Posted by
Jim McGriff Jr on Wednesday, October 22, 2008 8:34:20 PM
Equality led to no equity…
President Bill Clinton and our federal government made a social decision to bring equality to the housing market in 1999 by reducing the financial requirements on loans Fannie Mae could finance. This decision allowed banks to reduce the long standing 20% down payment requirement on home financing.
Now, let us look at a meeting of five people, a banker, a real estate agent, a real estate appraiser, a builder and a purchaser. The purchaser has made a bid on the house. The banker wants to make the loan. The purchaser will not qualify under the tradition financing; but, the banker tells the purchaser he can make it happen. . The banker has a quota on housing mortgages; he wants to meet this quota. The real estate agent wants the commission. The builder wants to sell the house, by the way the banker loaned the builder the money to build the house. The purchaser wants to purchase the house even though he can not afford the payments. The real estate appraiser is told by the builder and real estate agent, “This is the price we need to meet”. It is the price the purchaser has agreed to pay. The appraiser is off the hook, if the purchaser has agreed to the price the purchaser sets the market. The appraiser just makes the appraisal meet the price. The deal is done, and the purchaser and the purchaser of the mortgage is done in.
Because the government allowed and pushed a social agenda the deal was made. This is the real problem. The mortgage was bad from the start. The bad mortgage happened at the bottom and was covered up all the way to the top.
Oscar James McGriff, Jr.
682 Homestead Lane
Tuscaloosa, Alabama 35405