Your Questions About Mortgage Rates News

Mandy asks…

Who is to blame for the financial mortgage and lending crises?

“How banks were bullied into making bad loans”
‘Community activists’ used pressure tactics to secure high-risk mortgages
Posted: April 05, 2009, 7:11 pm Eastern
© 2009 WorldNetDaily
http://www.wnd.com/index.php?fa=PAGE.view&pageId=94031

WASHINGTON – Using tools provided by the federal Community Reinvestment Act, community organizers led by a self-described “banking terrorist” applied bullying tactics to secure high-risk mortgages and to shake down lending institutions for billions of dollars – actions that likely contributed to the “mortgage meltdown” that triggered the worst economic crisis since the Great Depression.

That’s the substance of a new report by the Capital Research Center on the Neighborhood Assistance Corporation of America headed by Bruce Marks.

“NACA has been accused of being overly aggressive and personal,” explains the group’s website. “NACA wears this as a badge of honor, leaving no stone unturned and often hounding CEOs from their shareholder meetings to their homes. The rationale is simple: lenders have a personal and often devastating impact on the lives of the people who they refuse to provide affordable credit to or take advantage of through predatory loans and scams.”

NACA earned that reputation by first targeting Fleet Financial Group of New England, which was accused of lending money to private mortgage companies that, in turn, lent money at “loan shark rates.” NACA filed lawsuits against Fleet and worked with local media on disparaging news coverage. NACA’s “shock troops,” known for wearing yellow shirts, disrupted speeches by bank officials, including one by CEO Terrence Murray at the Harvard Business School.

In 2007, Countrywide Bank was targeted. It quickly acquiesced to demands for a settlement that included a stipulation to restructure its borrowed troubled loans. A year later, Countrywide was insolvent – touching off a string of bank defaults and government bailouts that have cost taxpayers trillions.

“NACA could not operate as it has without the Community Reinvestment Act,” says the CRC report. “The CRA is a federal law, first enacted in 1977, that banned the real estate practice of ‘redlining’ communities, singling out geographical areas where a bank would make no loans. To comply with the CRA, banks had to show that they did not discriminate in making loans in poor and black neighborhoods.”

admin answers:

Only six percent of the subprime loans that have been foreclosed on were given out by CRA-affiliated banks, so I don’t think that you can blame this recession on the CRA alone. Both parties failed to address this crisis before it started. It was also fueled by private investors who were playing a game of “hot potato” with mortgage-backed securities. They knew that the bubble was going to burst, so they bought up these subprime mortgages and sold them off quickly for a nice little profit. Once the game was over, the investors and bankers that got stuck with these mortgages suffered a huge hit. There is a lot of blame to go around for this one. Not many folks in D.C. Or on Wall Street can claim that they had nothing to do with it.

Chris asks…

Mortgage program released, so why is it a bad thing that I’m now able to refinance my home?

http://news.yahoo.com/s/ap/20090304/ap_on_go_pr_wh/obama_housing

It looks like I’ll be able to refinance my home of 2 yrs. I’ve paid my mortgage on time but couldn’t take advantage of the low rates because of the huge drop in property values.
So, naysayers, why is this a bad thing?
NOBAMA: It’s called ‘simple math’…if I’m now able to refinance at a lower rate, I can pay less on my mortgage. If I pay less on my mortgage that frees up cash to spend on other things. That’s how it helps the economy.
FYI…my income has nothing to do with my home value decreasing. Is it my fault that property values decreased since I built my house and the bank wouldn’t lend because of it?

admin answers:

It’s a bad thing because it will help ease the strain on the housing market, it’ll help stabilize prices, the banks will be able to function, it’ll help ease credit,people will be able to stay in their homes, your local tax base will stabilize and, most of all, Obama’s attempts to lift the US out of the Bush Depression may actually begin to turn things around and that will be bad for the Republican Party.

-R.Limbaugh

James asks…

June 2008… Good time to buy a house?

I’ve been watching the mortgage chaos and noticed that they just released another 8% drop in housing sales as breaking news on MSNBC. I know it’s all speculation, but what do you think the market will look like next summer as far as mortgage rates are concerned?

admin answers:

Depends on so many things, that its hard to say. Housing prices likely won’t be going up, so you have that in your favor. Given how bad all of the talk is about the economy, its also likely to keep rates fairly low (by historical standards). One of the question is going to be how easy/hard it will be to get a mortgage. Overall, if you are in good financial condition with 20% down money, you should be in good shape to get a reasonably house.

Charles asks…

Should I stop paying my mortgage so the gov’t can lower my interest rate?

According to the news, the government will lower the interest rate for those people delinquent on their mortgages. It is rumored to be as low as 3%. This is half of what I am paying and I, fortunately, have never been delinquent on my mortgage. Isn’t the government unfairly rewarding those that are delinquent?

I agree that the subprime loans by predatory lenders should be re-underwritten. But only to an interest rate that the average homeowner is paying. Not all the way down to 3%. I wish I can pay 3% on my mortgage!

http://ap.google.com/article/ALeqM5iS_8Yvs6cwCRzoRlwcEQ3Oe717TAD944BVQ02

admin answers:

If that is the case, we will be rewarding irresponsibility. Kind of sick. My mortgage company called me two weeks ago and thanked me for keeping up my payments. Hell yes I am 10 years ahead!

Mark asks…

Why does anyone still care about Standard and Poor’s ratings after they rated the subprime debt as AAA?

According to BBC News, Greece’s debt has been downgraded to junk BBB- by Standard & Poor’s, meaning many financial institutions will no longer be able to invest in Greece due to rules against investing in junk bonds. Surely the credit ratings agencies’ ability to rate debt was discredited by the subprime mortgage crisis.

admin answers:

Yes they have been discredited but that hasn’t changed the fact that mandates still use them so yes, they are the single most important credit rating body.

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