Did the CRA (community Reinvestment Act) of 1977 combined with the Fannie & Freddie act of 1992 have something to do with the housing crisis? These combined ACT's required banks to lend to low & mod income borrowers, aimed to reduce discriminatory credit practices... Was this the fuse and the fuel for the housing bubble? I find it interesting that within 3 years of the second act passing low down payment lending from private lenders went from 8% to 25% and then just kept going up from there... This seems to have set the standard of providing loans to high risk buyers, I would venture to say that poor underwriting or “flexible” underwriting was also a large contributor. Did you know that CRA commitments from 1992-2009 are $6 trillion dollars?? WOW Something to think about, I'm sure these Act's had good intentions but again when Government is in charge there is always a larger risk factor involved for the tax payers.
Did you know 1 & 4 FHA loans are either delinquent or in foreclosure that is 25% of the all FHA loans are in trouble, now you have Barney Frank trying make the FHA limit of 800,000 permanent Are we making the same mistakes again with a new name? Folks this is a HUGE warning. Regulators are horrible at regulating when times are good… but they seem to over regulate when times are tough.
Top foreclosure states are Florida (12.7%), Nevada (9.4%) and Arizona (6.2%) per the WSJ.
Something I was pondering over a cup of coffee this morning
~John
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