Under Bill Clinton's HUD Secretary Andrew Cuomo, Community Reinvestment Act regulators gave banks higher ratings for home loans made in 'credit-deprived' areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting.
Before the 1970s, banks were banks. They did what banks were supposed to do in a state capitalist economy: they took unused funds from your bank account, for example, and transferred them to some potentially useful purpose like helping a family buy a home or send a kid to college.
The average credit score of today's FHA borrowers is higher than the average American household with a score. As it becomes more costly and difficult to get a FHA loan, loans from private mortgage lenders will become more attractive and their market share will grow.
I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate a greater volume of loans. Throughout 2004, I had watched as these mortgages were offered to more and more subprime borrowers - those with the weakest credit.
If you'd like to buy some of the fruits of deregulation, we have some S&L's [savings & loan's] we'd like to sell you.
God did not say that you should be able to borrow one hundred percent of the price of a house.
In the 1930s and the 1940s, we set up the FHA. We set up the Home Owners' Loan Corporation. We set up specific bureaus to make our communities look the way they look.
Stronger regulation and supervision aimed at problems with underwriting practices and lenders' risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates.
The overwhelming majority of new mortgages are issued with government backing in a highly concentrated securitization market. That leaves us with both potential taxpayer liability and systemic risk.
We survived for hundreds of years under the old banking structure. You'd have clearing banks, then merchant banks doing the racy stuff, and then building societies where you'd join a waiting list for a mortgage. But then banks started buying stockbrokers, doing mortgages, and you ended up with these big banking groups doing everything.
We need a system that provides mortgage credit in good times and bad to a broad range of creditworthy borrowers.
I got a mortgage at 17! I didn't even know you could get a mortgage at 17.
The FHA literally drew up the redlining map and then basically distributed - I'm sorry, the Home Owners' Loan Corporation actually did it, and then distributed to banks who used that as policy to determine how they would lend and who they would lend to. The racism in the system was pervasive and total.
Home ownership was the fig leaf for the rise in subprime lending. But that was really about cash-out refinancings, not buying homes.
The mortgage crisis is a clear instance of consumers who needed protection. There was predatory lending to people who didn't know what they were doing.
Yes, Americans can still get credit for cars and trucks and refrigerators, and those businesses are doing well. But just try to get a home loan now.
The notion that paradise begins with personal home ownership is one that has been drummed into Americans for so long by presidents … and realtors that it is hard to dislodge.
As the United States has become an older nation, reverse mortgages have grown into a $20-billion-a-year industry, with elderly homeowners taking out more than 132,000 such loans in 2007, an increase of more than 270 percent from two years earlier.
We think if the economy remains weak that we could see mortgage rates trail down and we think that we could see rates below seven percent into early next year.
After I dropped out of college at the age of 19, I became a mortgage broker, and when I went back to school I thought about going into real estate law.
Banks hold deposits and savings entrusted to them by individuals, by businesses, by governments and by central banks. They put that money to work, helping people to buy homes, for example, or lending to businesses to invest in expansion.
I personally believe that there's going to be a good case for the government preserving some type of guarantee to make sure that people have the ability to borrow to finance a house even in a very damaging recession. I think there's going to be a good case for that.
Fannie Mae and Freddie Mac buy mortgages from banks and other lenders, providing those financial institutions with capital to make new loans.
Although not well known outside Wall Street, Freddie Mac and its corporate cousin, Fannie Mae, are two of the world's largest financial institutions and play a crucial role in the housing market.
The same with the mortgage brokers that were selling people mortgages they couldn't afford. We shouldn't pay them on each mortgage they write. They should have what they call "skin in the game," where they've got to reimburse us if the guy who sold the mortgage defaults.
