Lately I have been hearing a lot of noise from misinformed people about how it was the investors who were flipping houses that caused the recent real estate bust. They cite as their "evidence" the fact that flippers increase the prices of homes dramatically, and this increase caused inflationary prices and values. Since I have been flipping for over 40 years, I can state unequivically that their assessment is myopic. Yes, we do increase prices, but we only do so by either buying at a bargain and reselling at true market, or by adding value through rehabbing a property that has been neglected. And when a flipper puts money into a declining home, then recycles it to Joe Homebuyer, that "flipper" is actually helping to improve the economy and the housing market.
That said, I think it is time that people discover the truth about what really happened - not only to the housing market, but how that afected the entire economy, causing the worst recession in a lifetime.
And some readers will be offended at the truth - they will wrongly claim that I am being an "idealogue", or partisan. But I am not - I am simply citing facts that anyone can look up for themselves.
Anyone who kept up with the news is aware that the major cause of the financial meltdown was caused by worthless mortgages issued to people who simply were not capable of paying for the homes they bought. But what many people do NOT know and the official documents show is that those mortgages were created thanks to Bill Clinton & Barak Obama, assisted by Jimmy Carter, FDR, LBJ, Janet Reno, Barney Frank and Chris Dodd, among others seeking "social justice".
First, laying the groundwork. At the urging of certain groups seeking "social justice", President Jimmy Carter signed the Community Reinvestment Act into law. That law prevented banks from discriminating against poor people - you know, the ones who cannot afford to repay loans. This got the ball rolling...
As detailed in the American Thinker, it was Barak Obama who represented ACORN in a 1994 suit against redlining. In other words, banks would not issue mortgages to poor people or minorities living in a "redline" district. ACORN was also a driving force behind a 1995 regulatory revision (the Bliley Bill) pushed through by the Clinton administration that greatly expanded the Community Reinvestment Act and helped spawn the current financial crisis by forcing banks to issue mortgages to people who could not afford them.
Obama was one of the the attorneys representing ACORN in this effort. In a speech to Acorn Obama said, "I've been fighting alongside ACORN on issues you care about my entire career." Indeed he has. Obama was and is fully aware of what ACORN was doing with the money and expertise he provided. He was the attorney representing ACORN in the lawsuit against Citibank that eventually resulted in the financial meltdown, as shown by the actual case history:
Case Name: Buycks-Roberson v. Citibank Fed. Sav. Bank Fair Housing/Lending/Insurance
Docket / Court 94 C 4094 ( N.D. Ill. ) FH-IL-0011
State/Territory Illinois
Case Summary
Plaintiffs filed their class action lawsuit on July 6, 1994, alleging that Citibank had engaged in redlining practices in the Chicago metropolitan area in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691; the Fair Housing Act, 42 U.S.C. 3601-3619; the Thirteenth Amendment to the U.S. Constitution; and 42 U.S.C. 1981, 1982. Plaintiffs alleged that the Defendant-bank rejected loan applications of minority applicants while approving loan applications filed by white applicants with similar financial characteristics and credit histories. Plaintiffs sought injunctive relief, actual damages, and punitive damages.
U.S. District Court Judge Ruben Castillo certified the Plaintiffs suit as a class action on June 30, 1995. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 322 (N.D. Ill. 1995). Also on June 30, Judge Castillo granted Plaintiffs motion to compel discovery of a sample of Defendant-bank loan application files. Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 338 (N.D. Ill. 1995).
The Plaintiff's Lawyers were:
Obama, Barack H. (Illinois)
Alexis, Hilary I. (Illinois)
Childers, Michael Allen (Illinois)
Clayton, Fay (Illinois)
Cummings, Jeffrey Irvine (Illinois)
Love, Sara Norris (Virginia)
Miner, Judson Hirsch (Illinois)
Wickert, John Henry (Illinois)
Under the Clinton administration, federal regulators began using the act to combat red-lining, a practice by which banks loaned money to some communities but not to others, based on economic status. "No loan is exempt, no bank is immune", warned then-Attorney General Janet Reno. "For those who thumb their nose at us, I promise vigorous enforcement."
The Clinton-Reno threat of vigorous enforcement pushed banks to make the now infamous loans that many blame for the current meltdown. Banks, in order to not get in trouble with the regulators, had to make loans to people who shouldn't have been getting mortgage loans.
In short, ACORN, with Obama's help, sucessfully sued the banks and forced an end to redlining. Clinton and Reno pushed it to the hilt, insuring every poor person the chance for home ownership. These risky mortgages forced lenders to bundle them into the now infamous "derivatives" and sold to Fannie Mae & Freddie Mac, in order to spread the risk. The mortgages did not get paid, resulting in the meltdown that we are still suffering from. And when John McCain tried to push through a bill that would put the brakes on Fannie Mae and Freddie Mac back in 2004, Barney Frank and Chris Dodd, both "social justice" liberals, stopped it, claiming that Fanny & Freddie were rock solid. It is also interesting to note that Fannie Mae was created by a social justice liberal (FDR), privatized by a social justice liberal (LBJ), and overseen and protected by social justice liberals (Frank, Dodd).
I do realize this sounds partisan because virtually all the players are liberal, "social justice" democrats. But the facts are what they are, and it has nothing to do with ideology. But it is seriously ironic that in the hope of finding someone who could fix the problem, low-information voters in 2008 elected to the White House the very person who helped create the problem.
And THAT is what actually happened. It had nothing to do with flippers. In fact, today's flippers are helping to rebuild the economy by recycling homes that no one wants. In many cases, those homes are also victims of ACORN and "social justice" - two out of three foreclosed homes over the last several years were purposely and viciously trashed by the people who were forced out, rendering many of the homes unliveable. Flippers are putting those homes back into circulation.
So, instead of blaming flippers for the housing crash, we would be far more insightful to thank them for helping the "Phoenix rise from the ashes".
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