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Clinton is largely responsible for the destruction of our housing market...

Discussion in 'Free Speech Alley' started by saltyone, Sep 7, 2008.

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saltyone So Mote It Be

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I felt this deserved it's own thread...

The reasons for the collapse are evident. The drive for home ownership during the 90's, and first part of this decade, have backfired on us. I would love to know who's idea it was to drive up home ownership. Basically, things stayed about the same for 50 years, then in the 90's, things changed drastically...why?

Urban Policy Brief, Number 2
August 1995

HOMEOWNERSHIP AND ITS BENEFITS

At the request of President Clinton, the U.S. Department of Housing
and Urban Development (HUD) is working with dozens of national
leaders in government and the housing industry to implement the
National Homeownership Strategy, an unprecedented public-private
partnership to increase homeownership to a record-high level over the
next 6 years. The ideal of homeownership is so integral a part of the
American Dream that its value for individuals, for families, for
communities, and for society is scarcely questioned. This paper
provides a brief survey of research into the nature and significance of
homeownership's presumed benefits, particularly for lower income
households and other underserved populations.

Introduction

The desire for homeownership is deeply rooted in the American psyche.
Owning a home embodies the promise of individual autonomy and of
material and spiritual well-being that many people sought in coming to
this country. In addition to its functional importance and economic
value, homeownership has traditionally conveyed social status and
political standing. It is even thought to pro-mote thrift, stability,
neighborliness, and other individual and civic virtues.

Throughout this century, there has been bipartisan support for Federal
policies designed to encourage home-ownership. Herbert Hoover called
the owner-occupied home "a more wholesome, healthful, and happy
atmo-sphere in which to raise children." Lyndon Johnson promoted
homeownership as part of a strategy for addressing the urban ills of the
1960s, declaring that "owning a home can increase responsibility and
stake out a man's place in his community....The man who owns a home
has something to be proud of and reason to protect and preserve it."
Ronald Reagan said that homeownership "supplies stability and
rootedness."

President Bill Clinton has linked increasing homeowner-ship to the
challenge of expanding opportunity for work-ing families. Speaking to
the National Association of Realtors in November 1994, he expressed a
national consensus that "more Americans should own their own
homes, for reasons that are economic and tangible, and reasons that are
emotional and intangible, but go to the heart of what it means to
harbor, to nourish, to expand the American Dream."
However, the American Dream became more distant for many during
the 1980s, as the national homeownership rate fell from its historic high
of 65.6 percent in 1980 to only 64.1 percent in 1991. The decline has
been sharp-est among segments of the population for whom access to
the homebuying market has traditionally been most difficult. The
homeownership rate for very low-income families with children fell by
almost one-third, from 39 percent to 27 percent, between 1980 and
1991. Even among moderate-income households, homeowner-ship
dropped by 10 percent. Homeownership rates stagnated at
approximately 43 percent for blacks, whilehomeownership among
Hispanics fell from 43 percent in 1980 to 39 percent in 1991.

Perhaps most alarming has been the decline in home-ownership among
families under age 35, when most first-time homebuying occurs and the
preference for ownership is strongest. In 1980 almost 45 percent of
families in this age cohort owned a home; by 1991, the percentage
stood at less than 38 percent.

To reverse this trend, President Clinton directed HUD Secretary Henry
G. Cisneros to work with leaders in the housing industry,
representatives of nonprofit groups, and officials at all levels of
government to develop a National Homeownership Strategy that would
increase ownership opportunities among populations and commu-nities
with lower than average homeownership rates.
Click to expand...

I know what your thinking...continue reading. It's worth it.....

This unprecedented public-private partnership is founded on a deeply
rooted and almost universally held belief that homeownership provides
important advantages that merit continued public support. The National
Homeown-ership Strategy cites four fundamental benefits:

"Through homeownership, a family...invests in an
asset that can grow in value and...generate financial
security."

"Homeownership enables people to have greater
control and exercise more responsibility over their
living environment."

"Homeownership helps stabilize neighborhoods and
strengthen communities."

"Homeownership helps generate jobs and stimulate
economic growth."

The validity of some of these assertions is so widely accepted that
economists and social scientists have seldom tested them. However, the
nature and signifi-cance of homeownership's actual benefits particularly
for lower income, minority, and younger families has profound
implications for national housing policies and programs. The following
pages will briefly review evi-dence on the four premises that undergird
the National Homeownership Strategy.

Homeownership and Wealth Accumulation

Purchasing a home is the largest investment that most families will ever
make. Homeownership has been called a "forced savings plan" in that
an owner-occupant's payments on mortgage principal are retained as
equity in a comparatively illiquid asset. Wealth is accumulated to
the extent that the constant-dollar value of the owner's equity exceeds
any decline in the home's value.

But accrued equity is only one potential financial benefit of
homeownership. Buying a home with a mortgage is a leveraged
investment: even though only a small part of the purchase price is paid
as a downpayment, the buyer controls all appreciation in the value of
the property and absorbs any loss in value as well. General trend data
on housing prices confirm that owner-occupied homes have
performed well as long-term investments. Real prices for the
median-priced home increased by a total of 41 percent between 1960
and 1989. Even the lowest-priced houses increased in value by almost
30 percent.

However, many external factors can affect whether and at what rate a
home's value increases or decreases. Changes in interest rates influence
demand for housing and its attractiveness relative to other investments.
Regional economic downturns, such as the oil "bust" in the Southwest
during the mid-1980s, can severely de-press housing prices. The
dynamics of a particular hous-ing market or the fortunes of a particular
neighborhood can also be a strong determinant of local home values.

Nonetheless, homeownership has become a critical factor in moving up
the economic ladder. Home equity is the largest single source of
household wealth for most Americans. Median net wealth for
homeowners exceeds $78,400, while renters accumulate less than
$2,300, or3 percent of this amount. For homeowners, almost 60
percent of their wealth is in the form of home equity. For minority
homeowners, home equity is an even more important component of
wealth, representing more than three-fourths of their median net wealth
of approxi-mately $48,300, almost 100 times the median wealth of the
average black renter (barely $500). For owners in the lowest income
brackets as well, equity in single-family homes constitutes more than
half their wealth.
Click to expand...

Please...keep reading...

Thus the economic evidence is clear in affirming that homeownership is
a good investment that increases wealth for families of all races and
incomes. However, critics of homeownership point out that the
economic benefits of homeownership for lower income and minor-ity
families should also be balanced against its financial risks. The lower
average incomes and educational attainment of these groups make them
particular vulner-able to economic downturns that can result in job loss
and, eventually, foreclosure. Indeed, newly published research on
FHA-insured mortgages indicate that default risk is higher among black
and lower income borrowers, although the explanation for this finding
is far from clear.
Click to expand...

confused:...yep, me too...continue..

This investment in housing fuels an immensely powerful engine of
economic activity. The use of the Nation's housing stock (rent and
mortgage payments and related expenditures) represents more than 9
percent of GDP and 14 percent of personal consumption. Another
12 percent of personal consumption expenditures go toward household
operations (including furniture, appliances, utilities, and maintenance).

The emergence of a strong secondary market for home mortgages has
dramatically expanded investor partici-pation in the housing market.
Twenty years ago, banks and thrifts retained up to three-quarters of
residential mortgages in their portfolios. However, since the late
1980s, Fannie Mae and Freddie Mac have purchased more than half of
all newly-originated home mortgages. Most of these mortgages are
pooled as mortgage-backed securities and sold in the secondary
market, where they are purchased by mutual funds, pension funds, and
a wide range of other institutional investors. These in-vestors were
holding $1.5 trillion in mortgage-backed securities at the end of 1993,
or nearly half of all residential mortgage debt.
Click to expand...

Here it comes...the best part....

The National Homeownership Strategy

For over 60 years, the Federal Government has played an important
role in making the American Dream of homeownership a reality for
millions of families. It created the Federal Housing Administration
(FHA) and Government-sponsored enterprises such as Fannie Mae
to enhance the availability and affordability of home mortgage funds.
HUD and other Federal agencies have provided billions of dollars in
grants and loans to support affordable home construction and
rehabilitation and to aid low- and moderate-income families in buying
their first home. Incentives for homeownership have been
written into the Nation's tax code.

However, Federal institutions, policies, and programs alone cannot
meet President Clinton's goal of record-high levels of homeownership
within the next 6 years. Under the leadership of Secretary Cisneros,
HUD has forged a nationwide partnership that will draw on the
resources and creativity of lenders, builders, real estate profession-als,
community-based nonprofit organizations, consumer groups, State and
local governments and housing finance agencies, and many others in a
cooperative, multifaceted campaign to create ownership opportunities
and reduce the barriers facing underserved populations and
communities. The National Homeownership Strategy is committed to:

CUTTING HOUSING PRODUCTION COSTS. Although the high cost of building
and rehabilitating housing is a nationwide dilemma, the National
Homeownership Strategy recog-nizes that the specific causes and thus
many of the solutions vary significantly among local and regional
markets. Accordingly, the National Partners have en-dorsed a wide
range of complementary strategies to:

Reduce regulatory barriers that can significantly increase the cost of
producing and rehabilitating affordable housing, including
high-quality manufactured housing.

Encourage the production of modest "starter homes"
that would be affordable to first-time homebuyers.

Stimulate the development of new building technol-ogies, materials,
and processes that could make homes more efficient to produce and
operate.

MAKING FINANCING MORE AVAILABLE, AFFORDABLE, and FLEXIBLE. The
inability (either real or perceived) of many younger families to qualify
for a mortgage is widely recognized as a very serious barrier to
homeownership. The National Homeownership Strategy commits both
government and the mortgage industry to a number of initiatives
designed to:

Cut transaction costs through streamlined regulations and
technological and procedural efficiences.

Reduce downpayment requirements and interest costs by making
terms more flexible, providing subsidies to low- and
moderate-income families, and creating incentives to save for
homeownership.

Increase the availability of alternative financing products in housing
markets throughout the country.

TARGETING ASSISTANCE TO UNDERSERVED COMMUNITIES. Decline and
disinvestment have left many pockets of urban and rural America
without the mortgage capital, infrastructure, and economic opportunity
needed to make homeownership feasible for current residents and
attractive to prospective ones. The National Homeown-ership Strategy
urges government, employers, lenders, insurers, and nonprofits to
undertake strategies that will:

Build the capacity of local actors to foster affordable
homeownership in their own communities.

Promote homeownership opportunities in areas easily accessible to
employment.

Revitalize distressed urban neighborhoods so that they can attract
and retain homeowners.

Expand homeownership in rural America through initiatives that
recognize the unique challenges and resources of nonmetropolitan
areas.

OPENING THE HOMEBUYING MARKET TO UNDERSERVED POPULATIONS.
Discrimination, inflexibility, and lack of informa-tion continue to keep
homeownership out of reach for many Americans, including racial and
ethnic minorities, people with disabilities (as a disabled person, I don't think they were talking about me, but more about people with "so called" mental disabilities that keep them from obtaining a certain level of education), and others. The National
Homeownership Strategy acknowledges a special need and presents a
special opportunity to reach out to histori-cally underserved
populations through actions that:

Promote fair housing and fair lending by removing barriers that
deter many Americans from seeking buying, insuring, or maintaining
a home in the neighborhood of their choice.

Increase employment diversity in the homeownership industry.
Click to expand...

Wow!

Conclusion

The United States has much at stake in the success of the National
Homeownership Strategy. Although research on some key points
remains inconclusive, the preponderance of the existing scholarship
confirms the validity of many of the benefits popularly attributed to
homeownership. Homeownership is a key source of individual wealth
and national prosperity. Overall, home-owners seem to be more content
with their own lives and more likely to participate in the life of their
neighborhood.

In some respects, the advantages of homeownership are greatest for the
households who currently have the least access to them. Minorities
derive a greater share of per-sonal wealth from homeownership than
whites. Home-ownership seems to make a particularly significant
difference in the physical condition of low-income neighborhoods and,
perhaps, in the lives of low-income children as well. By improving
access to homeownership for those previously underserved, the
National Home-ownership Strategy can, as Secretary Cisneros has
predicted, "make a real difference in the lives of millions of American
families, and in our communities, for years to come."
Click to expand...

http://www.huduser.org/publications/txt/hdbrf2.txt

Thoughts?

saltyone, Sep 7, 2008

#1
saltyone So Mote It Be

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And...once you break something, you have to try and fix it...

Emergency Home Ownership and Mortgage Equity Protection Act of 2007 -

Amends federal bankruptcy law governing a chapter 13 debtor (adjustment of debts of an individual with regular income) to prohibit the holder of a claim in bankruptcy which is secured by debtor's principal residence from adding fees, costs, or charges while the case is pending, unless such claimholder gives timely notice to both debtor and the bankruptcy trustee.

Revises requirements for the discretionary features of a chapter 13 debtor's plan. Removes the prohibition against modification of the rights of a holder of a claim secured only by an interest in real property that is the debtor's principal residence. (Thus allows a plan to modify such rights.)
Authorizes a chapter 13 bankruptcy plan to provide for payment of allowed claims secured by the debtor's principal residence over a period that exceeds a specified time frame.

Eliminates the pre-petition credit counseling requirement for a chapter 13 debtor facing foreclosure if the debtor submits a certification to the court that the holder of a claim secured by the debtor's principal residence has initiated foreclosure on that residence.

Adds to conditions for court confirmation of a plan in bankruptcy that the holder of an allowed claim secured by the debtor's principal residence shall retain the lien securing such claim until the claim is paid.

Excludes from final discharge of a debtor from all debts any allowed claim secured by the debtor's principal residence before such claim is paid.
Click to expand...

http://www.cbo.gov/ftpdocs/89xx/doc8968/hr3609.pdf

I love the part about estimated cost to tax payers and the private sector... :rolleye33:

saltyone, Sep 7, 2008

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saltyone So Mote It Be

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From Nancy Pelosi....

Problems in the subprime mortgage markets have helped push the housing market into its worst slump in 16 years. As many as 2 million Americans will see their mortgage rates increase in the next two years, with many of them losing their homes as a result of bad lending practices. Home foreclosures have shot up to an all-time high. As a result of the overall housing slump, tens of millions of homeowners could see the value of their home—their primary investment—drop in value.

On July 23, the House passed the most comprehensive response yet to the American mortgage crisis, which was signed into law on July 30. The American Housing Rescue & Foreclosure Prevention Act, H.R. 3221, will help families facing foreclosure keep their homes, help other families avoid foreclosures in the future, and help the recovery of communities harmed by empty homes caught in the foreclosure process. To shore up the housing market and ensure the availability of affordable home loans, the bill would put a tough, independent new regulator in charge of the housing Government Sponsored Enterprises, or GSEs (Fannie Mae, Freddie Mac, and the Federal Home Loan Banks), which are vital to both the financial markets and American homeowners. The new regulator will be far better prepared to quickly and effectively respond to issues affecting the safe and sound operation of these enterprises.
Click to expand...

http://speaker.gov/issues?id=0053

And now the Big Bail Out...

[MEDIA]http://www.youtube.com/watch?v=xTnbe53Tv2w[/MEDIA]

Please! Please! Watch the below video. After reading everything above, what do you think about their statements?

[MEDIA]http://www.youtube.com/watch?v=GM-Km47ius0[/MEDIA]

saltyone, Sep 7, 2008

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houtiger Founding Member

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not buying it. this is on the mortgage lenders who sold mortgages without qualifying the buyers and lying to the buyers about terms of the loan (private industry), rating agencies that called this 'aaa' debt when it wasn't (private industry), brokerage houses that bought this to increase their own yield for a few years and sold it to the public(private industry, see citigroup and merrill lynch writedowns), buyers not paying close enough attention to the fine print, federal reserve being over accommodative in 2002 2005 (govt), and lack of reguation of the banking sector by the treasury (govt). did clinton's desire to expand homeownership play a role? maybe. but what role? no way this is all on clinton.

houtiger, Sep 7, 2008

#4

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TheDude I'm calmer than you.

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houtiger said: ↑

not buying it. this is on the mortgage lenders who sold mortgages without qualifying the buyers and lying to the buyers about terms of the loan (private industry), rating agencies that called this 'aaa' debt when it wasn't (private industry), brokerage houses that bought this to increase their own yield for a few years and sold it to the public(private industry, see citigroup and merrill lynch writedowns), buyers not paying close enough attention to the fine print, federal reserve being over accommodative in 2002 2005 (govt), and lack of reguation of the banking sector by the treasury (govt). did clinton's desire to expand homeownership play a role? maybe. but what role? no way this is all on clinton.
Click to expand...

That is a reasonable analysis. One the dems don't share. You named mortgage lenders, rating agencies, brokerage houses, buyers and the federal reserve. You even acknowledge that Clinton could share some responsibility. Dems only blame repubs, and by extension, Bush, and by further extension McCain.

Personal accountability? That's dead.

TheDude, Sep 7, 2008

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houtiger Founding Member

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TheDude said: ↑

That is a reasonable analysis. One the dems don't share. You named mortgage lenders, rating agencies, brokerage houses, buyers and the federal reserve. You even acknowledge that Clinton could share some responsibility. Dems only blame repubs, and by extension, Bush, and by further extension McCain.

Personal accountability? That's dead.
Click to expand...

the final problems that hurt people were the massive inflation in house prices, and interest rates that dipped too low and stayed down too long in 2002 - 2005. This was all under repub president, congress and fed reserve control. who ya gonna blame, the dems?

houtiger, Sep 7, 2008

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TheDude I'm calmer than you.

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houtiger said: ↑

the final problems that hurt people were the massive inflation in house prices, and interest rates that dipped too low and stayed down too long in 2002 - 2005. This was all under repub president, congress and fed reserve control. who ya gonna blame, the dems?
Click to expand...

You first post was reasonable, this last one, not so much. There is a great deal of blame to go around and I didn't say that repubs had no hand in it - they share it. However, laying it all at the feet of this administration is disingenuous and false. Your previous post showed that, so continue the debate - with yourself.

TheDude, Sep 7, 2008

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houtiger Founding Member

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TheDude said: ↑

You first post was reasonable, this last one, not so much. There is a great deal of blame to go around and I didn't say that repubs had no hand in it - they share it. However, laying it all at the feet of this administration is disingenuous and false. Your previous post showed that, so continue the debate - with yourself.
Click to expand...

if you take my two posts together, I said exactly what you did. plenty of blame to go around (fisrt post), repubs have their share of it (second post). i could not possibly be laying it all at their feet after the first post. i don't see how you would have gotten that idea.

houtiger, Sep 7, 2008

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TheDude I'm calmer than you.

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houtiger said: ↑

if you take my two posts together, I said exactly what you did. plenty of blame to go around (fisrt post), repubs have their share of it (second post). i could not possibly be laying it all at their feet after the first post. i don't see how you would have gotten that idea.
Click to expand...

Guess I misunderstood you. The second post seemed in conflict. I agreed with your first post but pointed out that dems don't mention the combination of reasons, and instead only blame the republican admin. It's just political pandering.

TheDude, Sep 7, 2008

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saltyone So Mote It Be

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Here's your former HUD secretary under Clinton...

Pardoned by Clinton, convected felon Henry Cisneros

DENVER, Aug 27, 2008 /PRNewswire-USNewswire via COMTEX/ -- Henry Cisneros, former secretary of the US Department of Housing and Urban Development (HUD), declared today that the housing industry is in a "truly dangerous place" and that significant steps must be taken by the next administration to address the mounting problems.

Mr. Cisneros spoke at a housing forum at the Democratic National Convention that was hosted by the Federal Home Loan Bank of San Francisco (FHLBank San Francisco). Mr. Cisneros said the stakes are high because housing "is so embedded in the overall economy," and the situation "continues to get worse."

"Today, we cannot say how it will turn out," Mr. Cisneros told the gathering at the Colorado Convention Center. Joining him on the panel were Marc H. Morial, president and CEO of the National Urban League, and Maurice Jourdain-Earl, managing director of Compliance Technologies. The panelists reflected their personal views during the forum, and those views were not necessarily endorsed by the FHLBank San Francisco.

Dwight Alexander, vice president of legislative affairs at FHLBank San Francisco, set the stage for the discussion by noting that the housing industry has been beset with foreclosures related to sub-prime loans, depreciation of property values, tight credit by the banks and problems at the mortgage giants, Fannie Mae and Freddie Mac, which are suffering millions of dollars in losses each quarter.

"The housing industry is facing serious problems, and we brought this talented panel together to help us better understand the issues and what the solutions might be," Mr. Alexander said.

With the economy staggering along, Mr. Cisneros said the new administration next year will be forced to pass a second stimulus package. He said it must contain measures to deal with the credit crunch that is curtailing investments and lending. "We won't get the job machine started without credit," he said, adding that measures must also assist people and communities hurt by foreclosures, assist those who will be hurt in the future and increase the supply of affordable rental housing.

Mr. Morial agreed, but said an emphasis must be placed on homeownership. He noted that government programs, such as the GI Bill, were the foundation for the growth of the middle-class in the 70s, 80s and 90s. "Homeownership must be a goal," he said. "The goal for the nation must be to close the homeownership gap between whites and people of color."

Mr. Morial also said that any measures aimed at improving the credit situation for banks must also include a national law against predatory lending.

Meanwhile, Mr. Jourdain-Earl gave the audience a clearer picture of sub- prime borrowers. His company is a leading provider of technology that analyzes lending patterns across the country. His data determined that while the majority of sub-prime loans went to non-Hispanic whites, there was a much higher concentration of sub-prime loans to people of color.
"Whites had more sub-prime loans than all minorities combined," he said, but added that more than 50 percent of the loans to African Americans were sub-prime loans.

The Federal Home Loan Bank of San Francisco delivers low-cost funding and other services that help member financial institutions make home mortgages to people of all income levels and provide credit that supports neighborhoods and communities. The Bank also funds community investment programs that help members create affordable housing and promote community economic development. The Bank's members -- its shareholders and customers -- are commercial banks, credit unions, savings institutions, thrift and loans, and insurance companies headquartered in Arizona, California, and Nevada.

SOURCE Federal Home Loan Bank of San Francisco
Click to expand...

So, their plan to fix everything is to award more stimulus packages and continue to drive lenders to people who can not afford to pay back the loans? How the hell does this make sense?

I should also mention that Henry, after starting this mess, then profited from it by joining the board of directors of the now bankrupt Country Wide Finanicial Corp....

When Henry Cisneros joined the board of directors of Countrywide Financial Corp. in 2001, the real estate industry was poised for a spectacular ride.

All-time records for home sales started to fall like confetti. Mortgage interest rates dropped, prompting a surge in home buying and refinancing.
Countrywide, the nation's largest mortgage lender, boomed.

Cisneros' financial fortunes would soar, too. He was granted — and sold — more than $5 million in company stock as prices climbed from around $10 per share in 2001 to more than $40 per share in late 2006 and early 2007.
Additionally, he earned a base salary of $70,000 per year and received $1,500 for each board meeting attended, $750 for each phone meeting and health insurance. Overall, Countrywide's directors were among the country's best compensated.

Yet Countrywide's business began unraveling during the watch of Cisneros and his fellow directors. While the company's executives are considered primarily responsible, the case of Countrywide illustrates how quickly a director can find himself accused of having divided loyalties and poorly representing shareholders' interests.

The entire mortgage lending industry has fallen into turmoil in the past year.

"Countrywide was not unique in that they didn't handle this well," said Joseph Bower, professor at Harvard Business School. "After the fact you can go into these situations and say, 'How is it possible that you didn't ask these questions?' It turns out that human beings usually don't ask the right questions."

Cisneros, former San Antonio mayor and the first secretary of Housing and Urban Development under President Clinton, served at Countrywide while it increased the number of adjustable-rate mortgages and subprime loans made to borrowers with less-than-stellar credit histories.

He resigned from the board in October, citing the need to concentrate on his own company, just days before Countrywide reported a $1.2 billion quarterly loss. One-third of its subprime borrowers were late on their mortgage payments at the end of 2007, according to a Jan. 31 financial report. On Friday, the company said payments were overdue on 7.5 percent of the loans it serviced in January.
Click to expand...

http://www.mysanantonio.com/news/MYSA021708_01A_Cisneros-Countrywide_3584118_html19567.html

Follow the money and special interest.....It's not that hard.

Henry started this, under Clinton, then went to work on the board with the largest mortgage lender in the country at the time. He then walked away right before the bottom fell out...after becoming extremely wealthy. You've got to be kidding me.

Securities and Exchange Commission filings from 2001 to 2007 show that Countrywide's loans became increasingly risky.
In 2001, when Cisneros joined the board, 12 percent of the loans Countrywide originated had adjustable interest rates.

By 2004, 52 percent of the company's loans had adjustable rates.

Subprime lending to borrowers with credit problems also increased.

In 2001, subprime loans made up 4.5 percent of Countrywide's mortgage loan portfolio, according to regulatory filings.

By 2004, subprime loans made up 10.9 percent of the company's business.
Click to expand...

saltyone, Sep 7, 2008

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