The feeling of entitlement that runs amuck in this country is the root of the problem. No matter how much money one makes or what one can or can't afford, he is entitled to a big house, luxury car, nice clothes, exotic vacations and the like. People whine they can't afford health insurance but they have no problem buying lotto tickets, having cable and a cell phone, going to Starbucks and happy hours, buying $200 shoes, getting an $80 haircut....oh the torture.

When the consumer becomes such an idiot that they look for government handouts to bail them out and then turn around and whine that the same government is now oppressing them and didn't do enough to protect them...WTF? There is no winning. The government screwed up, the banks screwed up, and the borrowers screwed up.

Oh well, according to Biden my family should just bend over and be more "patriotic" to foot the bill. God Bless America!

Wants:


Each recession or downturn provides an opportunity for the next expansion. This is whats great about the US and our complex economy. I suspect that if oil prices do not come down (gas at the pump under 2.50 per) and the current mid-east challenges, the next opportunities will be in alternative energy. There are many challenges to overcome.



Black Raven: My thoughts exactly. Perhaps a more simple time will be good for us as a people in the long run.

Oh boy...the plot thickens.

They Warned Us About the Mortgage Crisis
State whistleblowers tried to curtail greedy lending—and were thwarted by the Bush Administration and the financial industry

Want2Stay

The government really needs to openly adopt socialism and call it a day. Obviously the concept that a consumer takes a loan out; agrees to pay a certain amount per month; and if they don't pay AS AGREED they will be foreclosed on is a difficult concept for many to grasp.

I hope the latest round of stop-gap measures end the downhill slide of the American stock market. The rest of the world is beginning to point their fingers at the US for the global economic crisis. If we don't get things under control soon, things are going to get really ugly.

World Blaming US For Economic Crisis

Want2Stay

For those that like to blame the mortgage crisis on the democrats, take a look at what GWB signed in 2003 that led to all the zero-down loans that are now failing. Like I said all along, this isn't a partisan problem, it is a government problem. Everybody is guilty in one regard or another.

Want2Stay

President Bush Signs American Dream Downpayment Act of 2003

THE PRESIDENT: Thank you all. Thank you for coming. Thanks for the warm welcome. It's great to be back at the Department of Housing and Urban Development. This is not my first time here, nor will it be my last. (Applause.) I am here today because we are taking action to bring many thousands of Americans closer to owning a home. Our government is supporting homeownership because it is good for America, it is good for our families, it is good for our economy.

One of the biggest hurdles to homeownership is getting money for a down payment. This administration has recognized that, and so today I'm honored to be here to sign a law that will help many low-income buyers to overcome that hurdle, and to achieve an important part of the American Dream.

I appreciate Alphonso Jackson agreeing to step up and become the Acting Secretary of the Housing and Urban Development. I look forward to his Senate confirmation, a hasty confirmation. (Applause.)

I also want to thank Mel Martinez for doing such a fine job as the Secretary of this important organization. Mel brought integrity and honor to the office. He did a fine job on behalf of all Americans. And we honor you, Mel. (Applause.)

I want to thank all the hardworking officers and employees of HUD. I appreciate your focus and your dedication, your willingness to work on behalf of a better America. (Applause.) I thank very much members of the Congress who have taken time to come and join us for this important bill signing. Senator Wayne Allard from Colorado is with us. Senator Allard, thank you for your work on the floor of the Senate. (Applause.) Chairman of the Financial Services Committee, Mike Oxley, is with us. Congressman, thank you for coming. (Applause.) Congressman Jim Leach from Iowa is with us today. Congressman, thank you for being here. (Applause.) Congresswoman Katherine Harris, who had a lot to do with this bill getting passed, is here with us. Katherine, thank you for coming. (Applause.) Delegate Madeleine Bordallo of Guam is with us today. I'm honored you are here. Thank you for coming, Madeleine. I appreciate you coming. (Applause.)

I, too, want to pay homage to a man I call "Little Woody" -- that would be Rob Woodson. He worked hard in the development of this policy. I think it is safe to say that he was the -- he developed the concept for this policy, a concept embraced by my administration. I'm appreciative that Michelle is here. I also want to thank Dad for coming -- Bob Woodson, who is a social entrepreneur, a person who cares deeply about every American having the right and a chance to own a home. Thank the Woodson family. God bless you all. (Applause.)

I want to thank the representatives of the consumer and housing groups that worked hard on this piece of legislation. I want to thank leaders of the national community organizations that are with us, and members of the real estate industry.

This administration will constantly strive to promote an ownership society in America. We want more people owning their own home. It is in our national interest that more people own their own home. After all, if you own your own home, you have a vital stake in the future of our country. And this is a good time for the American homeowner. Today we received a report that showed that new home construction last month reached its highest level in nearly 20 years. (Applause.)

The reason that is so is because there is renewed confidence in our economy. Low interest rates help. They have made owning a home more affordable, for those who refinance and for those who buy a home for the first time. Rising home values have added more than $2.5 trillion to the assets of the American family since the start of 2001.

The rate of homeownership in America now stands a record high of 68.4 percent. Yet there is room for improvement. The rate of homeownership amongst minorities is below 50 percent. And that's not right, and this country needs to do something about it. We need to -- (applause.) We need to close the minority homeownership gap in America so more citizens have the satisfaction and mobility that comes from owning your own home, from owning a piece of the future of America.

Last year I set a goal to add 5.5 million new minority homeowners in America by the end of the decade. That is an attainable goal; that is an essential goal. And we're making progress toward that goal. In the past 18 months, more than 1 million minority families have become homeowners. (Applause.) And there's more that we can do to achieve the goal. The law I sign today will help us build on this progress in a very practical way.

Many people are able to afford a monthly mortgage payment, but are unable to make the down payment. So this legislation will authorize $200 million per year in down payment assistance to at least 40,000 low-income families. These funds will help American families achieve their goals, and at the same time, strengthen our communities.

And there's more to do, as well. We'll continue to pursue a broad agenda to help people own a home. There are three steps I want to describe to you right quickly about what we intend to do. First, those who apply for mortgages should be made aware of all the costs and warned about predatory lenders who take advantage of inexperienced buyers. So we've doubled the funds for housing counseling services, including those run by faith-based and community groups.

We understand that buying a home for the first time is complicated, and we want to simplify the process. We want to help people understand the pros and cons of buying a home. We want people to be fully aware of what it means to buy a home and what it takes. And we want people as best protected as possible from those shysters who would take advantage of first-time buyers. (Applause.)

Second, we need to make the home-buying process more affordable. Some of the biggest up-front costs in a home purchase are the closing costs. Sometimes they catch you by surprise. (Laughter.) Many home buyers do not have the time to shop around looking for a better deal on closing costs. You're kind of stuck with what you're presented with. And so they end up paying more than they should. So we've proposed new rules to make it easier for buyers to shop around and to compare prices on closing costs, so they can get the best deal and the best service possible.

And thirdly, we want to make buying a home simpler. Many first-time buyers look at the paperwork from a loan application, and frankly, get a little nervous about all the fine print. Those forms can be intimidating to the first-time home buyer. They can be intimidating to the second or third-time home buyer, too. (Laughter and applause.) So this administration has proposed new rules to simplify the forms home buyers and homeowners fill out when they apply for a loan or close on a mortgage.

We understand that buying a home is a big step, and so these three recommendations we're making, these three changes in the rules will make that step easier; will enable people to make the step to buying a home -- they'll be able to do so with more confidence. These are practical ways that we are working to expand homeownership across the country.

The dream of homeownership should be attainable for every hardworking American. That's what we want. In this act of Congress I'm going to sign, the regulations that I hope are finalized soon will help thousands of families fulfill the dream.

And so now it my honor, right here at this important Department, the Department responsible for encouraging homeownership in America, to sign the American Dream Downpayment Act. (Applause.)

(The bill is signed.) (Applause.)

Affirmative action at work...

If anyone including GWB opposed this they are labeled a racist.


Give to the have nots...

If anyone says low-income families should continue to rent if they can't afford a house they are labeled an oppressive pig.

I don't see anything wrong with what Bush said. Democrats have been pushing race and income ever since I can remember as a reason why people are "owed" something. Yes it would be nice if minorities or low-income people could have greater home ownership...if they can afford it. It would be nice if anyone, whatever there circumstance in life, could own a home if that's what they want...if they can afford it.

There's a lot of blame to go around, never said there wasn't but I'm pretty sure when race and income are thrown into the mix that the Democrats are going full throttle to keep the division and class envy alive and strong.

I personnally do not see anything wrong with "No Money Down" loans. I think it's a good way from those that can't come up with 5 or 10% down to own a home.

But I disagree with you that this was the down fall of the mortgage industry. The down fall was the sub-standard interest rates, the ARM's, the interest only loans that enticed people to spend more than they could really afford.

While I blame the mortgage industry for part of the problem, those that took out these loans should get the lion's share of the blame (lets all be accountable for our actions) and the government (both the Dem's and the Republicans) for forcing mortgage companies to offer these loans. And at the top of the fault list, right under those homeowers was Fannie Mae and Freddie Mac.

Spending more than one can afford is context sensitive. In a general sense, whenever a family home is purchased with borrowed funds it's more than they can afford. The traditional process attempted to calculate the purchaser's ability to make their monthly payment. What you really have to ask though is whether the concepts underlying interest only mortgages were unsound? In hindsight they certainly look that way, but during the period they were being offered, was it really so clear. Let's not forget that that the premise underlying all these instruments was the idea that residential real estate appreciates annually. Most people who took out interest only loans thought that when the payments on the principle kicked in they could sell their homes for a profit--even though they had accrued no equity. Sure, it was more risky than a fixed rate loan, but when housing prices were quickly appreciating those interest only loans seemed to make sense to many people. Were they irresponsible lazy imbeciles b/c they bought into the notion that residential housing appreciates annually? I'd probably label them either naive and unsophisticated or very unlucky investors (bad timing).

An even bigger problem was that the derivates market's appetite for this debt was astounding. The instruments were leveraged in ways that defy simple definition. It became a self-perpetuating bubble--more loans, more homebuyers--higher home prices--culminating in a massive tsunami of leveraged instruments. The bubble eventually burst b/c even with such liberal credit, housing prices so grossly outstripped flat wages that the scheme was exposed for what it was--an inflated bubble. Housing prices (despite the government $ infusions) will now have to reset to traditional levels to realign with real wages. It's going to be painful.

A lot of this leverage came from demand. China sent us goods artificially cheap. We sent them dollars. What were all those dollars gonna buy? treasuries at 1.5% or AAA rated loan paper backed by houses at 5%?

What about no asset verification, no income verification? Who would ever write a loan without any verification? An idiot!

As to interest only loans, think about this. People were paying P&I for 5 years and then refinancing to cash the equity out. Why not just pay interest and save yourself the refi fees? There is no single entity to blame, but the entire system. It started with the government, bled to banks and mortgage companies, to consumers, and finally to investors seeking higher yields on their fixed income investments? So do you blame the investor who bought the investment (allowing the mortgage to be written)? The bank that lent the money? Everyone shares the balme, but government definately should get at a bigger share of the blame...but not all.

That's the crux of it--leverage came from demand. You asked how could they approve loans with virtually no verification (which of course is a good point)--but then that risky debt became the bread and butter of tranched CDO's. By packaging them with more secure instruments (b/c the unconventional mortgages had higher interest rates than conventional fixed rate mortgages) they offered a greater return to investors. The rating agencies went along for the ride, and you're right the government promoted it b/c it fed illusory growth, prosperity and lined their pockets with lobbyist’s money.

WE HAVE A WINNER!

Regardless of the reasons, EVERYONE should be responsible for their decisions and actions. I DO NOT want to hear that 'they' didn't know, or they made a bad choice.

We also are in a new house that we bought 2 years ago. When looking for financing, we were offered 3 different types of loans.
1. A "Conventional", fixed rate loan
2. An interest only loan
3. An ARM

With the second and third choices, the 'qualify' amount was about $200K more because the payments would be lower. So instead of say a house that cost $400k, we could 'qualify' for $600K. We would have loved to have bought the $600k house but we knew that with an ARM, we wouldn't be able to make the payments when the rate adjusted and we didn't want the 'interest only' because then we would not be paying anything to the principal.

AGAIN.... EVERYONE needs to be held accountable for their decisions and actions.

NO BAILOUTS for ANYONE.