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Phyllis Said:

how did the Republicans get the democrates to force lenders to handout high risk mortgages to deadbeats?

We Answered:

Lenders never lend money unless they have the property as security in case of default so they can repossess the property. They must have been government guaranteed loans. The government guaranteed to repay the lender the whole amount of money that they were owed. Lenders never loose. There is expected to be 4 million homes repossessed in the United States of America in 2010. (That's approximately the whole population of New Zealand.)

Enrique Said:

Would a tax credit for mortgage payments be more effective than subsidizing the lenders?

We Answered:

The amounts of money (700 billion) are so large, it is hard to believe this is only about mortgages. I think the banks are guilty of making lots of bad investments way beyond the bad mortgages they made in this country. Corporate greed led them to this situation, and it seems rather crazy to bail them out so they can do it again. Some, if not many, of these businesses should go out of business.

Giving these dollars back to each taxpaying adult in this country would make much more sense. The money could be used to pay down mortgages, buy things that are needed, or pay off the huge medical debt many Americans have. I have looked for some explanation of just what the proposed bail out would accomplish and for some reason, no one is telling us--perhaps these financial geniuses that got us into this mess have no idea how this thing will work. Having the same people that caused this problem try to fix it just seems like the wrong approach.

My concern is that this taxpayer money will end up in the hands of a few people that are already way to rich relative to what most of the people in this country have. The current administration has shown over and over they can't be trusted. How is this huge crisis going to be any different?

How about just canceling income tax for a year or two? That would provide a huge economic stimulus. How about all the law makers giving up their pay for a year or two? How about some of the many billionaires that made there bucks off the sweat of the rest of us giving back to the cause? There are many ways to solve this crisis that do not require our selling out the poor and middle class tax paying Americans.

Whatever we do, we can't put another one of these same people back into office. Vote for anyone but Republicans in November. You still have time to get reregistered and then get out and vote.

Tracey Said:

Re: Pressure on banks 2 make high risk loans 2 borrowers w/ poor credit: WHAT YEAR did it start & WHO started?

We Answered:

On September 30, 1999, the New York Times reported that the Fannie Mae Corporation was easing credit requirements on loans that it purchases from banks and other lenders.

The pressure was primarily from three sources. Banks, thrift institutions and mortgage companies were pressuring Fannie Mae to help them make more loans to sub-prime borrowers. The banks and other financial institutions made their money on fees for originating and selling these loans.

Meanwhile, stock holders, looking for higher yields, were pressuring Fannie Mae to expand its lending to a broader income group to increase its phenomenal profits.

And, the Clinton Administration wanted to expand mortgage loans among low-to-moderate income households.

The opportunists used the call to expand home ownership rates among minorities and lower income households as justification to open the floodgates on mortgage lending. Even though community development banks had an excellent track record of making mortgage loans to disadvantaged groups, there was no such motive among the lenders selling their bad loans to Fannie Mae and Freddie Mac. They did not care if the loans were paid back because all the risk was passed along to the investors and ultimately the taxpayers. All they cared about was maximizing profits and collecting their fees.

The banks were not pressured - they were doing the pressuring. They merely used the call to expand home ownership as a cover for their irresponsible lending practices.

You may hear that the Community Reinvestment Act had something to do with this lending crisis, and that really isn't true. 96% of the subprime lenders were not subject to CRA because they were private companies. Of the few subprime lenders that were covered under CRA, they all had a much better repayment record.

By the way, the previous answer is incorrect regarding Bill Clinton signing the Community Reinvestment Act. Bill Clinton was elected in 1992 and took office in 1993. The Community Reinvestment Act took effect in 1977.

Roberta Said:

How is the housing meltdown the fault of Bush?

We Answered:

Obama claimed it was fixed so it is his baby now.
Oh, and we are projected to have over a million new foreclosures this year.

Alan Said:

Increasing credit limits and qualifying for a mortgage loan?

We Answered:

To an extent, you are correct. It is kind of a backward philosophy - and that is why Hisotry is SO important. If you have those credit limits what have the balances typically been...If they have historically benn high, the lender might think they will just become higher. If you carry no balances then it will look like another source of cash should you have an emergency. We call it liquidity....As in, if you were to lose your job, what other sources could you turn to in order to repay your home loan while you are temporarily out of work. That's basically how it works.