The federal government and states are girding themselves for the next foreclosure crisis in the country’s housing downturn: payment option adjustable rate mortgages that are beginning to reset.
In an article titled “They Gave Your Mortgage To A Less-Qualified Minority” we see the effect of Clinton-era changes. Did these changes set the stage for the subprime crisis? You be the judge, but the system was abused, and went well beyond minorities. “Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton’s secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.
Just when we thought subprime could not get uglier, one of the world’s largest banks has found a way to usurp U.S. government regulations. High-Rate, High-Fee Loans HOEPA/Section 32 Mortgages and how to get around the regulation seems to be the newest and latest marketing ploy.
This time it’s an investment bank with problems. Swiss-based UBS announced a $10 billion writedown this week on subprime exposures. An injection of capital from investors in Singapore and the Middle East was also announced. UBS has also slammed on the brakes at its investment bank, where the problems originated. UBS has been the biggest casualty so far among major European banks of the meltdown in U.S. subprime mortgages. Some analysts continue to characterize subprime as loans made to people with poor credit histories. Others say lack of regualtory action and oversight transformed predatory lending into acceptable lending standards.
While Treasury Secretary Henry Paulson was speaking, a federal appeals court shut the door to state enforcement of federally charted banks. Now Paulson wants help from the states. What in the world is going on? Didn’t the court render the states powerless to seek documents and enforce predatory lending laws, while Paulson is asking stes for help after the fact? First we blame poor people, then we take no action at the federal level, and now this? American’s are not that stupid and gullible!