patrick.net

Sirs,

I met some people from Long Beach saving and loans, and also who got loans from Countrywide. There was one mortgage agent who I met who was stressed about the lack of ethics in Southern California mortgage markets. It was like a "Dont Ask Dont Tell" for mortgages.

My gardener who overpaid for a Condo told me his story, and I had to pay his father because of a deal he got with Hamp or Harp.

Whether people used the FHA to get a CRA loan from the government, or if they got it from Countrywide, the adverts for Cwide and LBSL read like the CRA manifesto for easy access to loans. This CRA easy money spirit was blessed by FHA and likely (due to a know visit to FHA by one Mozillo) suggested judging by the adds that ran for Countrywide in 2005/2006.

And, whether the NINJA or other Malinvesting loan was of the FHA/CRA/Private label, the government backed these loans into the tranches of the now well known MBS's.

"mutts"? who is this person??

anyhoo, what was central to the meltdown in '08 was this:

annual home mortgage credit expansion.

That $100B/month of new credit lending was a feedback loop that funded millions and million of jobs.

Not just real estate ladies and home improvement jobs, but all the jobs THEY supported, and all the jobs this second tier supported, plus all the home-equity borrowing that bought just about anything, until all this hot money eventually left the paycheck economy, as it does.

CRA wasn't about suicide lending, it was supposed to just enable people with subpar credit get loans too.

What fueled the trillion-dollar run-up was speculative fever -- people getting into homes at any cost because the prices were going up so it was a sure thing.

CRA had nothing to do with negative-amortization, liar loans, and all the other Alt-A crap (all now explicitly banned by reform legislation) that required actual good credit scores to get.

Another factor in the run-up was the introduction of 80-20% financing and teaser rates. Operators like Wamu and CFC could sell the 80% piece to the GSEs while floating the 20% on Wall Street via their sophisticated financial engineering, cutting up the 20% part into derivatives that were mostly rated AAA since they weren't in first-loss position.

All this loosening up of credit just fueled price appreciation, since when you make something in such limited supply as housing more affordable, all that does is raise the price.

(Home buying is one of the few purchasing events in our life when we generally have to directly bid against other buyers, yet nobody understands this basic dynamic for some reason!)

The crash came when all the suicide lending products -- loans that weren't able to be repaid without recapitalizing them -- started blowing up in 2007. Price appreciation had stopped in 2006, preventing the last round of specuvestors from cashing out, and there was a multi-trillion bolus of bad debt in the system, just waiting to collapse.

And collapse we did. The entire economy of 2004-2007 was a Potemkin Village, but the GOP's gotta blame the blacks, because that's who they are.

You are describing the effect not the cause.

What I find interesting about this is that it is just the tyranny of the majority in action. IOW 2.5 trillion will buy the majority when it comes to lending. The minutiae is not the cause.

APOCALYPSEFUCKisShostikovitch says

Exactly

Then there are those nasty facts about 17 banking crisess to Canada's ZERO.

Or the 2.5 trillion spent to those community groups on board.

To pretend this is not incestuous and wink wink nod nod is truly fabulist.

indigenous says

bob2356 says

The video makes the totally unsupported supposition that the CRA caused the crash.

Not that you listened to it...

That's how I found out it was totally unsupported.

The cause wasn't CRA – it was capitalism's usual fatal flaw, the unregulated market offering profit opportunities of externalities, sticking someone else with the cost while you get the profit.

http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html

Of the chain -- the liar-loan borrower, the mortgage broker getting paid to close the loan regardless of what rules he bent, the internal underwriters and auditors pressured to look the other away, same with the appraisers getting paid to go along, Wall Street of course totally uninterested in anything other than their billion-dollar take, the ratings agencies getting paid too, the regulators interested in free market laissez faire more than keeping the system honest.

The only people hurt by this systemic control fraud was the people buying the misrated bonds, and the taxpayers on the hook thanks to the Bush bailouts

http://money.usnews.com/money/blogs/capital-commerce/2008/11/20/the-terrible-scare-story-hank-paulson-told-congress

The initials C R A are really nowhere to be found, but because the 2001-2008 era was a conservative experiment, conservatives have to find a scapegoat to explain away their ideological -- faith in the unregulated free market -- failure, they find the black guy in the picture to pin the blame on him.

http://www.ritholtz.com/blog/2011/07/why-wallison-is-wrong-about-the-genesis-of-the-u-s-housing-crisis/

bob2356 says

That's how I found out it was totally unsupported.

The book is foot noted to death with citations galore. WTF are you talking about.

I will say you are the only mutt who actually listened to the tape, so a tip of the hat to you.

Bellingham Bill says

The cause wasn't CRA – it was capitalism's usual fatal flaw, the unregulated market offering profit opportunities of externalities, sticking someone else with the cost while you get the profit.

Yup that is the crap that is typically said about this and it is wrong.

The only thing that was REALLY WRONG was bailing out the TBTFs

Another thing too, was the run-up of 2004-2006:

(more than doubling in some areas)

was not just an "effect" but a "cause" -- driver -- of the boom/bust too.

The early gains of 2001-2003 attracted the multitudes, people getting in the market and buying because it was going up.

That's bubble market behavior. It's the same anywhere; it's what markets do.

http://en.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds

And unlike stock appreciation, this across-the-board rise in valuations enriched half or more of the economy, anyone who had title, mortgaged or not, to real property.

Feedback city.

Still effect, the cause was what I'm talking about.

APOCALYPSEFUCKisShostikovitch says

There was a CRA manifesto?

Can you send a citation that we can review? I was unaware that the CRA had been reduced to a propaganda vehicle with the power to reforge the underwriting protocols for mortgages in every assessment area in America by every bank and non-bank lender.

This will be a revelation to a number of correspondents in industry and regulatory affairs.

See the following:

http://www.prnewswire.com/news-releases/countrywide-expands-commitment-to-1-trillion-in-home-loans-to-minority-and-lower-income-borrowers-54027497.html

Moz made a trip to FHA, they met. The FHA leader would later worke at Countrywide.

Also, Countrywide had Jerry Browns sister employed, HUD leaders employed. Chicago housing advocates, etc. Look at this web of influence:

http://news.muckety.com/2008/06/26/the-tragedy-of-countrywide-financial-and-angelo-mozilo/3712

Entitlemented says

Moz made a trip to FHA, they met. The FHA leader would later worke at Countrywide.

Solution: Federal Regulator and Publicly owned Company Non-Compete Clauses.

Generals, Food inspectors, FHA employees, etc. - no working for the regulated industry for X years after leaving employment.

A General could work for Monsanto, an FDA Honcho could work for Lockheed Martin, but not vice-versa.

Wikipedia: A manifesto is a published verbal declaration of the intentions, motives, or views of the issuer, be it an individual, group, political party or government.[1][2][3][4] A manifesto usually accepts a previously published opinion or public consensus and/or promotes a new idea with prescriptive notions for carrying out changes the author believes should be made. It often is political or artistic in nature, but may present an individual's life stance. Manifestos relating to religious belief are generally referred to as creeds.

Heres a document that meets and exceeds the definition of Manifesto:

http://www1.nyse.com/pdfs/Countrywide0505.pdf

thunderlips11 says

Solution: Federal Regulator and Publicly owned Company Non-Compete Clauses.

The solution is to EMACIATE the government and repeal the 17th amendment.

But the government can be played by the absence of a ruling party that is not subject to election by the voting public. As the bankers and the community groups co opt the government. This was not the case previous to Wilson's handy work. What a complete asshole he was.

What I would like to know is how that cockaroach Deval Patrick avoided a jail term, and even more amazingly, was elected governor of Massachusetts. He was on board Ameriquest and profiting from their crime spree, which made Countrywide look like the Salvation Army.

bgamall4 says

Truth is, the TBTF banks want the GSE business. You didn't know that? I bet you thought the TBTF banks were the good guys! Lol.

Of course they did, if you can pass the bad paper off why wouldn't you.

Nope if I had my way the TBTF would be subjected to things that would make AF cringe.

APOCALYPSEFUCKisShostikovitch says

The local - in my council, North Cartlon, anyway - pronunciation was closer to MIL-bin. The table chuckled in delight at the lifer fuck's cluelessness.

The languages of NZ and Oz (they are 2 different languages) are based on english more or less. Sometimes less.

US embassies around the world cause more hatred of america and any other reason.

APOCALYPSEFUCKisShostikovitch says

I was hanging out out with teachers in Melbourne

I like Melbourne a lot except for their annoying habit of doing the british status thing. In Sydney they ask how much you make, in Brisbane they ask, where you are from, in Perth they ask do you want a beer, in Melbourne they ask what school you went to.

I took a long holiday in gippsland around barnsedale and lakes entrance. Really nice area. Would like to go back one day.