Archive for Housing Market

Nice Bank Ya Got There

Shame if somethin’ happened to it:

Extortion: Radical Democrat activist groups stand to collect millions from Attorney General Eric Holder’s record $17 billion deal to settle alleged mortgage abuse charges against Bank of America.

Buried in the fine print of the deal, which includes $7 billion in soft-dollar consumer relief, are a raft of political payoffs to Obama constituency groups. In effect, the government has ordered the nation’s largest bank to create a massive slush fund for Democrat special interests.

If there are leftover funds in four years, the settlement stipulates the money will go to Interest on Lawyers’ Trust Account (IOLTA), which provides legal aid for the poor and supports left-wing causes, and NeighborWorks of America, which provides affordable housing and funds a national network of left-wing community organizers operating in the mold of Acorn.

In fact, in 2008 and 2009, NeighborWorks awarded a whopping $25 million to Acorn Housing.

According to the list provided by Justice, those groups include come of the most radical bank shakedown organizations in the country, including:

• La Raza, which pressures banks to expand their credit box to qualify more low-income Latino immigrants for home loans;

• National Community Reinvestment Coalition, Washington’s most aggressive lobbyist for the disastrous Community Reinvestment Act;

• Neighborhood Assistance Corporation of America, whose director calls himself a “bank terrorist;”

• Operation Hope, a South Central Los Angeles group that’s pressuring banks to make “dignity mortgages” for deadbeats.

Worse, one group eligible for BofA slush funds is a spin-off of Acorn Housing’s branch in New York.

He’s written back-door funding for Democrat groups into other major bank deals he’s brokered, including the $13 billion JPMorgan Chase settlement and the $7 billion Citibank deal. They stand to reap millions more from those deals.

I never really understood the concept of “predatory lending” anyway. It implies—heck, it all but shouts—that the recipients were too stupid to understand the terms of their loans. You wouldn’t catch me claiming that.

But also the banks were all but ordered to increase mortgage loans to “marginal” neighborhoods: no more “red-lining”. How is it a scandal (let alone a surprise) that many people who wouldn’t have qualified for a loan under typical terms failed to keep up with a mortgage practically gifted to them?

I do see a conflict if the government both requires loans to unqualified borrowers and guarantees the loans if the borrowers default. That’s just free money for the banks, who can lend with abandon, without regard to financials, knowing someone will pay them. But that’s at least as much the fault of government as it is of the banks. Capitalism works if there’s a possibility of profit and a threat of loss. Tilting the balance for political ends was bound to end badly. And it did.

But the Left always lands on its feet—thanks to someone else’s parachute. And money.

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Who Betrayed the Obamabots?

They tweet, they Skype, they text (heck, they even sext)—but they don’t own a home.

Just 36% of Americans under the age of 35 own a home, according to the Census Bureau. That’s down from 42% in 2007 and the lowest level since 1982, when the agency began tracking homeownership by age.

It’s not all their fault.

They want a home, they say, but…

But student loan debt, tight lending standards and stiff competition have made it next to impossible for many of these younger Americans to make the leap.

“When we surveyed Millennials they cited several barriers to homeownership, especially access to financing,” said Steve Deggendorf, a senior director for Fannie Mae.

Many Millennials simply can’t come up with the hefty 20% down payments. Others don’t have good enough credit to qualify for loans.

Student loan debt is one barrier. That sounds like they have themselves to blame (same goes for bad credit). No one forces those loans on you. There are cheaper education options that leave you ready to start your career with little or no debt to drag you down or force you into a job you hate. But no, the allure of a fancy degree that leaves you unemployable and a bad credit risk was too much. That makes for two left-wing institutions—academia and Millennials themselves—responsible for their “homelessness”.

How about the economy, the economy almost five full years into “recovery”? The economy that can’t create well-paying, full-time jobs? The economy that leaves graduates and post-graduates asking if you want your double decaf with cream, milk, low-fat, or skim? The economy from which more people are retiring and going on disability than are finding work? Recovery Summer is a concept so old it’s new again, like sideburns and bell-bottoms. (If only the GDP hadn’t shrunk last quarter.)

The facts of life are conservative, my hipster, metrosexual, pajama-clad friends, just like home-ownership. You can’t expect to live in a tent in an Occupy encampment one week and buy a center-entry Colonial the next. You can’t be the ones you were waiting for and expect anyone to open the door for you when you get there. You can’t build a life or a home on the foundation of Hope and Change.

By the way, the rent is overdue.

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Say, How ‘Bout That Housing Market?

What about it?

While housing markets across the country are recovering from the deepest throes of the foreclosure crisis, others are just stumbling into it — and they aren’t exactly the places you’d expect.

States like Maryland, Oregon and New Jersey, which maintained relatively stable markets after the housing bubble popped, saw new foreclosure filings climb by double- and triple-digit percentages in July, according to RealtyTrac.

In Maryland, for example, new foreclosure filings skyrocketed 275% compared with a year earlier. When it came to overall foreclosure activity, including default notices, scheduled auctions and bank repossessions, the state had the second highest foreclosure rate in the nation, after default-riddled Florida.

Oregon saw new foreclosure filings surge 137% and New Jersey’s foreclosure starts spiked 89% year-over-year.

So what gives? In many of these cases, early government intervention aimed at helping these markets is now coming back to haunt them, says Daren Blomquist, RealtyTrac’s spokesman.

“Foreclosures are continuing to boil over in a select group of markets where state legislation and court rulings kept a lid on foreclosure activity during the worst of the housing crisis,” he said.

I’m sorry, I just need to repeat that. I enjoyed it so much:

In many of these cases, early government intervention aimed at helping these markets is now coming back to haunt them, says Daren Blomquist, RealtyTrac’s spokesman.

“Foreclosures are continuing to boil over in a select group of markets where state legislation and court rulings kept a lid on foreclosure activity during the worst of the housing crisis,” he said.

After the housing bubble popped, Virginia’s government didn’t try to stop many of the defaulting loans from working their way through foreclosure process. While the hit was painful at first — by the end of 2008, the state had the 10th highest foreclosure rate in the nation — the market has gotten back on its feet more quickly.

Meanwhile in Maryland, an aggressive effort by the state to make sure all foreclosures were handled properly during the housing crisis saved a lot of people’s homes but it also postponed a lot of inevitable foreclosures, according to Blomquist. Now the banks are catching up.

Hey Maryland, Virginia taunts, how’s my a** taste? Hahahahahaha!!!!

This reminds me of Cash for Clunkers—only we’ll call this Shacks for S**theads. The Obama regime thought it could jump-start the car market, which it did, for a couple of months. When everybody had swapped their jalopies for new SUVs (and depleted the used car market of most of its stock, therby hurting students and the poor), the market predictably slumped to far below normal. Who buys a new car on their own dime when Obama strews cars—and cellphones and cash— like candy?

You can only delay market forces; you can’t deny them.

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Movin’ On Up

Nice neighborhood ya got here, shame if something happened to it:

President Obama appears set to move boldly beyond prosecuting discriminatory housing practices into an entirely new arena: holding state and local official responsible for integrating areas that don’t, in the eyes of the administration, have enough minorities.

Get ready folks. We’re moving from a society based on equal opportunity for all to one requiring equal results for all. And you think I’m overdoing when I say Obama is prodding us toward Socialism?

Nothing wrong with integrated neighborhoods—I loved The Jeffersons—but by force?

By extortion?

A new interactive database will help regulators, local housing officials and individuals take action on a newly proposed regulation that would require agencies to “affirmatively further” the inclusion of minority residents in white neighborhoods.

Housing and Urban Development Secretary Shaun Donovan announced the database and regulation at last week’s NAACP convention, saying the Obama administration was battling “a quieter form of discrimination” that was “just as harmful” as long-outlawed segregationist practices, like racially restrictive property covenants.

The problem now, Donovan said, is that prospective minority buyers are not being encouraged to move into predominantly white neighborhoods with top-notch schools, government services and amenities like grocery stories, etc.

The goal here then is to continue to prosecute at a high rate incidences deemed proactively segregationist – Donovan touted 25,000 individuals in the past 3 years being paid damages under cases reported to the agency or independently investigated by HUD – but to add in a mandate for diversifying neighborhoods.

The old way was to punish exclusion. The new way is to punish lack of inclusion.

The punishment is also different. Rather than fines and prosecutions for those who sought to keep minorities out, the new penalty would be a withholding of federal funds from local and state government agencies dependent on HUD grants if they fail to push greater diversity. The way those agencies interact with developers, realtors, homeowners associations and others would need to reflect the federal push for diversity.

To pursue the Jefferson analogy, if George and Weezey had moved to, say, Washington Heights (a “diverse” neighborhood with lovely old buildings and sought-after apartments), rather than the “de-luxe apartment in the sky” of the East Side of Manhattan, could New York City be docked federal dollars for not enforcing integration of a predominantly white neighborhood? Sounds like it.

How would this work? Exactly how do you “’affirmatively further’ the inclusion of minority residents in white neighborhoods”? Aren’t they free to buy the houses they want? (If they’re not, then absolutely enforce the law with fines and prosecutions.)

Isn’t it rather that many minorities can’t afford “predominantly white neighborhoods with top-notch schools”—as indeed can’t many whites? And some other minorities who can afford them choose not to? How do you identify “lack of inclusion”? And how is “living while white” a crime punishable by government seizure of funds?

Why do I suspect, if this decree stands, that state and local government will be leaning on private sellers and developers to offer price discounts to minority buyers?

And why would that not be deemed racist?

During the sale, scheduled from 10 a.m. to 2 p.m., baked goods were sold to white men for $2, Asian men for $1.50, Latino men for $1, black men for 75 cents and Native American men for 25 cents. All women received 25 cents off those prices.

“We agree that the event is inherently racist, but that is the point,” Lewis wrote in response to upheaval over the bake sale. “It is no more racist than giving an individual an advantage in college admissions based solely on their race (or) gender.”

Or in buying a house.

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Blacks, Hispanics Buy Houses; Blacks, Hispanics Hardest Hit

If you’re not a die-hard conservative after reading this story, you’re either brain dead or, worse, a liberal for life:

Banks’ unfair treatment of African-Americans and Hispanics did not cause the housing bubble that that crashed the economy in 2007, a new economic study found.

Claims of racism are undercut because “black and Hispanic homeowners had much higher rates of delinquency and default in the downturn,” even when they had similar credit scores, according to the 41-page study titled “The Vulnerability of Minority Homeowners in the Housing Boom and Bust.”

“Our findings [...] raise serious concerns about [government policies that boost] homeownership as a mechanism for reducing racial disparities in wealth,” said the report, which was authored by three university professors.

Let’s pause for a word from our lawyers: BTL.com is an inclusive, diverse website that does not discriminate on the basis of race, creed, sex, or IQ score. (There are no stupid people, just stupid comments.)

With that mutually understood, may we look at the facts?

The housing bubble was inflated by federal policies created during President Bill Clinton, then expanded by President George W. Bush. The policies were supported by Senator and then President Barack Obama.

The policies were intended to help low-skilled Americans — especially African-Americans — and Hispanic immigrants gain housing wealth by pushing down credit-related mortgage requirements.

But the government policy had the reverse effect, when the housing collapse after 2007 eliminated much of the wealth held by African-Americans and Hispanics.

Since the 2007 crash, Obama and his Democrats allies have argued the crash was caused by greedy bankers’ unfair and illegal treatment of African-Americans and Hispanic borrowers.

The new report about the housing-bubble was published by the National Bureau of Economic Research, by authors Patrick Bayer, Fernando Ferreira and Stephen Ross.

“More than 1 in 10 black and Hispanic homeowners in our sample had a delinquent mortgage by 2009, compared to 1 in 25 for white households, and a similar pattern held for foreclosure rates,” said the report.

However, “racial and ethnic differences in foreclosure are tiny for homes that were originally purchased from 1998 to 2003 [when the bubble remains small], but substantial for homeowners who originally purchased their homes between 2004 and 2007,” the report said.

“These results call into question the [government policy] of encouraging homeownership as a general mechanism for reducing racial disparities in wealth… [because] such a push may backfire, leaving vulnerable households in a difficult financial situation and adversely affecting their wealth and credit-worthiness for years,” the report concluded.

I don’t say that blacks and Hispanics are necessarily deadbeats at a higher rate than whites—from 1998 to 2003 they weren’t. But government intervention—during George W. Bush’s administration—made them so.

The facts of life are conservative, Margaret Thatcher sagely observed. The sooner the rest of us learn that, if ever, the better off we’ll be. At this point, I don’t think there’s a choice: it’s survival under conservatism, or crash and chaos under liberalism.

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Is the Economy Itself Racist?

Or indeed economics?

The wealth gap between blacks and whites has nearly tripled over the past 25 years, due largely to inequality in home ownership, income, education and inheritances, according to a new study by Brandeis University.

That type of inequality can be a drag on economic growth for everyone, said Thomas Shapiro, director of the university’s Institute on Assets and Social Policy, which conducted the research.

The difference in wealth between typical households in each racial group ballooned to $236,500 in 2009, up from $85,000 in 1984, according to the study, released Wednesday. By 2009, the median net worth of white families was $265,000, while blacks had only $28,500.

Brandeis researchers looked at the same set of 1,700 families over the 25-year period to see how their actual work and school experiences affected their wealth accumulation.

What they found is that home ownership is driving the growing gap. Price appreciation is more limited in non-white neighborhoods, making it harder for blacks to build equity. Also, because whites are more likely to have family financial assistance for down payments, they are able to buy homes an average of eight years earlier than black families and to put down larger upfront payments that lower interest rates and mortgage costs.

If home-ownership is the greatest driver of white wealth, doesn’t that mean the collapse of the housing market fell disproportionately on people of pallor? Doesn’t the end point of this study—2009—miss the crash almost entirely? In fact, wasn’t it the whole push into subprime mortgages and other outreaches to minority home ownership that helped inflate the housing bubble? Only to see those homes almost immediately lose a great deal of their value?

Don’t you think most of those poor people are saying “[bleep] equity, I want my money back”?

There’s no evidence of insidious motives here. It boils down to the long-established truth that you need money to make money. The authors of the study picked a period of time (1984-2009) when housing prices grew dramatically. It’s no wonder they came to their conclusions. But as the last four years have proven, past performance is no guarantee of future returns.

The same holds true here:

When it comes to education, black graduates are often more saddled with college loans, making it harder for them to start socking away savings than their white peers. Four in five black students graduate with debt, compared to 64% of whites.

As with a home title, a college degree is no longer worth the paper it’s written on. Also not exactly a secret.

“Our economy cannot sustain its growth in the face of this type of extreme wealth inequality,” he said.

His own study disproves that assertion. The economy has been doing just fine over the past 25 years. Without do-gooding interventions in the housing market—and without Obama’s punitive economic policies—it might still be.

The best thing for minority families is the best thing for all families. Save money, limit debt, work hard, take advantage without taking undo risk.

“The racial wealth gap is the civil rights agenda for the 21st century.”

Oh stop. It is not. Who says there needs to be a “civil rights agenda” at all? The civil rights laws were passed almost 50 years ago. Let’s celebrate them, not reenact them.

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The Shape We’re In

It’s one thing to make seriously bad policy and get into an economic tar pit as a result. Anyone can do that.

But it takes a special type (of Marxist) to keep doing it:

In a complaint filed Wednesday and settled the same day, Justice claimed that California-based Luther Burbank Savings violated the 1968 Fair Housing Act and 1974 Equal Credit Opportunity Act by setting a policy that had a “disparate impact” on minorities. Between 2006 and mid-2011, 5.2% of Luther’s single-family residential mortgage loans went to African-Americans and Hispanics, compared to an average of 41.7% for other lenders in the area. The complaint doesn’t cite evidence of intentional discrimination because there wasn’t any.

Luther Burbank wasn’t a fly-by-night operator that marketed those loans to any and all. The bank insisted on a minimum $400,000 loan amount and made loans with an average 680 FICO score and 67% loan-to-value. Over the period that Justice examined, Luther Burbank foreclosed on a mere 11 borrowers out of 629 loans outstanding—a loss ratio of 1.75%. In a normal world, Luther Burbank would get a medal from regulators for its risk management, having chosen borrowers even at the height of the housing mania who could meet their monthly payments.

But Assistant Attorney General for Civil Rights Thomas Perez has a different priority: He wants banks to meet lending quotas to minorities—regardless of whether those borrowers can afford the loans. Many minority borrowers have low incomes that make them riskier lending bets. Is that a bank’s fault?

Luther Burbank admitted no guilt and said it settled to avoid costly litigation, which makes sense for a small, local lender that has to worry about its reputational risk. The bank has agreed to rachet down its minimum loan to $20,000 and will now commit $2.2 million to a “special financing program” for “qualified borrowers,” payouts for local community groups, and “consumer education programs.” Justice has the final say on who gets that money.

Doesn’t that sound like the mob? The bank has to make loans to favored constituencies at favorable rates, and the mob (Obama’s justice department) smiles with approval. They pocket their take in the form of votes and campaign contributions.

And when the deals go sour? The taxpayers (and other home owners) pay off. Obama calls it “spreading the wealth”.

When banks did this voluntarily, they were branded as “predatory” lenders. When they didn’t, Justice moved in.

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Dribbling Over Obama

What is it I always say about the mainstream media?

Exactly one month ago, the Washington Post published a 5,400 word front page hit piece on Republican presidential candidate Mitt Romney’s high school years which included a now infamous hair-cutting incident.

On Sunday, the Post devoted 5,500 words, beginning on the front page of the sports section, to an excerpt of David Maraniss’s new book with the headline “President Obama’s Love for Basketball Can be Traced Back to His High School Team”.

Doesn’t matter what I say, as it wouldn’t be printable anyway.

It matters what they DON’T say:

Reporters have aggressively sought more information from Romney about his business record, but there is no sign that a single reporter has ever asked Obama about his role in Chicago’s housing disaster.

The closest Obama has ever come to admitting his role in the scandal came in a September 2007 speech to a Wall Street audience.

“Subprime lending started off as a good idea: helping Americans buy homes who couldn’t previously afford to,” he said.

But “as certain lenders and brokers began to see how much money could be made,” he said, “they began to lower their standards. … Most everyone knew that some of these deals were just too good to be true, but all that money flowing in made it tempting to look the other way and ignore the unscrupulous practice of some bad actors.”

Why is it a good idea to entice people to do something they can’t sustain? That sounds like a drug dealer (to employ a metaphor Obama will be familiar with) giving away free samples of crack in order to hook new addicts.

Also, it’s nice of Obama to admit that the subprime fiasco had several “bad actors”: not just the “predatory lenders”, but also the borrowers who knew better, and the Keanu Reeves of bad actors, government policy itself, which put the whole mess in motion.

This is a small excerpt from a much longer piece at the Daily Caller. I encourage you to read more. You won’t learn anything about Obama’s jump shot or crossover dribble, but his political maneuverings are explored in great detail.

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Obamavilles

Un-[bleeping]-believable:

A federal-state program aimed at helping homeowners in states hardest hit by the mortgage crisis is falling far short of its goals, a federal watchdog said in a report released Thursday.

In the report, the Special Inspector General for the Troubled Asset Relief Program (TARP) said that just 3% of $7.6 billion available in the Hardest Hit Housing Markets program — available for 18 states and the District of Columbia — had been tapped as of Dec. 31.

The money has gone to help 30,640 homeowners, or about 7% of the 458,000 homeowners officials estimated would be helped by the end of the program in 2017, according to the watchdog.

More than 75% of the program funds has gone to prop up state unemployment programs that pay mortgages of the unemployed — not efforts such as mortgage modifications or principal reductions that would force banks to take a hit, according to the report.

Christy Romero, the Special Inspector General for the Troubled Asset Relief Program, said the hardest hit fund has largely served to help the unemployed.

“It was supposed to be an innovative program intended to reach the unemployed and underwater homes,” Romero said in an interview with CNNMoney. “It is important to reach the unemployed, but it’s not reaching underwater homes like it was intended.”

Signing TARP into law was one of Bush’s last acts in office. But it’s been Obama’s to run—into the ground.

Other larger TARP-funded housing programs, including the Home Affordable Modification Program, have weathered criticism, especially from the special inspector general, for falling short in its goal of easing the national foreclosure crisis.

This new watchdog report focused on a different, smaller program, the Hardest Hit Housing Markets program. The hardest hit program was targeted to states with the largest numbers of homeowners drowning in negative equity and unemployment.

The money was supposed to give state housing officials incentives to come up with new and different ways to address the housing crisis in their states. But most states just used the money for programs that pay the mortgages, insurance and property taxes of the unemployed.

Rather than try to do anything structural to put homeowners on their feet again, the money is just being used to pay their bills. It’s just another welfare program, a transfer of wealth. Give people money, with no expectations, no plan, just a blank check. Nothing gets better, the market continues to slump—it’s almost like it’s by design.

Heckuva job, Bambi.

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It Wasn’t Expected!

There is some economic good news:

New claims for unemployment benefits fell back to a four-year low last week, a government report showed on Thursday, suggesting further strengthening in the labor market.

COMMENTS:

ANDREW WILKINSON, CHIEF ECONOMIC STRATEGIST, MILLER TABAK & CO, NEW YORK
“In order to see an improvement in payrolls data from admittedly encouraging levels, we estimate that the weekly claims series must head towards the vicinity of 310,000. Last week’s dip to 351,000 was a decent start albeit from a higher base following an upwards revision to 365,000 the prior week. The four-week moving average remains unchanged at 356,000 as the headline reading remains near four-year lows. There was also some comfort from the 81,000 decline in continuing claims. Emergency and extended claimants both declined to support the view that perhaps more people are starting to return to the labor market in the hope that the hunt for work looks brighter.”

CHRISTOPHER LOW, CHIEF ECONOMIST, FTN FINANCIAL, NEW YORK
JOBLESS CLAIMS: “It’s nice to see another decline. It wasn’t expected to be down this much and it puts us right back at the February low, which is good stuff.

Interesting how the number needed to indicate economic health keeps receding the closer we get to it. Back in the dark days, anything below 400k indicated economic robustness, then 375, 350, 325—now we have to have only 310,000 new jobless claims in order to improve joblessness. Certainly 400,000 was a lie—hell, they’re all a lie. If these numbers are a four-year low, and only beginning to indicate job growth, why has unemployment been falling? (I know why—millions of people have given up looking for work.)

But if that’s the good news, what’s the bad news?

It’s hard to imagine life without smart and sleek iPods, iPhones or iPads. But take a step back and consider what corporate America would look like without Apple, and it’s even gloomier.

Apple’s extraordinary popularity and power among consumers have helped the world’s largest company deliver blowout earnings quarter after quarter. And that’s provided a sizeable boost to the S&P 500′s (SPX) overall profit growth.

Fourth-quarter corporate earnings for S&P 500 companies grew about 6%, year over year, according to FactSet Research Systems.

Strip out Apple’s (AAPL, Fortune 500) 116% profit surge, and that growth falls to just 3%. And if you also exclude AIG’s (AIG, Fortune 500) 77% earnings pop, which was driven by a tax-related accounting gain, overall S&P 500 growth gets slashed to a measly 1.2%.

What was already a humble quarter — ending eight straight quarters of double-digit percentage growth — suddenly looks even worse.

Well, yeah, growth is sluggish, tepid, moribund—but it’s still growth, right?

Right?

The number of homes entering foreclosure dropped in February, but a new up-turn may soon be on its way.

The reason? The $26 billion settlement between 5 major banks and state attorneys general over past foreclosure practices.

The agreement clarifies how foreclosures must be handled, and that is expected to enable banks to speed up their processing, putting many new delinquent homeowners into the foreclosure process.

Cases could go forward after sitting in limbo for months — even years — with their delinquent owners squatting on the properties.

“The pig is starting to move through the python,” said Daren Blomquist, director of marketing for RealtyTrac, which released its foreclosure report for February on Thursday.

The pig is starting to move through the python? Seriously? That’s awesome!

How’s that for a reelection campaign slogan, Mr. President?

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So Proud To Be From Massachusetts

Obama’s campaign chair, our very own Governor, is proud of his contribution to the housing bubble

Massachusetts Democratic Gov. Deval Patrick, President Barack Obama’s friend and campaign co-chair, told The Daily Caller that he’s proud of the work he did for Ameriquest as it pumped up the nation’s mortgage bubble.

“I served on the board of the holding company for that company, and it was work that I was asked to do with some of their fair-lending issues, and I’m proud of that work,” said Patrick, who was appointed Feb. 22 by Obama as one of his 2012 campaign’s co-chairs.

Patrick served on the five-member board of Ameriquest’s holding company, ACC Capital Holdings, from 2004 to 2006. This was when the mortgage bubble rapidly inflated under pressure from President George W. Bush, 1990s regulations, numerous Democratic-affiliated housing groups, as well as executives in Fannie Mae and Wall Street companies.

Ameriquest was a leading cause of the bubble, in part, because it began the practice of selling mortgages to people that were deemed by other mortgage companies to be a bad credit risk. For example, the company pioneered the practice of selling mortgages to people without asking for documentation of their income, greatly raising the chance that each loan would go into foreclosure.

In turn, Ameriquest sold the flawed mortgages, dubbed no-doc subprime mortgages, to Fannie Mae and Wall Street, and profited from the processing fees.

The subsequent foreclosure of many risky mortgages dragged down Wall Street and the national economy. Since then, the street unemployment rate has remained well above 10 percent, and the nation’s formal debt has risen by $5 trillion. The median wealth of African-American households fell by 53 percent, according to a 2011 Pew study.

They’re going to vote for him again, guys.

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Nice Bank Ya Got There

Shame if somethin’ happened to it:

Obama Administration officials and various state Attorneys General looked gleeful yesterday announcing a $25 billion settlement with five big tobacco—er, banks—and why not? The bankers coughed up shareholder money to settle a pseudo-foreclosure scandal, while the White House moved closer to its political goal of guaranteeing every home mortgage.

Rarely have so many politicians cashed in so blatantly on so little wrong-doing. In 2010, a group of AGs led by Iowa’s Tom Miller spotted political gold in reports that some bank employees had approved legal documents without proper review. They quickly spun this into the fairy tale that evil banks were kicking borrowers out of their homes for no good reason. Former Ohio Attorney General Richard Cordray, who parlayed his scare campaign into a job running the new Consumer Financial Protection Bureau, said banks had “a business model based on fraud.”

The banks did have sloppy paperwork practices, but they were also dealing with a historic wave of foreclosures created in large part by government-backed Fannie Mae and Freddie Mac. To date there’s no evidence that borrowers current on their mortgage payments were improperly ejected from their homes. Federal regulators have already stepped in, conducted lengthy audits, forced banks to change their internal procedures and yesterday levied $394 million in fines against four of them.

You might think $394 million is a lot of money, and it is. Don’t don’t forget the vig:

At least $10 billion will go toward principal reduction for delinquent borrowers or those on the brink of foreclosure with loans issued by private lenders. In other words, Washington is taking money from bank shareholders and investors in mortgage-backed securities, who will see the value of their holdings fall, and giving it to people who aren’t paying their bills. Welcome to the “fairness” era.

The settlement also has at least $3 billion to refinance homeowners who pay their bills but owe more than their home is worth—in other words, people who bought more home than they could afford. Another $7 billion will go to “other forms of relief,” including loan forbearance for the unemployed, “anti-blight programs,” “transitional assistance” and other political transfer payments.

Incredibly, the settlement doesn’t prevent states or the feds from pursuing more criminal cases, civil-rights or securitization lawsuits, or more claims against the Mortgage Electronic Registration Systems. So even after this round of political extortion, the banks will be asked to pay again and again. They have little ability to say no because Mr. Cordray and regulators now have life-or-death control over nearly every bank product. Ma and Pa Barker should have gone to law school and run for office.

Put another way:

Now, what this is, folks, is social justice at work, because after all, the banks were forced by the government at the point of a gun to loan to people they knew couldn’t afford the mortgages. That’s what really happened. That’s the root of the subprime mortgage crisis. It was the government forcing the banks to lend money to people that never had a chance, would never be able to repay the loans. Social justice, affordable housing, the so-called good intentions and don’t judge us on the failure of our results.

So now the banks have the pay the price for making those bad loans. This is all part of continuing the ruse that the banks were the originators of this scandal and the originators of the problem. And so now there’s a $25 billion shakedown. I’m gonna tell you, Snerdley, you can apply for it, but I’m gonna tell you — all of you mortgage people — you are not gonna see a dime. This is nothing but a slush fund. What Obama has done was gone to the bank, ’cause they’re having trouble fundraising. They’re nowhere near their billion dollars they’ve been bragging about. You ought to see what they’re gonna do at their convention. They’re gonna charge, what is it, a million dollars for a skybox. A million-dollar donation or something like that, to witness Obama’s acceptance speech. I think there’s a million-dollar charge or donation for something.

Now, this is Obama servicing his constituents. He is fulfilling that campaign promise he made to pay their mortgages. You may think, “Come on, Rush, he didn’t promise that.” We ought to dig out sound bites from one of his early town halls in 2009, the famous one that was in I think Tampa where a woman, who it turned out had a couple of houses or whatever, stood up and wanted a new kitchen. She thought that’s what the election of Obama meant. That’s what she thought it meant. I’m sure a lot of people that voted for Obama thought that’s what their lives held in store for them. Obama was gonna give them a house. Obama was gonna make sure that all the transgressions and all the discrimination and all the evil that had been perpetrated against these people in all of these years since the country was founded is gonna be fixed here.

And just for fun:

OBAMA: Millions of Americans who did the right thing and the responsible thing — shopped for a house, secured a mortgage that they could afford, made their payments on time — were nevertheless hurt badly by the irresponsible actions of others.

RUSH: Stop the tape! Stop the tape! Stop! Stop! Stop the tape! I love this. This is the setup: “Millions of Americans who did the right thing … were nevertheless hurt badly by the irresponsible actions of others.” Now, normally in the real world that would be a setup for the irresponsible citizens who took advantage of a program that they didn’t need. But, no, that’s not who he’s talking about, the irresponsible actions of others. Here’s is who he’s talking about.

OBAMA: Lenders who sold loans to people, uh, who couldn’t afford them — by buyers who knew they couldn’t afford them, by speculators who were looking to make a quick buck; by banks that took risky mortgages, packaged them up, uh, and traded them off for large profits. It was wrong, and it cost more than four million families their homes to foreclosure.

RUSH: That’s right. They were tricked! These poor schlubs, they were tricked into this, but now Obama’s getting even with the tricksters. Obama is getting even with these evil bankers, the lenders who sold loans to people that couldn’t afford them. I can’t tell you how big a lie all of this is. All of this is a lie.

This is what happens when the government intervenes in the market (beyond regulation). By rewarding, even demanding, bad behavior, the government required banks to make loans that they wouldn’t have otherwise made—for financial reasons alone. But Obama learned well from his former chief of staff: a crisis is a terrible thing to waste.

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