January 4, 2009

WSJ: "Housing Push for Hispanics Spawns Wave of Foreclosures"

From the Wall Street Journal:

"Housing Push for Hispanics Spawns Wave of Foreclosures"

California Rep. Joe Baca has long pushed legislation he said would "open the doors to the American Dream" for first-time home buyers in his largely Hispanic district. For many of them, those doors have slammed shut, quickly and painfully.

Mortgage lenders flooded Mr. Baca's San Bernardino, Calif., district with loans that often didn't require down payments, solid credit ratings or documentation of employment. Now, many of the Hispanics who became homeowners find themselves mired in the national housing mess. Nearly 9,200 families in his district have lost their homes to foreclosure.

For years, immigrants to the U.S. have viewed buying a home as the ultimate benchmark of success. Between 2000 and 2007, as the Hispanic population increased, Hispanic homeownership grew even faster, increasing by 47%, to 6.1 million from 4.1 million, according to the U.S. Census Bureau. Over that same period, homeownership nationally grew by 8%. In 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%, according to the Federal Financial Institutions Examination Council.

An examination of that borrowing spree by The Wall Street Journal reveals that it wasn't simply the mortgage market at work. It was fueled by a campaign by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, who all were pushing to increase homeownership among Latinos.

What about President Bush and his 2002 White House Conference on Minority Homeownership, where he called for adding 5.5 million Hispanic and black homeowners via cutting back on barriers to the American Dream, such as down payments?

The network included Mr. Baca, chairman of the Congressional Hispanic Caucus, whose district is 58% Hispanic and ranks No. 5 among all congressional districts in percentage of home loans not tailored for prime borrowers. The caucus launched a housing initiative called Hogar -- Spanish for home -- to work with industry and community groups to increase mortgage lending to Latinos. Mortgage companies provided funding to that group, and to the National Association of Hispanic Real Estate Professionals, which fielded an army to make the loans.

In years past, minority borrowers seeking loans were often stopped cold by a practice called red-lining, in which lenders were reluctant to lend within particular geographical areas, often, it appeared, on the basis of race. But combined efforts to open the mortgage pipeline to Latinos proved successful.

"We saw what we refer to in the advocacy community as reverse red-lining," says Aracely Panameno, director of Latino affairs for the Center for Responsible Lending, an advocacy group. "Lenders were seeking out those borrowers and charging them through the roof," she says.

Ms. Panameno says that during the height of the housing boom she sought to present the Hispanic Caucus with data showing how many Latinos were being steered into risky and expensive subprime loans. Hogar declined her requests, she says.

A very large fraction of the people steering Hispanics into risky and expensive subprime loans were Hispanics, so it's hardly surprising that their political representatives weren't interested in hearing about predatory lending abuses. Hispanic mortgage brokers, real estate agents, and construction workers were making a killing off easy credit, so why kill the goose that laid the golden egg?

When the national housing market began unraveling, so did the fortunes of many of the new homeowners. National foreclosure statistics don't break out data by ethnicity or race. But there is evidence that Hispanic borrowers have been hard hit. In part, that's because of large Hispanic populations in areas where the housing bubble was pronounced, such as Southern California, Nevada and Florida.

And why was the Housing Bubble pronounced in those areas with large Hispanic populations? In the propaganda of the time, population growth was constantly cited as justifying rising home prices, but there was no mention of whether these new people had the earning capacity to pay back their mortgages.

In U.S. counties where Hispanics account for more than 25% of the population, banks have taken back 6.7 homes per 1,000 residents since Jan. 1, 2006, compared with 4.6 per 1,000 residents in all counties, according to a Journal analysis of U.S. Census and RealtyTrac data.

Hispanic lawmakers and community groups have blamed subprime lenders, who specialize in making loans to customers with spotty credit histories. They complain that even solid borrowers were steered to those loans, which carry higher interest rates.

In a written statement, Mr. Baca blamed the foreclosure crisis among Hispanics on borrowers' lack of "financial literacy" and on "lenders and brokers eager to make a bigger profit." He declined to be interviewed for this story.

But a close look at the network of organizations pushing for increased mortgage lending reveals a more complicated picture. Subprime-industry executives were advisers to the Hogar housing initiative, and bankrolled more than $2 million of its research. Lawmakers and advocacy groups pushed hard for the easy credit that fueled the subprime phenomenon among Latinos. Members of the Congressional Hispanic Caucus, who received donations from the lending industry and saw their constituents moving into new homes, pushed for eased lending standards, which led to problems.

Mortgage lenders appear to have regarded Latinos as a largely untapped demographic. Many were first or second-generation U.S. residents who didn't own homes. Many Hispanic families had multiple wage earners working multiple cash jobs, but had no savings or established credit history to allow them to qualify for traditional loans.

The Congressional Hispanic Caucus created Hogar in 2003 to work with industry and community groups to increase mortgage lending to Latinos. At that time, the national Latino homeownership rate was 47%, compared with 68% for the overall population. Hogar called the figure "alarming," and said a concerted effort was required to ensure that "by the end of the decade Latinos will share equally in the American Dream of homeownership."

Hogar's backers included many companies that ran into trouble in mortgage markets: Fannie Mae and Freddie Mac, both now under federal control; Countrywide Financial Corp., sold last year to Bank of America Corp.; Washington Mutual Inc., taken over by the government and sold to J.P. Morgan Chase & Co.; and New Century Financial Corp. and Ameriquest Mortgage Corp., both now defunct.

Hogar's ties to the subprime industry were substantial. A Washington Mutual vice president served as chairman of its advisory committee. Companies that donated $150,000 a year got the right to place a research fellow who would conduct Hogar's studies, which were used by industry lobbyists. For donations of $100,000 a year, Hogar offered to provide news releases from the Hispanic Caucus promoting a lender's commercial products for the Latino market, according to the group's literature.

Hogar worked with Freddie Mac on a two-year examination of Latino homeownership in 63 congressional districts. The study found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting. It recommended further easing of down-payment and underwriting standards.

Representatives for Hogar declined repeated requests for comment.

The National Association of Hispanic Real Estate Professionals, one of Hogar's sponsors, advised the group, shared research data and built a large membership to market loans to Latinos. By 2005, its ranks had grown to 16,000 agents and mortgage brokers.

The association, called Nahrep, received funding from some of the same players that funded Hogar. Some 22 corporate sponsors, including Countrywide and Washington Mutual, together paid the association $2 million a year to attend conferences and forums where lenders could pitch their loan products to loan brokers.

While home prices were rising, the lending risk seemed minimal, says Tim Sandos, Narhep's president. "We would say, 'Is he breathing? OK, we'll give him a mortgage,' " he recalls.

Nahrep's 2006 convention in Las Vegas was called "Place Your Bets on Home Ownership." Countrywide Chairman Angelo Mozilo spoke, as did former Housing and Urban Development Secretary Henry Cisneros, a force in Latino housing developments in the West.

The words "Las Vegas" constantly pop up in these kind of articles.

Countrywide and other sponsors contracted with Nahrep to set up regional events where they could present loan products to loan brokers and their customers. Mr. Sandos says his organization doesn't get paid to promote particular lenders.

At the height of the subprime lending boom, in 2005, banking and finance companies gave at least $2.3 million in campaign contributions to members of the Hispanic Caucus, according to data from the Center for Responsive Politics.

In October 2008, a charitable foundation set up by Mr. Baca received $25,000 from AmeriDream Inc., a nonprofit housing company and Hogar sponsor. Mr. Baca has long backed AmeriDream's controversial seller-financed down-payment assistance program. AmeriDream provided down-payment money to buyers, a cost that was covered by home builders in the form of donations to the nonprofit.

This is a tax evasion scam, often organized through minority charities, such as churches. The Bush Administration tended to push it as "compassionate conservatism."

New housing legislation last fall outlawed the program. Mr. Baca is cosponsoring a bill that would allow AmeriDream and similar nonprofits to resume arranging seller-financed down-payment assistance to low-income Federal Housing Administration borrowers.

Such seller-financed loans comprise one-third of the loans backed by the FHA, and have defaulted at nearly triple the rate of other FHA-insured loans, according to agency spokesman William Glavin.

[prime candidates chart]

In a news release, AmeriDream said the donation to Mr. Baca's foundation was intended to fund the purchase of gear for firefighters in his district. Local news reports say the foundation gave away $36,000 in scholarships this year.

Internal Revenue Service records indicate that Mr. Baca's son, Joe Baca Jr., has an annual salary of $51,800 as executive director of the Joe Baca Foundation, which is run out of the congressman's home. Joe Baca Jr. says he currently is taking only about half that listed salary.

Mr. Baca's office declined to comment on the AmeriDream contribution.

Mr. Baca remains opposed to strict lending rules. "We need to keep credit easily accessible to our minority communities," he said in a statement released by his office.

Mortgage lending to Hispanics took off between 2004 and 2007, powered by nonprime loans. The biggest jump occurred in 2005.

If this had been merely a cynical re-election ploy by the Bush Adminstration, Bush could have pulled the plug on it the day after the November 2004 election. But, instead, this was a practically universal delusion among the Great and the Good. To Karl Rove, it was a permanent good idea that would bring about long-term realignment by making Hispanics into home-owning Republicans. To Democrats, it was pork for their constituents.

The 169% increase in nonprime mortgages to Hispanics that year outpaced a 122% gain for blacks, and a 110% increase for whites, according to a Journal analysis of mortgage-industry and federal-housing data. Nonprime mortgages carry high interest rates and are tailored to borrowers with low credit scores or few assets.

Between 2004 and 2007, black borrowers were offered nonprime loans at a slightly higher rate than Hispanics, but the overall number of Hispanic borrowers was much larger. From 2004 to 2005, total nonprime home loans to Hispanics more than tripled to $69 billion from $19 billion, and peaked in 2006 at $73 billion.

Tricks of the Trade

Mortgage brokers became a key portion of the lending pipeline. Phi Nguygn, a former broker, worked at two suburban Washington-area firms that employed hundreds of loan originators, most of them Latino. Countrywide and other subprime lenders sent account representatives to brokerage offices frequently, he says. Countrywide didn't respond to calls requesting comment.

Representatives of subprime lenders passed on "little tricks of the trade" to get borrowers qualified, he says, such as adding a borrower's name to a relative's bank account, an illegal maneuver. Mr. Nguygn says he's now volunteering time to help borrowers facing foreclosure negotiate with banks.

Many loans to Hispanic borrowers were based not on actual income histories but on a borrower's "stated income." These so-called no-doc loans yielded higher commissions and involved less paperwork.

Another problem was so-called NINA -- no income, no assets -- loans. They were originally intended for self-employed people of means. But Freddie Mac executives worried about abuse, according to documents obtained by Congress. The program "appears to target borrowers who would have trouble qualifying for a mortgage if their financial position were adequately disclosed," said a staff memo to Freddie Mac Chairman Richard Syron. "It appears they are disproportionately targeted toward Hispanics."

Freddie Mac says it tightened down-payment requirements in 2004 and stopped buying NINA loans altogether in 2007.

"It's very hard to get in front of a train loaded with highly profitable activities and stop it," says Ronald Rosenfeld, chairman of the Federal Housing Finance Board, a government agency that regulates home loan banks.

Regions of the country where the housing bubble grew biggest, such as California, Nevada and Florida, are heavily populated by Latinos, many of whom worked in the construction industry during the housing boom. When these markets began to weaken, bad loans depressed the value of neighboring properties, creating a downward spiral. Neighborhoods are now dotted with vacant homes.

By late 2008, one in every nine households in San Joaquin County, Calif., was in default or foreclosure -- 24,049 of them, according to Federal Reserve data. Banks have already taken back 55 of every 1,000 homes. In Riverside, Calif., 66,838 houses are owned by banks or were headed in that direction as of October. In Prince William County, Va., a Washington suburb, 11,685 homes, or one in 11, was in default or foreclosure.

Gerardo Cadima, a Bolivian immigrant who works as an electrician, bought a home in suburban Virginia for $330,000, with no money down. "I said this is too good to be true," he recalls. "I'm 23 years old, with a family, buying my own house."

When work slowed last year, Mr. Cadima ran into trouble on his adjustable-rate mortgage. "The payments were increasing, and the price of the house was starting to drop," he says. "I started to think, is this really worth it?" He stopped making payments and his home was sold at auction for $180,000.

In the wake of the housing slump, some participants in the Hispanic lending network are expressing second thoughts about the push. Mr. Sandos, head of Nahrep, says that some of his group's past members, lured by big commissions, steered borrowers into expensive loans that they couldn't afford.

Nahrep has filed complaints with state regulators against some of those brokers, he says. Their actions go against Nahrep's mission of building "sustainable" Latino home ownership.

These days, James Scruggs of Northern Virginia Legal Services is swamped with Latino borrowers facing foreclosure. "We see loan applications that are complete fabrications," he says. Typically, he says, everything was marketed to borrowers in Spanish, right up until the closing, which was conducted in English.

"We are not talking about people working for the World Bank or the IMF," he says. "We are talking about day laborers, janitors, people who work in restaurants, people who do babysitting."

Two such borrowers work in Mr. Scrugg's office. Sandra Cardoza, a $28,000-a-year office manager, is now $30,000 in arrears on loans totaling $370,000. "Her loan documents say she makes more than me," says Mr. Scruggs.

Nahrep agents are networking on how to negotiate "short sales" to banks, where Hispanic homeowners sell their homes at a loss in order to escape onerous mortgages. The association has a new how-to guide: "The American Nightmare: Strategies for Preventing, Surviving and Overcoming Foreclosure."

—Louise Radnofsky contributed to this article.

Write to Susan Schmidt at susan.schmidt@wsj.com and Maurice Tamman at maurice.tamman@wsj.com

Well, I told you so.

My published articles are archived at iSteve.com -- Steve Sailer

26 comments:

  1. It seems 2005 and 2006 were the worst years, when bad loans were handed out like champagne on New Year's. I'm asking non-rhetorically, what was it about those years that inspired all those bad loans? It was post-election for Bush. Had all the "good" loans dried up and they needed to scrape the bottom of the barrel to keep the ship afloat? Or was something else going on that I don't know about? Because it 2005 & 06 seem just like yesterday.

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  2. Millions of working class Hispanics were the victims in the home-value ponzi scheme bubble, as you have brilliantly pointed out, perpetrated by white collar Hispanics. That is a Big and Important idea, by all means. But now we are all suffering. Can we turn our attention to forward thinking, to solving the crisis? Home prices are now at the same value as spring 2004, before the bubble, and the foreclosure cycle is nowhere near being over.

    What happens when a critical mass of home owners goes upside-down? At what point does it become a self-sustaining black hole implosion that cannot end? Would it be when half of all home-owners are upside down? A third, a quarter?

    Will the collapse ever end? Have we already crossed over that threshold?

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  3. Don't forget during the 90's the Hispanic total fertility rate dropped to 2.65 but has risen to 2.92 in 2006.

    It is possible the Bush-Rove policy of inflating minority home ownership caused an increase in Hispanic and, to a lesser extent, black fertility rates.

    It will be worth watching the next few years to see whether Hispanic birth rates begin to fall during the Diversity Depression.

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  4. When I learned in 2005 that Citibank issued mortgage loans to customers having no credit, down payment or job history documentation, I decided to move our family's accounts. After an short search, I found a local credit union whose customer service manager stated in writing that its stringent requirements forbid it from operating that way. I closed my accounts with Citibank and moved them to my current the credit union shortly thereafter.

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  5. i generally agree with steve on this topic, but still do not fully understand why the housing bubble did not exist in texas, which is the most or second most mestizo state in america.

    i have not found any explanation that was particularly convincing. maybe because there is so much more usable land in texas than there is in california, arizona, and florida?

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  6. Texas: More usable (level and with convenient water supplies) land, much less land use regulation, and lots of institutional memory of the great Texas housing crash of the 1980s.

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  7. Steve's one of the few islands of sanity left nowadays but I hope he gets beyond the minority housing bubble. It’s important he stakes his credentials here so I understand we need lots of fact-based articles, but I do hope there's new stuff coming. It’s not as if there's a dearth of happenings.

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  8. That's one thing that apparently has changed between the recent bubble and bust periods: during a bubble, journalists are PR men for the groups who are inflating the bubble. When it blows up in everyone's faces, they're willing to ask tough questions, look up and analyze data, and generally figure shit out.

    We hold people who do real work to high industry standards -- a shipment of food can't have more than x particles per million of some toxin, a bridge must be built to withstand so many tons of force, etc.

    It's high time we do the same for journalism: no reporting on national trends or "think pieces" unless they're backed up by data analysis.

    If nothing else, it'll provide great free entertainment as we get to laugh and throw eggs at all the pundits standing in line to collect unemployment checks.

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  9. Don't Dallas and Houston still have excess housing stock from the 80's?

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  10. The borrowers typically didn't put anything down so they just walk away when they can't make the payments and never really lost anything. The mortgage payments were just an alternative to rent. You shouldn't be able to buy a house with nothing down (and I suspect you won't be able to for a while now).

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  11. 1/ Didn't Steve's heroine Margaret Thatcher do a similar thing in Britain?

    2/ Ironically, with prices of homes way down, now would be a great time for lower income people to buy a house, government program or no government program.

    3/ Rove? I blame Frank Capra. Hee-haw, George.

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  12. This is the most important story since the Iraq war, with policy implications on the two most important issue facing the nation (the economy and immigration) and Sailer was first with it. Why on earth do you wish he “gets beyond the minority housing bubble”???
    Too painful?

    Initially people, even his readers, said it couldn’t possibly be true. Now even the pro-immigration WSJ is admitting that this is the source of the crisis. You still don't want to hear more about the truth?

    Whats wrong with people?

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  13. "Millions of working class Hispanics were the victims in the home-value ponzi scheme bubble"
    "But now we are all suffering."

    We were suffering then, too. Those of us buying homes back then had to compete with all these liars. Whenever they bought houses with their stated high incomes, that pushed up the housing average. My husband and I were pulling our hair out during this. He made more money than average back then, around $60,000, but the homes we could responsibly afford were below average (in Florida). Exasperated and dumb-founded don't begin to describe what we were every time we were shown a house in our price range. We got lucky because I was aggressive and snagged a house (custom built '50s) immediately after it was listed and by an out-of-town realtor (who was trying to help family out and he did not know the area). The house should have sold back then for at least $160, but we got it for $125. A 1960's trailer a couple houses down with add-ons that had siding put on it to make it look like a house, and that had a hole in the bathroom floor when we looked at it was sold a month later to a yuppie woman for $110,000 (same amount of land,too).
    She's much more typical of the invisible victims.

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  14. I hope he gets beyond the minority housing bubble.

    Even people who agree with Steve find the whole idea just...well...unpleasant that minority homeownership's beautiful dream was a nightmare. It's just so...incorrect...or not nice. The main responses appear to be: "not true!" and then, when the person is worn down by evidence, "okay maybe, but let's forget this and get past it, okay?"

    I for one hope Steve keeps rubbing it in - hard. You will eat your spinach and you will like your spinach.

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  15. I don't think poor Hispanics suffered that much. They "lost their home" but they paid out of pocket only about what they would have paid in rent, and got to live in a much nicer home than they could have rented for several years.

    The real losers are those who held the paper based on the defaulted loans. Who were those people? I guess we will find out eventually, but very likely they were mostly well-off white people. Very unlikely that they were poor minorities.

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  16. I love this passage in the article:

    "Many loans to Hispanic borrowers were based not on actual income histories but on a borrower's "stated income." These so-called no-doc loans yielded higher commissions and involved less paperwork." [emphasis added]

    Of course that situtation is highly counter-intuitive. Why would a bank pay a salesman more for a loan much more likely to default? Even when you grasp that the 'higher commission' mentioned by the article is probably "yield spread premium" (that is, the salesman earned extra commission by persuading the sucker [borrower] to sign up for a loan at a higher- than- required interest rate), it still seems crazy from the lender's point of view.

    The key thing missing from this story is the influence of Federal regulators and the GSE's trying to increase the percentage of loans to likely deadbeats [NAM's]. The salesfolk were being compensated for rounding up borrowers with the right skin color or names ending in 'z'.

    The sales people and all the other functionaries worked for fees and their behavior is easy to explain-- as fee earners the riskiness of the loans did not concern them.

    However, I think the key influence on the top people was political pressure-- even if some executive had wished to trim back on risky lending at some point, he could not do so: any sudden reversion to prudence would cause his institution to miss its minority quota and that particular executive would be fired.

    Since all this crazy lending drove up prices, lenders had to make ever more risky loans to keep financing the same percentage of NAM's.

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  17. Maybe all this is an unintended consequence of the massive purchases of oil and manufactured goods America made abroad in the 2000's. All that money came back to the U.S., and was looking for 'somewhere' to go. A few enterprising and/or misguided souls found a home (or homes) for those untold billions.

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  18. Hey, Steve,

    I'm in an argument with a liberal and *losing* at the moment. I say the mortgage meltdown is largely due to Mexican illegals taking NINJA (no income no job no assets) loans, aka "liar's loans," then skipping out.

    But I can't prove it. Is there on the Web somewhere that lays out the #s of home foreclosures in absolute (not just percentage of pop.) terms broken down by ethnicity?

    Or is that too politically incorrect a question for our cowardly lyin' gov't / mainstream media to discuss?

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  19. Mr. Baca remains opposed to strict lending rules. "We need to keep credit easily accessible to our minority communities," he said in a statement released by his office.

    It sounds like people who believe in less government regulation should be excited that Baca still believes in their philosophy.

    Get the government out and we'll get back to nirvana.

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  20. "cam said...
    Mr. Baca remains opposed to strict lending rules. "We need to keep credit easily accessible to our minority communities," he said in a statement released by his office.

    It sounds like people who believe in less government regulation should be excited that Baca still believes in their philosophy.

    Get the government out and we'll get back to nirvana."

    No, Cam. This whole thing is the opposite of free markets. It was gov't anti-redlining legislation and lawsuits by leftist activists alleging "discrimination" that caused bankers to make these lousy loans.

    The loan officers knew better and knew these loans would go bad, so they made lemonade of lemons -- made the minority's home loan and then sold it to pension funds in the form of mortgage backed securities.

    So legislation lead banks to do what they, if they were operating in the free market, would NOT have, would not have DARED.

    Also, part of this is due to the cabal of the Federal Reserve system, which is a privately owned monopoly -- a gov't protected monopoly, NOT the free market.

    The Fed PRINTS MONEY out of thin air, then loans it to U.S. gov't, as well as provides it to member banks at cheap rates so they have lots of money laying around to be able to MAKE loans to the bad risks.

    If banks truly were operating in the free market, having to lure savers to their banks in order to have money to lend, the interest rates THEY pay US would shoot through the roof to compensate US for OUR risk of loss. And then the interest the bank would have had to charge the mortgagee, in turn, would have made the price upspiral of this bubble impossible.

    In a true free market, the whole housing bubble thing could NOT have grown. Only goofy p.c. social engineering legislation and lawsuits alleging "discrimination" enabled this whole debacle.

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  21. There's a painful parallel here with affirmative action programs. You're a reasonably bright guy, and an extremely hard worker, who would make a fine CPA, middle manager, nurse, electrician, etc. But then, someone offers you a great opportunity--the very definition of success--they'll let you into (say) Harvard Law School. Bursting with pride and determination, you borrow lots of money to pay the tuition and pursue your dream--a dream which you'd never imagined possible to you, which seems like a golden path to success.

    And then, inevitably, you discover at Harvard that you are hopelessly outclassed--everyone in your class is as hard-working and driven as you are, but they're all much, much smarter than you, and most of them are also way better prepared. Your determination only serves to keep you around long enough to really rack up the student loans, before you're finally given the boot.

    This seems quite similar with what happened to striving people who weren't really making enough to buy a house. They got screwed.

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  22. "This seems quite similar with what happened to striving people who weren't really making enough to buy a house. They got screwed."

    I agree with much of your post, but as far the striving people getting screwed, well, W.C. Fields said, you can't cheat an honest man.

    For a person to take out a home loan that he really can't afford, he knows in his heart he really can't afford it.

    But his greed, on the other hand, is telling him, hey, housing only goes up. If I get into trouble, I'll just sell this turkey for a profit to the bigger fool.

    So it was really the immorality of the feeling, I'll just screw someone else, that led to buyers signing for those mortgages.

    Which, after all, are promises to pay the mortgage pmt. for the loan term, not the promise to try to find a bigger sucker.

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  23. Didn't Steve's heroine Margaret Thatcher do a similar thing in Britain? - anony-mouse

    Similar yes, but not the same.

    Im sure the Bush/Rove thinking was informed by the Thatcher policy but quite different in execution.

    Many Brits (esp. blue collar) lived in council housing up until the '80s, in fact many still do - Im sitting in one right now! This is housing owned by local government.

    As a council tenant one had the right to buy the property after a minimum number of years of renting and at a discount, the longer you had rented, the bigger the discount. It tended to be older people who bought their council houses and not in large numbers.

    What Thatcher did was expand the 'right to buy' scheme. The minimum rental time was cut down to a few years and the discount element was ramped up.

    Lots of people ended up buying their homes and it seems this did have some success in turning them into conservative voters. Of course these are mostly white people of British origin we are talking about.

    The success of the 'right to buy' scheme was as much about marketing. It already existed but many people were not aware of it. Even now many people over here think it was entirely the creation of the Thatcher government.

    As far as Im aware there was not a sudden appearance of no money down mortgages. Various excesses were seen as the '80s housing boom progressed but not quite the wholesale debauching of the system thats been going on recently.

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  24. "Well, I told you so."

    How nerd-tastic do your communication skills have to be for you to taunt your own readers who mostly agree with you anyway?

    No wonder you wallow in self-pity about how you don't have a rich sugar daddy.

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  25. Steve, you should be writing for the WSJ, you wrote about this months before the WSJ.

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  26. Every destruction-wreaking gigantic snowball starts with an innocent little clump of mud. In this extraordinary case, I'd put the mud at just over 40% of the total snowball mass.

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