June 1, 2011

The past is an unknown country

The New York Times appears genuinely surprised to discover that racial activists like La Raza and the NAACP are teaming up with big mortgage lenders to try to undermine prudent regulation of home loans. Who could imagine such a thing?

From the New York Times: 
Advocates and Bankers Join to Fight Loan Rules 
As banking regulators rewrite mortgage rules, unusual alliances have sprung up to oppose tighter standards
WASHINGTON — The weight of the mortgage crisis fell heavily on lower-income and minority communities, where first-time home buyers often fell victim to the predatory lending practices that resulted in an explosion of defaults and foreclosures. 
That left consumer advocates and civil rights groups frequently at odds with bankers, mortgage lenders and their lobbyists during the debate over the financial regulation act last year, which aims to rein in the subprime mortgage excesses that inflated the housing bubble. 
Now, as banking regulators are rewriting the rules for the mortgage market, unusual alliances have sprung up in opposition to tighter lending standards. Advocacy groups like the N.A.A.C.P. and the National Council of La Raza, a Latino civil rights organization, on the one hand, and the American Bankers Association on the other, are joining together to fight rules they say could make home loans less affordable for minority and working-class Americans. 
The growing alliance between civil-rights organizations and banking lobbyists could extend beyond the current round of financial rule-making. If Congress turns its focus to restructuring Fannie Mae and Freddie Mac, for example, the same groups could voice similar concerns over anything that restricts the availability of credit for first-time home buyers. ...
For the uncommon alliance

Huh? It was an awfully common alliance in the 1990s and 2000s.
the first point of attack is on a proposal that would require sellers of mortgage-backed securities to retain part of the risk should a package of loans go sour. The sellers would have to keep on their books at least 5 percent of the value of any baskets of loans they purchase from lenders and then resell to investors. One of the few exceptions to the requirement would be for mortgages on which the home buyer has made a down payment equal to 20 percent of the purchase price. 
“Most people don’t have 20 percent to put down,” said Janis Bowdler, a project director in La Raza’s office of research, advocacy and legislation. “These rules will so significantly deter the ability of first-time buyers to break into the market that we will see a real decline in home ownership.” 
... Any standards that apply to the private mortgage market will have to be reflected in government housing finance entities that help low-income and minority borrowers, said Barry Zigas, director of housing policy for the Consumer Federation of America. ... 
Last year, according to the National Association of Realtors, 96 percent of first-time home buyers made down payments below 20 percent. ... 
 Some regulators  say that the coalition of consumer and industry groups is jeopardizing rules that could, in the long run, protect borrowers from risky lending practices. In private meetings, some top agency lawyers now refer to the partnership as “the unholy alliance.”
But mortgage lenders, consumer and community groups, which are planning a joint news conference in Washington on Thursday to highlight their opposition to the risk-retention proposals, say they are just as certain that the regulations will not prevent risky loans from being made while hurting qualified borrowers. 
“It is more likely that the credit restrictions that result will disproportionately fall on lower-income borrowers,” said Robert R. Davis, an executive vice president for the American Bankers Association. That, in turn, puts banks in a bind, because it gives the appearance of violating fair-lending practices. 
The bonds between the former foes could unravel, in part because the wounds created by the implosion of the housing market remain fresh.

"Former foes"??? Mortgage lenders like Angelo Mozilo of Countrywide and diversity mongers like Henry Cisneros of Countrywide's board were best friends from roughly 1994 through 2007. 


Anonymous said...

When Wall Street, MLK Street, and Cesar Chavez Street are aligned, folks on Main Street better watch their backs.

Wes said...

I'd say there was some willful ignorance on the NYT's part. It's amazing how powerful the urge to stay true to "The Narrative" is among the elites and media folks.

glib, facile n snarky said...

I love the smell of a good piggy back loan in the morning.

It's great that you can magically waive that 20% down payment by paying interest on the amount you couldn't come up with on top of the actual home loan. Yea, Yippie, Wow, Zowie!

Anonymous said...

Those who write and comment at the NYT are either on average of below average IQ or willfully ignorant. There is no other way to explain the stuff that rag produces.

Anonymous said...

willfully ignorant.
you have to remember all they read is huff post, npr etc.. and they know only 'racists' would point such a think out as the racist steve did.

Ideology makes one blind to reality.

Anonymous said...

I do some work with foreclosed homes and all my work orders have the name of the former owner on them. I would estimate 75% of the foreclosures I work on were owned by Guatemalans and Salvadorans.

I see I won't be going out of business any time soon.

Marc B said...

Banks are either predatory lenders or redlining racists. I guess side of the bed the professional grievance activists wake up on determines the fight du jour.

Plato's Cave said...

When I recently told a DC inlaw that profiting parties were trying to revive high-risk loans to NAMs, they refused to even consider it. Nothing so evil could possibly happen under the holy reign of Obama, peace be upon him.

Our higher education and SWPL enclaves produce far too many under-informed, intellectually incurious, and overly self-assured sheeples.

As has been said, we are educating far too may people beyond their intellectual abilities. It's creating a mass illusion of free will, knowledge, and competence among the masses who are being led off the cliff by our philosopher kings.

Anonymous said...

"Advocacy groups...are joining together to fight rules they say could make home loans less affordable for minority and working-class Americans."

The new rules won't make homes more expensive for responsible people of any class or race. After all, the old, easy money rules were the rules in place during the last big real estate bubble.

The new rules will make homes less expensive by removing demand from the marketplace. Our would-be "saviors" are only looking after their own bottom lines.

Who got hit the worst during the last real estate bubble? People who bought near its peak, but who kept paying on their loans. Those people were most likely to be those who made a 20% down payment, or those who out of a sense of responsibility kept making payments despite being upside down.

AnotherDad said...

The NYT lying and spinning to keep "the Narrative" alive ... par for the course.

What's really sad here is the regulatory proposal is for lenders have to keep 5% on their books. Five percent. How about ... the whole loan on their books!

The way this market should work is to have very large well capitalized mortgage lending corporations, lending their *own* capital -- raised in the stock and bond markets. They can easily develop internal compensation policies that reward based on the long term profitablity of the loans individuals write (or are written in a managers division). And the stock and bond markets will be way better indicators of the soundness -- and hence risk to capital -- of these companies than the rating agencies could ever do with CMOs.

I want a politician who'll just stand up and say "shut down Fannie and Freddie and CRA and "Fair Housing", and let the market work."

Where the heck is a Republican who isn't a twerp? Heck, the Democrats even use Fannie and Freddie as their favorite feeding trough for their "public service" hacks to loot the public ... and no Republican says "shut these down". This is supposed to be the middle class party? Protecting my interests?

The really sad thing here, we got through this mortgage meltdown debacle -- drags down the entire economy into a recession -- and we as a society can draw *no* lessons from it. None.

When you reach the point that your society can't even learn from experience -- that's the whole genesis of science and modernity --you are toast.

Geoff Matthews said...

It does make you wonder if the folks involved learned nothing from this debacle.
Yeah, it sucks that the poor will have a harder time buying a home. But guess what? It sucks to be poor. That's why people should do whatever they can to not be poor.
Or, at the very least, do what they can so their grandchildren won't be raised poor.

Marlowe said...

How long ago did Wolfe write Mau mauing the flak catchers?

john williams said...

Lenders appear to have a very blinkered view that they were not to blame for the credit crisis and whether irresponsible lending needs to be controlled. Whilst borrowers should always be sure they can afford the repayments, lenders should always make sure they have advised correctly. I was a mortgage broker over 20 years ago and I would not sign up a deal which I was not satisfied the borrower could afford. However the recent crisis showed the lenders to be acting recklessly and irresponsibly and since they will never police themselves ethically they must be forced to take a more ethical and long term view.

Anonymous said...

"Former foes" could mean just recently when all the "minorities hit hardest" stuff started up, or it could be a conceptual artifact of assuming a fundamental hostility between Fanny and the NAMs. The assumption is white = anti-NAM; since bankers are mostly white, it "follows" that anything they do hurts minorities.

Assistant Village Idiot said...

David, I would add that the narrative is Business = conservative, NAM's = liberal, so they are historic enemies.

That way, white liberals can think well of themselves no matter how much money they make.