It Was the Community Reinvestment Act All Along

Industry Observer with No Longer Processing Mortgages. MLO #293441 expired

Pamela Seeley in California has put out some very good information on the foundation of the entire real estate bubble problem.  This is news that the main streem media, for what ever reason, doesn't seem to want to broadcast.

Original content by Pamela Seley BRE #01824145

It Was the Community Reinvestment Act All Along

That caused the housing bubble, not the greedy, evil banks in tandem with Wall Street.

Finally, an expert authority, the National Bureau of Economic Research has confirmed in a recent study, that it was the Community Reinvestment Act and subsequent government policies that played a role in “a government effort to extend home-ownership in lower-income neighborhoods.”

It’s exactly what I’ve figured out these last few years after meeting and hearing the personal stories of distressed homeowners, and discussing the cause of the mortgage meltdown with mortgage brokers, and other real estate professionals.

It was in 2008 that I first began to realize something was terribly amiss, when I met a homeowner who made $8.50 hour and bought a $300,000 new construction home in 2006 with no money down.

The homeowner received an option 4 payment loan (usually reserved for investors, not owner-occupied borrowers) and was paying only the minimum payment for two years when his loan reset to 3-1/2 times because the principal on his mortgage was growing, instead of shrinking. Because there was not an escrow account set-up, the homeowner was responsible for paying property taxes outside paying the mortgage payment. The homeowner was completely blindsided and had no idea property taxes were not being paid, especially when he could barely afford the minimum required monthly mortgage payment.

The loan originated with Countrywide, and he was told at the time because housing prices were rising, he would be able to refinance later to a fixed rate loan. The monthly payment he was making covered about half of the monthly interest on the principal. Two years later in 2008 as housing prices started to crash, he was denied a refinance of his mortgage loan.

As of January 2010 negative amortization loans are banned in California. Unfortunately, it was too late for this particular homeowner, who soon lost their home to foreclosure. Like so many Californians, the dream of homeownership became a nightmare. It’s cruel to lend money to someone who is not able to repay it.  

Occupy Wall Street should have been Occupy Pennsylvania Avenue instead.


Pamela Seley, REALTOR®
CA DRE lic # 01824145 | Dir 951.491.4063 | pamelaseley.comTemecula Valley California homes for sale

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All information deemed reliable, but not guaranteed. Copyright © 2009-2012 by Pamela Seley, REALTOR® 

Posted by


Steven CookSteven T Cook
Loan Officer, MLO-293441      

Cascade Pacific Home Loans  NMLS ID 76988
720 S 333rd St  Federal Way  WA  98003
Office 253-874-1111 | Cell 253-677-1064
Toll Free 1-800-874-8760 | fax 253-295-3901 |

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Comments (2)

Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Steven, thank you for the re-blog. 

Dec 27, 2012 04:03 PM
Steven Cook
No Longer Processing Mortgages. - Tacoma, WA

Pamela -- glad to do it, we need to get this information out there.

Have a fantastic weekend!

Dec 28, 2012 01:47 AM