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Timeline shows Bush, McCain warning Dems of financial and housing crisis; meltdown (video) ^ | 9/24/2008 | ProudtobeCanadian

Posted on 01/31/2012 1:31:07 PM PST by Signalman

The Bush Admin and Senator McCain warned repeatedly about Fanny Mae and Freddy Mac and what thus became the 2008 financial crisis -- starting in 2002 (and actually even earlier -- in the Clinton and Carter White Houses. Democrats resisted and kept to their party line, extending loans to people who couldn't afford them -- just like you would expect of socialists.

TOPICS: Business/Economy
KEYWORDS: fanniemae; freddiemac; truth
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1 posted on 01/31/2012 1:31:18 PM PST by Signalman
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To: Signalman

What was President Bush warning about when he said the following in 2002?

And let me talk about some of the progress which we have made to date, as an example for others to follow. First of all, Government-sponsored corporations that help create our mortgage system—I introduced two of the leaders here today; they call those people Fannie Mae and Freddie Mac—as well as the Federal Home Loan Banks will increase their commitment to minority markets by more than $440 billion. I want to thank Leland and Franklin for that commitment. It’s a commitment that conforms to their charters as well and also conforms to their hearts. This means they will purchase more loans made by banks to African Americans, Hispanics, and other minorities, which will encourage homeownership.

Read more at the American Presidency Project: George W. Bush: Remarks at St. Paul AME Church in Atlanta, Georgia

2 posted on 01/31/2012 1:45:09 PM PST by trumandogz
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To: Signalman


3 posted on 01/31/2012 1:52:02 PM PST by Wuli
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To: Signalman

Oh wow... careful now, don’t let the truth get in the way of King Hussein and his Court of Jesters.(DemocRATS)

4 posted on 01/31/2012 1:55:07 PM PST by nagdt ("None of my EX's live in Texas")
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To: Signalman

The DemonRATs knew and were going to work it so the collapse would happen. Then, they would blame it on Bush and the Republicans. The 2008 elections worked like magic for them.

5 posted on 01/31/2012 1:59:20 PM PST by jonrick46 (Countdown to 11-06-2012)
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To: trumandogz


6 posted on 01/31/2012 2:10:05 PM PST by rightly_dividing
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To: trumandogz

How soon they forget. There was no pushback from the Bush administration nor was there any initiative when they had a veto proof congress.

7 posted on 01/31/2012 2:10:19 PM PST by joesbucks
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To: trumandogz
Ooooh, you really exposed politics.

How was he supposed to know in '02 that the Democrats would allow and even encourage the meltdown or that he wouldn't be able to do anything to stop it? I suppose not being able to see 6 years into the future is an impeachable offense.

Of course, even with the crash looming they were all working behind the scenes to prevent it while not making statements that would shake the markets. That's what the '08 tax rebate checks were about. Try reading the other side, you'll learn something.

8 posted on 01/31/2012 2:21:26 PM PST by Deb (Beat him, strip him and bring him to my tent!)
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To: joesbucks

What were they supposed to “pushback” on and “veto” what?

9 posted on 01/31/2012 2:22:54 PM PST by Deb (Beat him, strip him and bring him to my tent!)
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To: joesbucks

“How soon they forget.”

Perhaps you’ve forgotten, Joe. Bush tried fourteen (that’s 14) times to get oversight on Fannie and Freddy. Congress refused him every time. And then came Obama.

10 posted on 01/31/2012 2:23:08 PM PST by kitkat (Obama, rope and chains)
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To: joesbucks; trumandogz; nagdt; jonrick46
How soon they forget. There was no pushback from the Bush administration nor was there any initiative when they had a veto proof congress.

The initiative that Bush did show was to open the US banking and housing market to Mexican illegal aliens.

Funny how Bush's supporters never, ever seek to answer the following questions. If they did, the only reasonable answer is that Bush was in collusion with the DemocRATs to gut the US economy to the benefit of his Wall Street banker buddies and the detriment of the US citizens.

They always conveniently forget that Bush comes from a long line of Wall Street bankers and it is this constituency he served, from the day he entered office until the day he left.

This youtube video posted by the thread starter was created by the Bush folks themselves to hide Bush's actions which wrecked the US economy.

Why did Bush meet with El Presidente de Mexico, Vicente Fox on February 16, 2001, just 3 weeks after being inaugurated?

Exactly what was the purpose of the US/Mexico Partnership for Prosperity Agreement?

Exactly what was the purpose of the New Alliance Task Force?

Exactly what was the purpose of the American Dream Down Payment Act?

Why did the Bush Justice Dept. and Treasury Dept. give their blessings to the change in banking regulation to allow banks to accept the Matricula Consular card as ID?

Why did Bush, in 2002, praise Franklin Raines, of Fannie Mae and Leland Brendsel of Freddie Mac and call on them to increase their financial commitments to the 'minority' market by $440 billion?

Why did the Bush Administration change the rules to allow banks that served the 'minority' market through international remittances to claim CRA credit?

What are 'international remittances' and what size is the market?

Why did Bush champion amnesty for Mexican illegal aliens?

Why did the Bush administration claim that national security was a priority and form the TSA and DHS while supposedly fighting a "War on Terrorism", then leave the southern borders wide open by ordering border and interior immigration enforcement to the lowest levels in years?

Why didn't the Bush administration complete the southern border fence despite the signing the appropriations into law?

Why did Bush sign the US/Mexico Social Security Totalization Agreement that would allow a Mexican national to apply for and collect US SS benefits after having worked (illegally) in the US for only 6 quarters (18 months) and could collect US SS benefits for their family back home in Mexico, even if the family had never stepped foot into the US?

11 posted on 01/31/2012 2:26:10 PM PST by Ol' Dan Tucker (People should not be afraid of the government. Government should be afraid of the people)
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To: Deb
Try reading the other side, you'll learn something.

Deb, perhaps you can answer the questions I've asked in my post #11 on this thread.

12 posted on 01/31/2012 2:27:52 PM PST by Ol' Dan Tucker (People should not be afraid of the government. Government should be afraid of the people)
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To: kitkat
Bush tried fourteen (that’s 14) times to get oversight on Fannie and Freddy. Congress refused him every time.

Which Congress was this? Both houses of the 108th were controlled by Republicans.

13 posted on 01/31/2012 2:29:19 PM PST by Ol' Dan Tucker (People should not be afraid of the government. Government should be afraid of the people)
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To: Ol' Dan Tucker

Stuff your stupid list. I don’t respond to idiots who make up BS lists. Wave your list at the millions of babies saved by the most anti-abortion president we’ve ever had.

14 posted on 01/31/2012 2:34:33 PM PST by Deb (Beat him, strip him and bring him to my tent!)
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To: kitkat

And who was in control of congress most of those years?

15 posted on 01/31/2012 2:42:52 PM PST by joesbucks
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To: Deb
Stuff your stupid list. I don’t respond to idiots who make up BS lists.

The only people posting BS are the 'idiots' who defend Bush's presidency.

It's document-dump time...

On February 16, 2001, just 3 weeks after his inauguration, President George W. Bush met with Mexican President Vicente Fox to discuss the terms of the Partnership for Prosperity Agreement (with Mexico). (See: Partnership for Prosperity Agreement (with Mexico))

The P4P agreement was signed on September 6, 2001.

On October 26, 2001, Bush signed the USA PATRIOT Act of 2001 into law. Contained in section 326(b) was the provision that allowed US banks to accept the Mexican Matricula Consular card as valid ID for opening a bank account.

Congress sent a request for opinion to Bush's Treasury Dept. about 326(b). Bush's Treasury responded:

“The proposed rules set forth the requirement that financial institutions would have to establish a customer identification and verification program applicable to all new accounts that are opened, regardless of whether the customer is a U.S. citizen or a foreign national. While the proposed rules prescribe minimum standards for such programs, they leave sufficient flexibility to permit financial institutions to tailor their program to fit their business operations. The customer identification program would have to contain reasonable procedures for identifying any person, including a business, that opens an account, setting forth the type of identifying information that the financial institution will require. At a minimum, for U.S. persons the proposed rules would require financial institutions to obtain the following information: name, address, taxpayer identification number, and, for individuals, date of birth. While a taxpayer identification number is not required for non-U.S. persons, a financial institution must describe what type of information it will require of a non-U.S. person in place of a taxpayer identification number. The regulations state that financial institutions may accept one or more of the following: a U.S. taxpayer identification number; a passport number and country of issuance; an alien identification card number, or the number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard.”

This also contained a footnote (17):

“Thus, the proposed regulations do not discourage bank acceptance of the ‘matricula consular’ identity card that is being issued by the Mexican government to immigrants.” (See: Treasury Department Issues USA PATRIOT Act Report to Congress)

Note that no Mexican banks accept their own government's Matricula Consular card as valid ID for opening a bank account because the bearer's identity is all but untraceable. In contrast, thanks to Bush's Treasury Dept., almost all US banks accept it.

On June 17, 2002, Bush held a press conference. In this press conference he said that by 2010 he wanted to see 5.5 million new 'minority' home owners.

He called on Fannie Mae and Freddie Mac to increase commitments to the 'minority' market by $440 billion. (See: President Calls for Expanding Opporunities to Home Ownership)

Here's how Bush described the minorities he wanted to 'help':

"Three-quarters of white America owns their homes. Less than 50 percent of African Americans are part of the homeownership in America. And less than 50 percent of the Hispanics who live here in this country own their home. And that has got to change for the good of the country. It just does."

In response to the mandate contained in the P4P agreement, the New Alliance Task Force was formed in May 2003. (See: New Alliance Task Force)

The NATF is a broad-based coalition of 62 members, including the FDIC, Mexican Consulate, 34 banks, community-based organizations, federal bank regulatory agencies, government agencies, and representatives from the secondary market and private mortgage insurance (PMI) companies.

Their goal was to open the Mexican illegal alien market to US banks and visa-versa using low-cost remittances as the bait. As Bush's 2002 speeches show he was talking about hundreds of billions of U.S. tax dollars going to directly benefit millions of Mexican illegal aliens.

The NATF was organized into four working groups that were tasked with the following goals:

  • Financial Education—educates immigrants on the benefits and importance of holding accounts, the credit process, and mainstream banking.
  • Bank Products and Services Working Group—encourages banks and thrifts to develop financial service products with remittance features as a strategy to reach the unbanked immigrant community.
  • Mortgage Products—created the New Alliance Model Loan Product for potential homeowners who pay taxes using an ITIN.
  • Social Projects—provides scholarship funds for immigrant students and fosters economic support for Plazas Comunitarias, a program that will give Mexican citizens an opportunity to finish their high school education.

In June 2004, the FDIC released a report detailing the goals and the progress to date, of the Partnership for Prosperity Agreement (with Mexico)

"During the past several years, bilateral agreements and U.S. banking laws and regulations have facilitated remittance transfers for immigrants and helped bring the unbanked into the formal banking system. For example, in 2001 the United States and Mexico launched the U.S.-Mexico Partnership for Prosperity which fosters economic and labor opportunities in less developed parts of Mexico and expands access to capital in Mexico. The Partnership also addresses the high cost of sending money from the United States to Mexico and encourages banking institutions to market accounts that offer remittance features to Mexican workers. In addition, the G-8 countries are promoting programs to alleviate poverty in developing countries, including Latin America.17 These programs facilitate remittances through the formal banking system and, at the same time, attempt to reduce the cost of these transfers."

"In June 2004, in an effort to encourage more banks to enter the remittance market and improve access to the U.S. banking system among recent Latin American immigrants, bank regulatory agencies clarified that financial institutions offering low cost international remittance services would receive credit under the Community Reinvestment Act (CRA).18 Regulated financial institutions are required under the CRA to serve the convenience and credit needs of their entire communities, including low- and moderate-income areas. Most remittance senders to Latin America are low- to moderate-income immigrant wage earners who operate outside the formal banking system."

"In addition, a growing number of U.S. banks accept alternative forms of identification to help taxpaying immigrants open bank accounts and secure other banking services; these include the Individual Taxpayer Identification Number (ITIN) and foreign government issued identification, such as the Mexican Matricula Consular card. The USA PATRIOT Act allows financial institutions to accept both forms of identification, enabling insured financial institutions to serve unbanked immigrants who live and work in the United States. The ITIN, created by the U.S. Internal Revenue Service (IRS) for foreign-born individuals who are required to file federal tax returns, is a nine-digit number similar to the social security number (SSN) and is issued to individuals who are not eligible for the SSN. The Matricula Consular card is an identification card issued by the Mexican consulate to individuals of Mexican nationality who live in the United States. According to the Mexican government, an estimated 4 million Matricula cards have been issued in the United States."

"As an example of the effectiveness of using this form of identification, Wells Fargo opened more than 400,000 new accounts for Mexican immigrants, using the Matricula Consular card between November 2001 and May 2004. In recent months, Wells Fargo has averaged 22,000 new accounts per month, many of which feature the bank's remittance product.20 For example, the bank offers InterCuenta Express, an account-to-account wire transfer service that charges $8 to transfer up to $3,000 per day directly into a beneficiary's bank account in Mexico. Transfers can be initiated at the bank's branch or ATM in the United States, and the receiving party can access monies via the bank's sizeable remittance distribution network of more than 4,000 banking offices and 10,700 ATMs in Mexico. According to the Mexican government, 178 banks in the United States accept the Matricula Consular card to open bank accounts; 86 of these institutions are in the Midwest."

Keep in mind this is just Wells Fargo and that sub-prime lending would not reach its peak until 2005-2007. This does not include all the other major banks, such as CitiGroup, Bank of America, Chase, Washington Mutual, or the hundreds of other smaller regional banks and lenders who were also taking part in this feeding frenzy.

The IRS says they've issued over 11 million ITINs since its inception. Mexico says they've issued over 5 million Matricula Consular cards.

But, none of this would be workable if ICE was deporting the banks' new customers. Once again, Bush swung into action, hobbling border and interior enforcement.

Worksite arrests of illegal aliens fell some 97 percent, from 2,859 in 1999 to 159 in 2004. Investigations targeting employers of illegal immigrants fell more than 70 percent, from 7,637 in 1997 to 2,194 in 2003. Arrests on job sites fell—precipitously, from 17,554 in 1997 to 445 in 2003. Fines levied for immigration-law violations fell from 778 in 1997 to 124 in 2003. Notices of intent to fine employers fell from 865 in 1997 to just 3 in 2004.

When the USA PATRIOT Act came up for renewal in 2004, some republicans wanted to remove the provision that allowed banks to accept Matricula Consular ID as the consular ID is unreliable.

Barney Frank (D-MA) and some of his Republican and Democrat friends swung into action to protect it:

Anti-matrícula proposal defeated; financial institutions can continue accepting consular ID's:

In a vote of 222 to 177, the U.S. House of Representatives passed a bipartisan amendment, H.Amdt. 754, introduced by Reps. Michael Oxley (R-OH), Barney Frank (D-MA), Jim Kolbe (R-AZ), Ed Pastor (D-AZ), and Rubén Hinojosa (D-TX) to strike the so-called Culberson amendment that would have prohibited the Treasury Dept. from implementing regulations that allow financial institutions to accept matrícula consular identification cards as part of a valid customer identification program under the USA PATRIOT Act... In countering Culberson’s allegations that the FBI and the Justice Dept. were opposed to the bipartisan amendment to preserve the use of matrícula consular cards, Bachus presented a letter for the record written by Deputy Atty. Gen. James B. Comey and addressed to Speaker of the House Dennis Hastert. The letter, dated Sept. 14, 2004, stated: The Department of Justice fully supports the Administration’s current policy under the USA PATRIOT Act that requires banks and other financial institutions to establish reasonable procedures for the identification and verification of new account holders, which is set forth in regulations of the Department of the Treasury. Therefore the [Justice] Department supports the Oxley-Frank-Kolbe amendment to H.R. 5025 that preserves these regulations. . . . The Department of Justice, including the FBI, continue[s] to work closely with the Treasury Department on this and other issues related to halting all financing of terrorists.

In the final roll call vote, 49 Republicans supported the Oxley-Frank-Kolbe-Pastor-Hinojosa amendment and 16 Democrats opposed it. This legislative victory was a joint effort by financial institutions, immigrants’ rights groups, consumer groups, and many others who worked in coalition to defeat, once again, efforts to limit the acceptance of consular ID cards by banks, credit unions, thrifts, and other financial entities.

In Bush's June 17, 2002 speech, he also called for the creation of the American Dream Down Payment Fund.

"And so here are some of the ways to address the issue. First, the single greatest barrier to first time homeownership is a high downpayment. It is really hard for many, many, low income families to make the high downpayment. And so that's why I propose and urge Congress to fully fund the American Dream Downpayment Fund. This will use money, taxpayers' money to help a qualified, low income buyer make a downpayment. And that's important."

And, the 108th Congress (2003-2005) responded with the American Dream Downpayment Act:

"Amends the Cranston-Gonzalez National Affordable Housing Act to: (1) authorize the Secretary of Housing and Urban Development to make grants to State and local participating jurisdictions for downpayment assistance and related home repair to low-income, first-time home buyers; and (2) limit family assistance to the greater of six percent of the purchase price or $10,000. Requires a participating jurisdiction to include intended grant uses in its fiscal year comprehensive housing affordability strategy under such Act."

"Sets forth State and local jurisdiction allocation formulas. Permits fund reallocation."

"Requires the Comptroller General to report respecting the impact of such grants on a State-by-State basis."

"Terminates grant authority after December 31, 2007. Authorizes specified FY 2004 through 2007 appropriations."

"Makes the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 inapplicable to such assistance."

The act was authorized to appropriate up to $200 million per year of US taxpayer funds between FY2004 through FY2007 to go to Bush's 'minorities'.

The sponsor and co-sponsors of this $800 million giveaway:

Sponsor: Sen. Wayne Allard [R-CO]

Sen. Samuel Brownback [R-KS]
Sen. Conrad Burns [R-MT]
Sen. Ben Campbell [R-CO]
Sen. Michael Crapo [R-ID]
Sen. Michael Enzi [R-WY]
Sen. Charles Hagel [R-NE]
Sen. Lisa Murkowski [R-AK]
Sen. Richard Santorum [R-PA]
Sen. Jefferson Sessions [R-AL]

Park Place South is, in microcosm, the story of a well-intentioned policy gone awry. Advocating homeownership is hardly novel; the Clinton administration did it, too. For Mr. Bush, it was part of his vision of an “ownership society,” in which Americans would rely less on the government for health care, retirement and shelter. It was also good politics, a way to court black and Hispanic voters.

But for much of Mr. Bush’s tenure, government statistics show, incomes for most families remained relatively stagnant while housing prices skyrocketed. That put homeownership increasingly out of reach for first-time buyers like Mr. West.

So Mr. Bush had to, in his words, “use the mighty muscle of the federal government” to meet his goal. He proposed affordable housing tax incentives. He insisted that Fannie Mae and Freddie Mac meet ambitious new goals for low-income lending.

Concerned that down payments were a barrier, Mr. Bush persuaded Congress to spend up to $200 million a year to help first-time buyers with down payments and closing costs.

And he pushed to allow first-time buyers to qualify for federally insured mortgages with no money down. Republican Congressional leaders and some housing advocates balked, arguing that homeowners with no stake in their investments would be more prone to walk away, as Mr. West did. Many economic experts, including some in the White House, now share that view.

The president also leaned on mortgage brokers and lenders to devise their own innovations. “Corporate America,” he said, “has a responsibility to work to make America a compassionate place.”

And corporate America, eyeing a lucrative market, delivered in ways Mr. Bush might not have expected, with a proliferation of too-good-to-be-true teaser rates and interest-only loans that were sold to investors in a loosely regulated environment.

“This administration made decisions that allowed the free market to operate as a barroom brawl instead of a prize fight,” said L. William Seidman, who advised Republican presidents and led the savings and loan bailout in the 1990s. “To make the market work well, you have to have a lot of rules.”

But Mr. Bush populated the financial system’s alphabet soup of oversight agencies with people who, like him, wanted fewer rules, not more.

The president’s first chairman of the Securities and Exchange Commission promised a “kinder, gentler” agency. The second was pushed out amid industry complaints that he was too aggressive. Under its current leader, the agency failed to police the catastrophic decisions that toppled the investment bank Bear Stearns and contributed to the current crisis, according to a recent inspector general’s report.

As for Mr. Bush’s banking regulators, they once brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry. When states tried to use consumer protection laws to crack down on predatory lending, the comptroller of the currency blocked the effort, asserting that states had no authority over national banks.

The administration won that fight at the Supreme Court. But Roy Cooper, North Carolina’s attorney general, said, “They took 50 sheriffs off the beat at a time when lending was becoming the Wild West.”

The president did push rules aimed at forcing lenders to more clearly explain loan terms. But the White House shelved them in 2004, after industry-friendly members of Congress threatened to block confirmation of his new housing secretary.

"In the 2004 election cycle, mortgage bankers and brokers poured nearly $847,000 into Mr. Bush’s re-election campaign, more than triple their contributions in 2000, according to the nonpartisan Center for Responsive Politics. The administration did not finalize the new rules until last month."

Among the Republican Party’s top 10 donors in 2004 was Roland Arnall. He founded Ameriquest, then the nation’s largest lender in the subprime market, which focuses on less creditworthy borrowers. In July 2005, the company agreed to set aside $325 million to settle allegations in 30 states that it had preyed on borrowers with hidden fees and ballooning payments. It was an early signal that deceptive lending practices, which would later set off a wave of foreclosures, were widespread.

Andrew H. Card Jr., Mr. Bush’s former chief of staff, said White House aides discussed Ameriquest’s troubles, though not what they might portend for the economy. Mr. Bush had just nominated Mr. Arnall as his ambassador to the Netherlands, and the White House was primarily concerned with making sure he would be confirmed.

“Maybe I was asleep at the switch,” Mr. Card said in an interview.

Brian Montgomery, the Federal Housing Administration commissioner, understood the significance. His agency insures home loans, traditionally for the same low-income minority borrowers Mr. Bush wanted to help. When he arrived in June 2005, he was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans. The Ameriquest settlement, he said, reinforced his concern that the industry was exploiting borrowers.

In December 2005, Mr. Montgomery drafted a memo and brought it to the White House. “I don’t think this is what the president had in mind here,” he recalled telling Ryan Streeter, then the president’s chief housing policy analyst.

It was an opportunity to address the risky subprime lending practices head on. But that was never seriously discussed. More senior aides, like Karl Rove, Mr. Bush’s chief political strategist, were wary of overly regulating an industry that, Mr. Rove said in an interview, provided “a valuable service to people who could not otherwise get credit.” While he had some concerns about the industry’s practices, he said, “it did provide an opportunity for people, a lot of whom are still in their houses today.”

The White House pursued a narrower plan offered by Mr. Montgomery that would have allowed the F.H.A. to loosen standards so it could lure back subprime borrowers by insuring similar, but safer, loans. It passed the House but died in the Senate, where Republican senators feared that the agency would merely be mimicking the private sector’s risky practices — a view Mr. Rove said he shared.

‘We Told You So’

Armando Falcon Jr. was preparing to take on a couple of giants.

A soft-spoken Texan, Mr. Falcon ran the Office of Federal Housing Enterprise Oversight, a tiny government agency that oversaw Fannie Mae and Freddie Mac, two pillars of the American housing industry. In February 2003, he was finishing a blockbuster report that warned the pillars could crumble.

Created by Congress, Fannie and Freddie — called G.S.E.’s, for government-sponsored entities — bought trillions of dollars’ worth of mortgages to hold or sell to investors as guaranteed securities. The companies were also Washington powerhouses, stuffing lawmakers’ campaign coffers and hiring bare-knuckled lobbyists.

Mr. Falcon’s report outlined a worst-case situation in which Fannie and Freddie could default on debt, setting off “contagious illiquidity in the market” — in other words, a financial meltdown. He also raised red flags about the companies’ soaring use of derivatives, the complex financial instruments that economic experts now blame for spreading the housing collapse.

Today, the White House cites that report — and its subsequent effort to better regulate Fannie and Freddie — as evidence that it foresaw the crisis and tried to avert it. Bush officials recently wrote up a talking points memo headlined “G.S.E.’s — We Told You So.”

But the back story is more complicated. To begin with, on the day Mr. Falcon issued his report, the White House tried to fire him. (See: White House Philosophy Stoked Mortgage Bonfire)

Partnership for Prosperity (the propaganda):

Fact Sheet: Partnership for Prosperity

Partnership for Prosperity agreement/New Alliance Task Force. (the truth):

Linking International Remittance Flows to Financial Services: Tapping the Latino Immigrant Market

New Alliance Task Force

Housing Push for Hispanics Spawns Wave of Foreclosures:

Mortgage lenders appear to have regarded Latinos as a largely untapped demographic. Many were first or second-generation U.S. residents who didn't own homes. Many Hispanic families had multiple wage earners working multiple cash jobs, but had no savings or established credit history to allow them to qualify for traditional loans.

The Congressional Hispanic Caucus created Hogar in 2003 to work with industry and community groups to increase mortgage lending to Latinos. At that time, the national Latino homeownership rate was 47%, compared with 68% for the overall population. Hogar called the figure "alarming," and said a concerted effort was required to ensure that "by the end of the decade Latinos will share equally in the American Dream of homeownership."

Hogar's backers included many companies that ran into trouble in mortgage markets: Fannie Mae and Freddie Mac, both now under federal control; Countrywide Financial Corp., sold last year to Bank of America Corp.; Washington Mutual Inc., taken over by the government and sold to J.P. Morgan Chase & Co.; and New Century Financial Corp. and Ameriquest Mortgage Corp., both now defunct.

Hogar's ties to the subprime industry were substantial. A Washington Mutual vice president served as chairman of its advisory committee. Companies that donated $150,000 a year got the right to place a research fellow who would conduct Hogar's studies, which were used by industry lobbyists. For donations of $100,000 a year, Hogar offered to provide news releases from the Hispanic Caucus promoting a lender's commercial products for the Latino market, according to the group's literature.

Hogar worked with Freddie Mac on a two-year examination of Latino homeownership in 63 congressional districts. The study found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting. It recommended further easing of down-payment and underwriting standards.


Mortgage lending to Hispanics took off between 2004 and 2007, powered by nonprime loans. The biggest jump occurred in 2005. The 169% increase in nonprime mortgages to Hispanics that year outpaced a 122% gain for blacks, and a 110% increase for whites, according to a Journal analysis of mortgage-industry and federal-housing data. Nonprime mortgages carry high interest rates and are tailored to borrowers with low credit scores or few assets.

Between 2004 and 2007, black borrowers were offered nonprime loans at a slightly higher rate than Hispanics, but the overall number of Hispanic borrowers was much larger. From 2004 to 2005, total nonprime home loans to Hispanics more than tripled to $69 billion from $19 billion, and peaked in 2006 at $73 billion.


Regions of the country where the housing bubble grew biggest, such as California, Nevada and Florida, are heavily populated by Latinos, many of whom worked in the construction industry during the housing boom. When these markets began to weaken, bad loans depressed the value of neighboring properties, creating a downward spiral. Neighborhoods are now dotted with vacant homes.

By late 2008, one in every nine households in San Joaquin County, Calif., was in default or foreclosure -- 24,049 of them, according to Federal Reserve data. Banks have already taken back 55 of every 1,000 homes. In Riverside, Calif., 66,838 houses are owned by banks or were headed in that direction as of October. In Prince William County, Va., a Washington suburb, 11,685 homes, or one in 11, was in default or foreclosure.


These days, James Scruggs of Northern Virginia Legal Services is swamped with Latino borrowers facing foreclosure. "We see loan applications that are complete fabrications," he says. Typically, he says, everything was marketed to borrowers in Spanish, right up until the closing, which was conducted in English.

"We are not talking about people working for the World Bank or the IMF," he says. "We are talking about day laborers, janitors, people who work in restaurants, people who do babysitting."

Two such borrowers work in Mr. Scrugg's office. Sandra Cardoza, a $28,000-a-year office manager, is now $30,000 in arrears on loans totaling $370,000. "Her loan documents say she makes more than me," says Mr. Scruggs.

Mortgages to Illegal Immigrants Come Under Fire

...Manuel Lopez came to the U.S. on a tourist visa in 1999 after his bus-driving business in Ecuador failed due to runaway inflation. He stayed here illegally and eventually brought over his wife and son and had another daughter here. He makes about 40-thousand dollars a year working for a downtown Chicago parking garage. Two years ago, he started looking to buy a house but the interest rates his broker quoted him were 8 to 9 percent. Then he heard about a program with much better terms run by Citibank and the non-profit group Acorn Housing.

...He bought the house for 230-thousand dollars with a 30-year fixed rate mortgage set at 6 percent. The program required that he pay three percent down. Lopez is just one of about 900 undocumented immigrants who have gotten mortgages from the Citibank Acorn program nationwide in the past few years. And they’re by no means the only ones in the business....

At Second Federal Savings and Loan in Chicago’s Little Village neighborhood, tellers count out bills in Spanish to their predominantly Latino customer base....

This savings and loan got its start serving Eastern Europeans but had to adapt – or die – once the neighborhood changed. Mark Doyle is president and CEO of Second Federal. His bank became one of the first to pioneer the practice of making mortgages to undocumented immigrants several years ago.

DOYLE: Loan applications were astounding. I mean, we had 40 million dollars in the pipeline in one four-week period of time. And we did those loans for a good period of 8, 10 months and then we cut it off. We curtailed that activity because we couldn’t handle the volume.

But the bank was soon able to get back into it. What made this whole market possible is that back in 1996 the IRS started offering illegal immigrants a way to pay taxes. The IRS created something called individual taxpayer identification numbers, or ITINs. People without social security numbers who earn money in the U.S. are still obligated to get ITINs and pay tax – whether or not they’re here legally. More than 10 million people have gotten ITINs since the system was created. And now they’re able to show those tax returns to banks as proof of income in order to get mortgages. Still, Doyle says most ITIN holders lack a regular credit history. So Second Federal had to get creative in assessing credit worthiness.

DOYLE: We have to go to local churches to find out if they’re a member of that parish, are they paying weekly. If they’ve borrowed money from an uncle to buy a pickup truck, there’s a paper trail behind that, so we look for the check, we take a look at the title, we make sure they paid him back. If they’re a tenant, you know, we look for receipts, proof they’ve been rent to their landlords. The underwriting on an ITIN loan typically takes at least 6 hours.

And that’s three times as long as a regular loan. He says it’s worth it because the ITIN loans have performed well. But lately, volume has dropped to as few as six applications a month versus 40 a few years ago. Doyle says one reason is competition from other banks. Another is the political climate. The government plans to send so-called no-match letters to employers warning them that they face penalties if their workers are illegal. That could trip up people with ITINs who use fake social security numbers to work. A judge has temporarily blocked the letters, but Doyle says potential borrowers are intimidated.

DOYLE: They’re afraid. If an employer now has to go to their people and say he has five people who don’t have a valid social security number and tell them if you don’t give me a valid social security number in 90 days, I’m going to have to fire you, if enough of that happens. People have two choices – they can go back to Mexico or they’re going to go underground.

And Mari Gallagher, a Chicago-based consultant who’s researched the ITIN mortgage market, says banks are also thinking twice.

GALLAGHER: The big players have other issues right now in the mortgage industry, so they’re not going to be spending their time figuring out the ITIN mortgage. So I think it’s the small banks who will keep pushing the envelope, and then if it looks like it’s a safe area again, banks as other markets dry up might revisit it, but I think with the political current right now, banks are wary.

CHEREE CALABRO: This is about the first home loan, and this is a picture from the coverage of us protesting at the bank in Hammond, this was our first protest.

That’s Cheree Calabro. She heads a group called Indiana Federation for Immigration Reform and Enforcement. She’s pulled out a folder of newspaper clippings documenting her group’s 7-month protest of Bank Calumet after the bank made its first mortgage to an undocumented immigrant. They handed out flyers to bank customers saying the practice is illegal. Calabro says the bank wasn’t happy.

CALABRO: They got pretty upset with us. They didn’t want us to step on their property, so what I did is I bought one of those extendo-rods, it’s for reaching objects on high shelves, and I would put the flyer in it so I could reach across their property and hand it to the people as they sat in the drive-thru.

In other words, pretty much a bank’s worst nightmare. Calabro says they persuaded some people to close their accounts – including one person she says withdrew 100-thousand dollars. When First Midwest Bancorp bought Bank Calumet in spring of 2006, they stopped making ITIN mortgages. Calabro says that’s what she’d like to see happen all across the country.

CALABRO: I mean you shouldn’t be rewarded for your illegal activity, neither the banks nor the illegal aliens should be rewarded for their crimes.

Calabro points to a section of the immigration code that says it’s a crime to aid or abet illegal immigrants for financial gain. But a spokesman for the Federal Deposit Insurance Corporation says ITIN mortgage lending is legal. Congressman John Doolittle – a Republican from California – introduced a bill earlier this year to make the practice illegal, but it didn’t get to the floor for a vote. Mark Doyle of Second Federal says homeownership should be encouraged – regardless of immigration status.

DOYLE: People are more responsible for their neighborhoods. They’re more attentive to their schools and churches and they take care of their homes.

The Wall Street Journal Online Sub-prime Geographic Distribution Map

Open Borders and the Mortgage Mess

Illegal Immigration and the Mortgage Mess

16 posted on 01/31/2012 2:43:09 PM PST by Ol' Dan Tucker (People should not be afraid of the government. Government should be afraid of the people)
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To: Signalman


17 posted on 01/31/2012 2:44:42 PM PST by Lando Lincoln (But that's just me.)
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To: Ol' Dan Tucker
Blah, blah, blah. You Bush-haters are the scum of the Earth. I hope you're not dumb enough to think anyone reads your crap. Crawl back to the Birchers. And:



18 posted on 01/31/2012 2:51:42 PM PST by Deb (Beat him, strip him and bring him to my tent!)
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To: Deb
Blah, blah, blah. You Bush-haters are the scum of the Earth. I hope you're not dumb enough to think anyone reads your crap.

The only people who don't read it are those who are afraid of the truth that from the time Bush entered office until the day he left he served only one constituency --Wall Street bankers.

Anyone who thinks otherwise is not just an idiot, but a useful idiot.

19 posted on 01/31/2012 2:58:41 PM PST by Ol' Dan Tucker (People should not be afraid of the government. Government should be afraid of the people)
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To: Ol' Dan Tucker

Hahahahaha. Yeah, Bush was a real slave to the “Wall Street bankers”. That’s why they gave all their money to Gore, Kerry and Obama. You Bush-haters are comically deranged.

20 posted on 01/31/2012 3:09:54 PM PST by Deb (Beat him, strip him and bring him to my tent!)
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