Friday, September 26, 2008

The Victims of the Housing Crisis

The Victims of the Housing Crisis

I was watching Lou Dobbs last night with a panel discussing the housing crisis and bailout of Wall Street. I was very pleased to see that it was possible for a bunch of talking heads to actually discuss something without trying to talk over each other.

One point that Lou Dobbs made that I think is quite important is that we really aren't getting any data on "the victims." There's a lot of screeching about people losing their homes, but he pointed out that a lot of the people that are in danger of losing their homes put nothing down to buy these homes. The only equity that such persons had in their homes was that which came from buying a house for $250,000, watching it soar to $325,000 in the 2005-2006 bubble--and now that home is only worth $225,000.

A person who put nothing down and is in danger of being foreclosed is only going to lose one thing: his credit history is going to have a black mark on it for being foreclosed. I feel a little for such people, but only a little. More than a few of these "subprime" mortgages went to people who could not document their incomes (because many didn't have the stated incomes) and in some cases, were illegal aliens. Michelle Malkin makes the point that the areas with the biggest problems on foreclosure have something in common:
It’s no coincidence that most of the areas hardest hit by the foreclosure wave – Loudon County, Virginia, California’s Inland Empire, Stockton, San Joaquin Valley, Las Vegas, and Phoenix, for starters — also happen to be some of the nation’s largest illegal alien sanctuaries. Half of the mortgages to Hispanics are subprime (the accursed species of loan to borrowers with the shadiest credit histories). A quarter of all those subprime loans are in default and foreclosure.
Regional reports across the country have decried the subprime meltdown’s impact on illegal immigrant “victims.” A July report showed that in seven of the 10 metro areas with the highest foreclosure rates, Hispanics represented at least one-third of the population; in two of those areas – Merced and Salinas-Monterey, Calif. – Hispanics comprised half the population. The amnesty-promoting National Council of La Raza and its Development Fund have received millions in federal funds to “counsel” their constituents on obtaining mortgages with little to no money down; the group almost succeeded in attaching a $10 million earmark for itself in one of the housing bills past this spring.
For the last five years, I’ve reported on the rapidly expanding illegal alien home loan racket. The top banks clamoring for their handouts as their profits plummet, led by Wachovia and Bank of America, launched aggressive campaigns to woo illegal alien homebuyers. The quasi-governmental Wisconsin Housing and Economic Development Authority jumped in to guarantee home loans to illegal immigrants. The Washington Post noted, almost as an afterthought in a 2005 report: “Hispanics, the nation’s fastest-growing major ethnic or racial group, have been courted aggressively by real estate agents, mortgage brokers and programs for first-time buyers that offer help with closing costs. Ads proclaim: “Sin verificacion de ingresos ! Sin verificacion de documento !” — which loosely translates as, ‘Income tax forms are not required, nor are immigration papers.’”
Correspondents in California tell me that they are startled at how many of the foreclosures listed in the newspapers there have Hispanic names. If lenders were targeting illegal aliens for loans, this is not surprising.

Wall Street wants a bailout? The extent of my sympathy to them is that they were being pressured by Fannie Mae to extend loans to minorities whose credit histories, legal status, etc. might otherwise have prevented them from getting loans. But at a certain point you should be responsible and say, "Okay, we're not going to make loans to people who can't document their incomes. If we have to get out of the mortgage business, perhaps we should." But if large numbers of lenders did this, the same crowd that is now whining about Wall Street greed would have been whining about the "racism" of Wall Street. You can't win.

A number of commentators last night were pointing out that if mortgage lenders need some help, it should be loans, not taking over problem mortgages. If the federal government is going to take away obligations of lenders, I darn well expect them to take away assets, too. And to the extent that fraud played a part in how some of the officers earned their huge bonuses, those officers should be required to turn over those bonuses to the federal government. Of course, that would impoverish a lot of prominent Democrats, such as Mistress of Diaster Gorelick, so that isn't going to happen. Democrats hate "fatcats" except for the ones that actually run the party.

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