Lending Standards Hurt the Poor

Patrick.Net posted this link to a decision by the Democrats to block a Republican sponsored amendment that would require a 5% down payment for any mortgage. The Democrats blocked this measure arguing:
"...that a 5% down payment would hurt minorities and the poor."
Should poor people be purchasing houses? I'm not poor but I can't afford a house.

Don't get me wrong, I oppose this amendment as well. I believe those in the mortgage industry that misrepresented the mortgages they issued should go to jail. Those banks that trusted the mortgage brokers and purchased the mortgages should go out of business instead of being bailed out. And the entire mortgage secularization industry should be destroyed through civil and criminal fraud lawsuits starting with the ratings industry, especially the Oracle Crook of Omaha's insider traded Moodys. Let the problem take care of itself. Bad business gets punished; good business gets rewarded. But I guess we're socialists now and the opposite is the new paradigm.

So I oppose this; I just don't oppose it for the poor, or the genetically inferior minorities. (Hey I don't think they are inferior and I put 'American' as my race on the census; I'm color blind. I just don't get why the media keeps using the term minority. If we're all equal, and I believe we are, where's the minority?)

And what's with the so called conservative party trying to implement a completely liberal law? If the Republicans were in power I bet this same article would be written just flipping Democrats and Republicans.


Anonymous said...

In my experience, living in a country that offered zero-down mortgages for several years (Canada), it can hurt the poor TO offer zero down... the payments end up higher each month, or for a longer term, and despite being offered zero down and low interest rate AND 40 yr mortgages up here for several years, many are defaulting and running into trouble now. It also helped drive up the price of homes because suddenly more people were in the game and offers rose, which in turn again makes it difficult for poorer people to afford to buy a house.

In my city, for example, it only took about 5 years for home prices to DOUBLE! My parents bought their house in 1985 for about $72,000. My mom sold it in 2002 for $142,000. But it sold again only 4 years later for $260,000! The same house with very little work done on it to excuse a $120,000 price hike.

We are not poor either, but we cannot afford a home right now, due to the avg cost being over $240,000. I do not live in a big city, I live in a small city of 60,000 in the middle of the dry prairie but homes have easily gone up 60-100 thousand or more since zero down and other measures were put in to help poorer people purchase a home. Now Canada realized it better stop that so they got rid of zero-down and 40 yr mortgages (many people even got 50 yr mortgages!!!). Now I think the top is 30 or 35 year terms. Anyhow there is a lot going on behind the scenes and in my personal experience, messing around to make things much easier on poorer people ends up hurting everyone.

W.C. Varones said...

To be fair to Corker, it's not really a liberal proposal.

The government owns essentially the entire mortgage market, so this bill would really only limit what the government can do, not what free-market lenders can do.

And non-government-backed banks wouldn't make sub-5%-down loans in the first place.

Only the taxpayers make such shockingly stupid loans via the FHA.

Anonymous said...

Ironic coming from Patrick who is a Obama-loving libtard.

Dean said...

W.C., great points. I understand and sympathize with the desire to protect the poor in the housing market.

However, in open and transparent transactions, who needs to be protected?

The disinformation and election interference is coming from inside the house

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