2 ms·

Really? http://www.usatoday.com/money/economy/housing/2009-03-05-foreclosure_N.htm http://www.usatoday.com/money/economy/housing/2009-03-05-for... "More than

by defen 18y ago

Really? http://www.usatoday.com/money/economy/housing/2009-03-05-foreclosure_N.htm http://www.usatoday.com/money/economy/housing/2009-03-05-for... "More than half of the nation's foreclosures last year took place in 35 counties" "A few of the 35 counties leading the foreclosure boom are in already-distressed areas around Detroit and Cleveland. But most are clustered in places such as Southern California, Las Vegas, Phoenix, South Florida and Washington, where home values shot up dramatically in the first half of the decade, then began to crumble." What do all those areas have in common?

bilbo0s 18y ago
A nice data point. Though, the critical thinker will immediately notice that the article discusses foreclosures, and not foreclosures on CRA loans. Indeed, a little research will confirm that most of the places you listed, do not qualify for CRA. For instance, Lehigh Acres (Ft. Meyers FL), often described as ground zero of the mortgage crisis would have in no way qualified for CRA loans. Contrast that with the North and South Carolinas. Both states have huge, impoverished, minority communities. Both states have communities that make liberal use of CRA. Odd, is it not, that these states should be so relatively void of foreclosures. An interesting exercise I am trying to engage in is to determine, what percentage of CRA loans were defaulted on in comparison to Fannie and Freddie loans. It is difficult to determine as right now Fannie and Freddie seem almost desperate to keep that information opaque. Why? What I can say is that here is a telling datapoint, Fannie and Freddy have collapsed, but Ginnie is still going strong. What problems Ginnie has, it got through foolhardy government attempts to save Fannie and Freddy. "What is Ginnie?", you ask. Ginnie Mae is the explicitly government backed entity that handles all of the FHA HUD housing stuff, indian (native American) housing, housing for military veterans etc. Incidentally, FHA HUD housing provides loans explicitly to those with low credit scores and low incomes. Strange, don't you think, that they are not having trouble right now? I mean given that these are exactly the people who are alleged to have caused the problem. Even more curious that Fannie and Freddy would collapse, considering Ginnie was the one on the hook for all of these low credit score mortgages. Again, as always, I know there are a lot of people shooting off their mouths right now, so I invite you to look these things up. You may find it helpful to start here http://en.wikipedia.org/wiki/Government_National_Mortgage_Association http://en.wikipedia.org/wiki/Government_National_Mortgage_As.... Then there is an explication of exactly what CRA does here http://www.ffiec.gov/cra/ http://www.ffiec.gov/cra/. And finally, you may think wikipedia is biased, so I would encourage you to read more about Ginnie Mae here http://ginniemae.gov http://ginniemae.gov. Finally, take a look at the map on the link you sent out in your post http://www.usatoday.com/money/economy/housing/2009-03-05-foreclosure_N.htm http://www.usatoday.com/money/economy/housing/2009-03-05-for... and compare the North and South Carolinas to say California. Now you are probably asking why you've never heard of this stuff before? Because data, takes analysis and critical thought. It doesn't fit well in a soundbite. Seneca said that a lie could make it halfway around the world before a fact could get its shoes on. The great CRA debate is a textbook example of this phenomenon.
- defen 18y ago
  FWIW I don't think that our current problems were caused entirely by the CRA. The rocket scientists on Wall Street who leveraged themselves 30x on the assumption that housing prices would never go down are just as culpable. Another issue is that in the 70's the big three ratings agencies started charging bond-issuers for ratings, rather than bond-buyers, setting up a huge conflict of interest.

by defen 18y ago

bilbo0s 18y ago

A nice data point. Though, the critical thinker will immediately notice that the article discusses foreclosures, and not foreclosures on CRA loans. Indeed, a little research will confirm that most of the places you listed, do not qualify for CRA. For instance, Lehigh Acres (Ft. Meyers FL), often described as ground zero of the mortgage crisis would have in no way qualified for CRA loans. Contrast that with the North and South Carolinas. Both states have huge, impoverished, minority communities. Both states have communities that make liberal use of CRA. Odd, is it not, that these states should be so relatively void of foreclosures. An interesting exercise I am trying to engage in is to determine, what percentage of CRA loans were defaulted on in comparison to Fannie and Freddie loans. It is difficult to determine as right now Fannie and Freddie seem almost desperate to keep that information opaque. Why? What I can say is that here is a telling datapoint, Fannie and Freddy have collapsed, but Ginnie is still going strong. What problems Ginnie has, it got through foolhardy government attempts to save Fannie and Freddy. "What is Ginnie?", you ask. Ginnie Mae is the explicitly government backed entity that handles all of the FHA HUD housing stuff, indian (native American) housing, housing for military veterans etc. Incidentally, FHA HUD housing provides loans explicitly to those with low credit scores and low incomes. Strange, don't you think, that they are not having trouble right now? I mean given that these are exactly the people who are alleged to have caused the problem. Even more curious that Fannie and Freddy would collapse, considering Ginnie was the one on the hook for all of these low credit score mortgages. Again, as always, I know there are a lot of people shooting off their mouths right now, so I invite you to look these things up. You may find it helpful to start here http://en.wikipedia.org/wiki/Government_National_Mortgage_Association http://en.wikipedia.org/wiki/Government_National_Mortgage_As.... Then there is an explication of exactly what CRA does here http://www.ffiec.gov/cra/ http://www.ffiec.gov/cra/. And finally, you may think wikipedia is biased, so I would encourage you to read more about Ginnie Mae here http://ginniemae.gov http://ginniemae.gov. Finally, take a look at the map on the link you sent out in your post http://www.usatoday.com/money/economy/housing/2009-03-05-foreclosure_N.htm http://www.usatoday.com/money/economy/housing/2009-03-05-for... and compare the North and South Carolinas to say California. Now you are probably asking why you've never heard of this stuff before? Because data, takes analysis and critical thought. It doesn't fit well in a soundbite. Seneca said that a lie could make it halfway around the world before a fact could get its shoes on. The great CRA debate is a textbook example of this phenomenon.

defen 18y ago
FWIW I don't think that our current problems were caused entirely by the CRA. The rocket scientists on Wall Street who leveraged themselves 30x on the assumption that housing prices would never go down are just as culpable. Another issue is that in the 70's the big three ratings agencies started charging bond-issuers for ratings, rather than bond-buyers, setting up a huge conflict of interest.