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Yeah, the rates soared in the 1970s, and went over 20%. The 1980s also gave birth to Adjustable Rate Mortgages, in an effort to get more borrowers with the prom

Yeah, the rates soared in the 1970s, and went over 20%. The 1980s also gave birth to Adjustable Rate Mortgages, in an effort to get more borrowers with the promise of lower rates a decade later. Which then of course led to predatory lending practices when they'd start with a low rate, switch to a high rate, and the borrower would default. So in the 90s, with interest rates still high, regulation was passed to lower the capital requirements for Fannie & Freddie to give out loans - leading to more lending than could be covered by capital, leading in 2008 to a spectacular global "whoops!". I think the housing prices are high because the market can get away with it. If I'm selling a house, new or old, I'm gonna price it at what the market values it at, even if it cost less to produce or if I didn't pay that much for it. And the value of it will keep going up as long as there appear to be buyers for it, and most cities in the country aren't losing value as long as the economy grows.

lotsofpulp 5y ago
> So in the 90s, with interest rates still high, regulation was passed to lower the capital requirements for Fannie & Freddie to give out loans - leading to more lending than could be covered by capital, leading in 2008 to a spectacular global "whoops!". There was outright fraud happening in the years leading up to 2008, with people writing down false incomes and assets, and underwriters looking the other way on verifying them.
- eli_gottlieb 5y ago
  And did anyone who committed that fraud go to jail?
  - lotsofpulp 5y ago
    The only people who I know committed fraud were the people filling out loan applications with false information about income/assets. And it would not be politically popular to go after them, and I do not recall ever hearing about them going to prison. As for the underwriters and the executives who instructed underwriters to look the other way? I also do not remember them going to prison, but I also do not know if there was any evidence of their intent. The beauty of many white collar crimes, where you can always claim you made an unintentional mistake and you are not dumb enough to write an email incriminating yourself, but rather talk it out over lunch in an all party recording law jurisdiction.
jeffbee 5y ago
Mortgage rates did not exceed 20% at any time. They peaked in 1981 at 18.4%. They were over 18% for a few days only. http://www.freddiemac.com/pmms/pmms30.html http://www.freddiemac.com/pmms/pmms30.html

lotsofpulp 5y ago

> So in the 90s, with interest rates still high, regulation was passed to lower the capital requirements for Fannie & Freddie to give out loans - leading to more lending than could be covered by capital, leading in 2008 to a spectacular global "whoops!". There was outright fraud happening in the years leading up to 2008, with people writing down false incomes and assets, and underwriters looking the other way on verifying them.

eli_gottlieb 5y ago
And did anyone who committed that fraud go to jail?
- lotsofpulp 5y ago
  The only people who I know committed fraud were the people filling out loan applications with false information about income/assets. And it would not be politically popular to go after them, and I do not recall ever hearing about them going to prison. As for the underwriters and the executives who instructed underwriters to look the other way? I also do not remember them going to prison, but I also do not know if there was any evidence of their intent. The beauty of many white collar crimes, where you can always claim you made an unintentional mistake and you are not dumb enough to write an email incriminating yourself, but rather talk it out over lunch in an all party recording law jurisdiction.

jeffbee 5y ago

Mortgage rates did not exceed 20% at any time. They peaked in 1981 at 18.4%. They were over 18% for a few days only. http://www.freddiemac.com/pmms/pmms30.html http://www.freddiemac.com/pmms/pmms30.html