how to respond to minority loans being blamed for crisis?

[Omerrrta]

conservatives are posting this article around, whats a good response? I'm no economy expert but I know theres been a history of denying loans to black people...

http://www.worldnetdaily.com/?pageId=75717
"Guess again who's to blame for U.S. mortgage meltdown
Analysts point not to greed, but to social activist politics"

[Stellabella]

1. World Nut Daily?

Consider the source, first of all.

Second, it's the derivatives that exponentially increased this mess. I read somewhere that they were 'worth' (on paper, that is) a quadrillion dollars. That's a thousand trillion. And nothing to back them up.

[Zodiak]

2. How to respond?

By saying that this is an article in Worldnet daily, one of the most skewed right-wing publications on the net, known for its distortion of facts and it's made-up statistics.

If they want to discuss something, they should start with a credible source.

Unless, of course, the wingnuts want to open discussions with "credible articles" from the Worker's Daily or from Wayne Madsen.

[slampoet]

3. Just respond.."Are you calling the American Middle Class a minority sir?"

"....I say good day to you!!"

[Roland99]

4. Ask them to explain how several million in loans created 40-50 trillion in derivatives

When they come back with complete silence, walk away.

[jjanpundt]

5. What about the people who've lost their jobs, used up the

equity in their home for food for their families, have no insurance, and are ill? All thanks to our "compassionate conservative" administration?

I am so furious over this shit, and so fearful that the Dems are going to roll over again....

[sinkingfeeling]

6. I answered that here, in this totally ignored post.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4066094&mesg_id=4066094

[prolesunited]

7. Thank you so much for posting this

I have now seen the light. It's all the fault of liberals and minorities.

I am now voting for McCain.

Good job. Your work here is done.

[Lydia Leftcoast]

8. Most of the defaults are occurring in the McMansion sloburbs favored by

white office park dads and soccer moms.

Besides, the easing of loans for minority borrowers was a matter of removing unfair restrictions on qualified buyers, not FORCING financial institutions to PUSH home loans on UNQUALIFIED buyers. And push they did. I remember reading in the NY Times how they told African-Americans in New York City that they could afford a house if only they moved to the Poconos and that it would be worth all the hassles and the long commute.

See, the financial institutions thought they had a good thing going, with easy credit and high interest rates creating a dependable supply of life-long debt slaves. This works only as long as the debt slaves can afford the debt.

[RobinA]

11. I Would Say

Oh, so that foreclosed McMansion down the street was a bunch of homeboys from North Philly movin' on up to the 'burbs?

[Lithos]

9. Ask them...

First, it's an issue of class, not race/ethnicity.

Second, why are they blaming the victim and not the predator? It's like telling a rape victim that it is their fault for being raped.

[ThomWV]

10. If someone says that to you the appropriate response is "Horse-shit!"

They were coaxed into taking the loans by endless TV commercials and junk mail, it had been going on for years, the bankers were the one's getting rich on every bad loan they wrote, and it is the poor who were the first to be tossed out on the street - so who in hell do you think caused this mess? It sure as hell wasn't some poor ghetto folks who put together the complicated financial packages that are behind the whole mess and it was not the poor who deregulated the fucking market.

[Hassin Bin Sober]

12. First let's try and establish what they are referring to.

The best I can make out, they are talking about the "CRA" loans. CRA stands for "Community Reinvestment Act." I know that was one of the trial-balloons Baghdad-Larry-Kudlow floated.

This is from my perspective - 10 years in the mortgage business.

I don't know all the back-end working of how the CRA system works so I will only deal with how the rubber meets the road.

Effectively, the CRA is a system by where the larger institutions have to make loans to "low to moderate income (LMI)" borrowers or to borrowers buying in "low to moderate income (LMI) areas" to justify their existence and avoid the charges of red-lining. Since the larger banks, like Citibank or Chase, need to justify their existence under the act, they pay a premium to brokers to steer business to them they wouldn't normally get through their retail operations. It's a sneaky way for them to not put a branch in a poor neighborhood but still generate loans there. This premium would be 1-1.5% of the loan amount to the broker so it can be especially lucrative to brokers, like me, operating in a gentrifying city like Chicago.

THESE LOANS WERE IN NO WAY OUTSIDE THE LENDER'S (or fannie/freddie) NORMAL GUIDELINES.

The CRA system essentially boils down to two categories:

1....Mortgage brokers/lenders getting paid a premium to deliver loans, to the larger institutions, that qualified by either income of the borrower or property location being by located in a "low to moderate income" neighborhood as designated by the government website. The larger institutions, like CitiBank for example, relied on this stream of loans to justify their existence under the CRA act. First of all, it was always a bit of a joke to be getting paid extra money to deliver a loan made to a high income borrower that qualified ONLY based on the property address (these were usually in gentrifying areas and based on outdated census information). Second, the people qualifying under the "low to moderate" income standard could earn as much as $58k so they weren't, for the most part, "poor people".

2....Fannie Mae/Freddie Mac programs (such as Fannie's "My Community" or Freddie's "Affordable Gold") for low to moderate income borrowers and/or borrowers purchasing in low to moderate income neighborhoods. These loans were ALL conventional loan programs - meaning they were fixed rate loans underwritten to conventional standards (sometimes more stringent) AND had the added benefit of reduced mortgage insurance premiums and prior credit counseling. My understanding is these loans have a below average default rate.

NONE OF THESE LOANS WERE SUB-PRIME, INTEREST ONLY, OPTION ARMS, STATED INCOME OR NEGATIVE AMORTIZATION LOANS THAT ARE CAUSING MOST OF THE PROBLEMS.

The real trouble loans were made by lenders that HAD NO obligation to justify their existence under the CRA. ..... mostly sub-prime and "ALT-A" lenders like "Green Point Mortgage" or "Option One Mortgage" OR CRA obligated lenders such as WAMU dabbling in the sub-prime/ALT-A sphere. These were the lenders making loans to no-income-proof borrowers with bad credit scores and zero down-payment. Toward the end of the bubble, I remember a lender's representative passing out flyers for "no income verification, 100% financing, 580 FICO score, investment property" and I thought to myself, how the fuck do they justify THAT loan?...........

..........thanks to the wonderful work of DUer Hamdenrice, I understand it. It was all done by smoke and mirrors - a.k.a. over collateralizing and derivatives.

[Catherine Vincent]

13. I know you're new and all but you're performing trollish behavior.

I don't know who you think you're fooling.

[Omerrrta]

16. I dont like echo chambers

stop attacking me...some of you are like the hillaryis44 people who attacked anyone who went off message. I was asking how to fight back against this stuff in the article.

[SweetieD]

14. Those dang minorities. Of course its all their fault.

[Stellabella]

15. Oh, and follow the money.

All that money had to go somewhere.

Blaming it on minorities who lost their houses is ridiculous.

Look for who got really, really rich over the last few years. THAT'S who stole all that money.