2013, 12:54 PM   #6
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"Everyone should be able to own a house." Bill Clinton
Everyone should be able to own a house. Not everyone will be able to without hard work and fiscal responsibility. It's not like he said they must.
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Old 08-07-2013, 01:30 PM   #7
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Lmao....
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Old 08-07-2013, 01:34 PM   #8
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Why don't we give a home to all the soldiers we have in other countries?
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Old 08-07-2013, 02:06 PM   #9
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Why don't we give a home to all the soldiers we have in other countries?
That would create a ton of jobs. Actually, why don't we build a home for EVERYONE.. EVERYWHERE! Think of all those jobs!
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Old 08-07-2013, 02:24 PM   #10
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Obama Calls For Eased Restrictions on Home Mortages : Bubble Here We Come!!!

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Originally Posted by Carskibum View Post
"Everyone should be able to own a house." Bill Clinton

Most destructive statement in the last 50 years. Good thing Obama learned from that mistake.
I guess you never heard of this little thing called the Vietnam War.


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Old 08-07-2013, 02:44 PM   #11
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If you don't have the down payment, you aren't qualified!
I did just fine with my zero down loan in 2007 when I purchased my first home. As a younger person that's recently acquired a career and is starting a family and wanting to place roots, it's difficult coming up with the down payment currently necessary for a modestly priced home.

I now have enough equity in my current home that it's serving as my 10% down for a conventional loan on our new house that we're closing on in less than a month. I'm over thirty, married with a kid and making over six figures with an 800+ credit score and only just now have been able to acquire enough cash to come up with a down payment we are happy with to purchase the home we wanted.

There are plenty of other factors that go into credit worthiness than down payment alone. This thought process is why the recovery is taking as long as it's taking.

The bubble burst largely in part to ARMs. Down payments and lack of equity simply resulted in the banks losing more money as the LTVs were proportionately higher. The Down payment or lack thereof didn't dictate whether or not someone could afford their monthly mortgage when the ARMs killed people's ability to pay.
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Old 08-07-2013, 02:52 PM   #12
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I guess you never heard of this little thing called the Vietnam War.
Let's put it this way... even his Dad was probably too young at the time to have been drafted. If you catch my drift.




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Old 08-07-2013, 03:30 PM   #13
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"Everyone should be able to own a house." Bill Clinton

Most destructive statement in the last 50 years. Good thing Obama learned from that mistake.


Nobody was missing a house payment when Clinton was in office.

The real damage occurred after Dubya's idiotic American Dream Downpayment Assistance Act that was passed in '03.

Dubya didn't just ease restriction on mortgages - he gave away down payments to people who had no business buying a house.
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Old 08-07-2013, 03:37 PM   #14
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Nobody was missing a house payment when Clinton was in office.

The real damage occurred after Dubya's idiotic American Dream Downpayment Assistance Act that was passed in '03.

Dubya didn't just ease restriction on mortgages - he gave away down payments to people who had no business buying a house.
Not to mention the it was the debt-swaps of mortgage securities that led to the financial meltdown. All of which happened under Bush's watch.


There is a clear correlation between Republicans and destroying this country. It's statistics. You cannot argue otherwise, it would be illogical, dare I say... childish.
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Old 08-07-2013, 03:39 PM   #15
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Translating for the OP: People who don't look like me don't deserve to own an home.
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Old 08-07-2013, 03:43 PM   #16
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Translating for the OP: People who don't look like me don't deserve to own an home.
But he does feel strongly that they deserve to live in gated communities.














































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Old 08-07-2013, 03:49 PM   #17
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what goes up must come down

economics 101? bubble 101?
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Old 08-07-2013, 03:55 PM   #18
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Translating for the OP: People who don't look like me don't deserve to own an home.
what is wrong with you?
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Old 08-07-2013, 03:57 PM   #19
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But he does feel strongly that they deserve to live in gated communities.
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Old 08-07-2013, 04:08 PM   #20
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Translating for the OP: People who don't look like me don't deserve to own an home.
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Originally Posted by casino is no lie View Post
But he does feel strongly that they deserve to live in gated communities.

There's no place like home.
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