Comments on: Spreading The Cancer of Subprime Loans

By: Jim

Jim — Wed, 12 Nov 2008 17:30:10 +0000

Bryan
Thank you for so clearly stating facts on this subject. It is very difficult for me to understand that we have so many stupid Senators, Congressmen in Washinton who ignore this issue. It is well known and has been documented by numerous sources for the past 20+ years, beginning (as you stated) in the Carter era and accelerated in the Clinton era. These people should be in jail for what they have done to the rest of the US hard working folks. However, the politicians have made them heros. How sad that all of our leaders turn the other way and ignore the root causes.
We must stop the bleeding. Another $150B to AIG, probable bail out of GM/Ford/Chrysler. Why don’t they ‘loan’ them the money to help them get through their self inflicted crisis? Entitlements are killing the desire to excel and work hard in this country.

Jim

By: Margaret

Margaret — Wed, 12 Nov 2008 16:02:59 +0000

ok. I wrote to all three. Thanks for the heads up. Thank you, Margaret - you've done a very good thing! -- Bryan Ellis

By: Bill

Bill — Wed, 12 Nov 2008 15:48:41 +0000

Bryan, you seem to have a rather bias view of the NCRC. Have you ever heard of red-lining where banks have blocked off areas of their lending territory as no loan areas? Does being in a lower income area mean you don’t pay off your loans? It seems to me to be healthy for the overall community for the lending institutions of it to provide their services for everyone who qualifies regardless of the type of neighborhood they live in.

I challenge you to show any real evidence to back up your rhetoric that banks are forced to make stupid loans to people who can not pay back their loan. Your misguided attack on the NCRC may be swallowed by your uninformed readers but it detracks from your creditability for me. Without advocacy groups like these in our communities looking out for and seeking opportunities for those who are not as privileged as some of us, we would all be the poorer for it.

Thanks for your comments. According to the American Sentinel about three weeks ago, “banks are now reporting that CRA defaults have in many cases exceeded 20 per cent of the bank’s total CRA loans - - a huge, unprecedented default rate.” I’d say that alone is a huge indicator. Even now in the United States, it’s estimated that approximately 6-8% of all mortgages are in default, which is considered a “mortgage meltdown”. Yet the number for CRA loans appears to be 3 to 4 times the currently elevated national average.

Further, the Federal Reserve board published an interesting report about this exact phenomenon (the poor quality of CRA loans compared to non-CRA loans). On page 15, evidence from NationsBank and CountryWide (now both part of Bank of America) “reported that their affordable home loan portfolios have had higher delinquency rates than their other conventional home loans.”

So there are some facts to consider. But the deeper issue is whether government really has a role in requiring lenders to make a particular type of loan, regardless of the nature of that loan. It is my contention that the government helps no one by doing so, nor is it a fundamental right of government to do so. Clearly, the default rate for CRA loans is MUCH higher than normal loans, causing profit losses that would not exist without the interference of the government. And those profit losses lead directly to job losses and further financial difficulty.

Thanks for your comments, Bill. I’m happy to continue this dialogue with you. — Bryan Ellis

By: kalimah

kalimah — Wed, 12 Nov 2008 15:27:21 +0000

Thank you for keeping us informed on these issues and giving concrete actions that can be taken to resolved them. Kudos to you, Brian. Thanks, Kalimah! -- Bryan Ellis