President-elect Obama

[brainbone]

You're ignoring the fact that the Community Reinvestment Act (pushed by the Clinton Admin and the Congress at the time) is the primary reason for the current housing problems.

 

The Community Reinvestment Act was a great opportunity, squandered by financial institutions through mismanagement, and increased deregulation. It's the overwhelming misuse of stated income loans facilitated by decreasing regulation that allowed the opportunity of the Community Reinvestment Act to be turned into the burden it now is.

 

You can't ignore the pillars of lending just to get poor people into houses. When they can't make any more payments, we get into the exact mess we've gotten into

 

The vast majority of loans that caused this issue aren't from "poor people", although a great number of those people are negatively effected by this massive downturn in the economy.

 

Some of the major contributing factors to the mess:

 

1) "investors" that purchased properties for any price with zero down on a stated income loan, with no intention of ever paying a dime on the loan, knowing that it can take years to foreclose on the property. This can give a 2-3 year window to sit back and collect rent. Because any price was paid for these properties (price didn't matter, since no payments were ever to be made), these purchases dramatically over-inflated surrounding property values. Compounding the problem, the majority of these properties have been run into the ground, having no maintenance, and bad renters. When the properties are eventually placed back on the market, they are at a dramatically lower value, bringing down the value of surrounding properties, and decreasing the desirability of the neighborhood due to their blight. The end result: entire neighborhoods have been or are on the verge of being decimated.

 

2) Those that thought they were "rich" and purchased way more home than they could afford, using stated income loans.

 

3) Fools that thought they could quickly flip a home and turn a profit using a stated income loan, usually in the same neighborhoods that had been dramatically overvalued due to 1 or 2, above, further feeding back into the bubble.

 

4) Lenders that handed out all these loans, based on the false assumption that land values would never decrease.

 

Look around your neighborhood. You'll likely see that the majority of homes in foreclosure before Sept. fell into one of the categories described above: 1 (a blighted rental property), or 2 (a suburban home or McMansion), 3 (the house or condo up for auction that has been vacant for the past 1 to 3 years).

 

Relatively few of these properties were actually owned by "poor people".

[Maxintosh]

To them, I say "Keep them here or pay the price"

I agree 110%