Conventional collectivist created authority is a deception in consciousness. You are your own Authority!

Thursday, July 14, 2011

Housing Bubble? What Housing Bubble?

Let’s say you are a member of an ethnic minority living on the edge of poverty in a big American city, have no job, no money in the bank, and a lousy credit history. Suppose further that you are collecting public assistance benefits, food stamps, unemployment compensation, or other welfare payments.

You’re the last person who should qualify for a bank home mortgage loan, right?


It’s easy credit time again in the Obama Administration. The Department of Justice is once again admonishing banks to suspend their normal mortgage underwriting standards and approve home mortgage loans for minorities with poor credit. The Feds are cracking down on alleged discrimination against poor minorities. Poor white folks need not apply.

The DOJ is prosecuting several banks in court, and investigating several others, for illegal “loan discrimination” practices. Most of the banks are caving in and settling because they want to avoid being labeled racist. What you or I would call sound lending practices, the DOJ calls discrimination.

The Feds have even ordered banks to post notices at all their offices informing minorities that they won’t be turned down for home loan mortgage credit just because they have no job, receive public assistance, welfare payments, food stamps or unemployment benefits.

You see, the friendly Obama Administration counts welfare as ordinary income – the same as a job -- for credit purposes if you are a minority. If you are a minority with no job and a blemished credit rating, you’re entitled to a prime rate mortgage with favorable interest rates and even down payment assistance.  If you are not a minority – forget it.

This is precisely the same easy lending government policy that created the housing bubble crisis which gutted residential and commercial real estate markets nation wide. In many areas of the country homes are barely worth half their value of only 4 years ago and foreclosure rates are still at epic levels. There is a glut of houses on the market in America and we have the Federal government to thank for it.

Until about four years ago, banks were being forced over several years to lend money for housing to people with bad credit, i.e. people who had no reasonable hope of making their monthly payments on a sustainable basis. Anyone who wanted a home could buy one, whether they were creditworthy or not, which resulted in a huge housing boom.

When the economy stumbled in 2007, and unemployment shot upwards, thousands upon thousands of mortgagees defaulted on their loans causing home prices to plummet, the market to bust, and the housing bubble to pop.

Now the cycle is starting all over again. The government is long on easy loans and short on memory. Those bad loans of yesteryear were backed by the United States government, which means that they are now part of the $14.4 trillion outstanding government debt, which means that the American taxpayers are left holding the bill.

Any respectable moron knows that you shouldn’t lend money to someone who can’t pay it back.

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