Government Forces Banks to Make Bad Loads to Minorities; Minorities Hardest Hit

Community Organizers Sue Businesses for Believing Community Organizers' Propaganda

Remember the good old days when banks were allowed to decide for themselves who to lend to? They would consider old-fashioned factors like the amount of the down payment, the borrowers' employment history, credit scores and otherwise come to a conservative expectation of the future profitability of a given loan. And they profited. And taxpayers didn't have to bail them out.

This is the law and the article is untrue.

The Equal Credit Opportunity Act (ECOA) ensures that all consumers are given an equal chance to obtain credit. This doesn’t mean all consumers who apply for credit get it: Factors such as income, expenses, debt, and credit history are considerations for creditworthiness.

The creditor must give you a notice that tells you either the specific reasons for your rejection or your right to learn the reasons if you ask within 60 days.
Acceptable reasons include: “Your income was low,” or “You haven’t been employed long enough.” Unacceptable reasons are: “You didn’t meet our minimum standards,” or “You didn’t receive enough points on our credit-scoring system.” Indefinite and vague reasons are illegal, so ask the creditor to be specific.

There is nothing “untrue” about the article. Bankers were forced to make loans or risk the threat of lawsuit. Standards were relaxed.

In a free market economy, bankers would decide to whom they wished to lend, and if not enough of them were lending to qualified minorities, another bank would step in and make a killing and take over that portion of the industry. And freedom would remain intact.

Did you not read the text of the piece? ACORN recognized very early the opportunity presented by the Community Reinvestment Act (CRA) of 1977. As Stanley Kurtz has reported, ACORN proudly touted "affirmative action" lending, and pressured banks to make subprime loans. Madeline Talbott, a Chicago ACORN leader, boasted of "dragging banks kicking and screaming" into dubious loans. And, as Sol Stern reported in City Journal, ACORN also found a remunerative niche as an "adviser" to banks seeking regulatory approval. Businesses will do anything in their power to avoid the label of racist, as they tend to think it isn't very good for business. If you don't think this results in standards being relaxed, you are flat-out wrong. And don't have much in the way of common sense. ACORN bragged about it. It happened.

“American Dream Down Payment Act, December 16, 2003. A $200 million-a-year welfare program that helped low-income Americans to afford the down payment and closing costs.

The Zero Down Payment Act of 2004, introduced by Rep. Pat Tiberi (R-OH), would require the Federal Housing Administration (FHA) to offer federally insured mortgage loans to certain eligible households to buy a house without a down payment. Although the bill could lead to a very modest increase in the homeownership rate, it would do so by exposing the FHA—and ultimately taxpayers—to major losses stemming from high default rates, as evidence from similar FHA programs shows. The Congressional Budget Office estimates that the new program would cost the government $618 million from 2006 through 2009.

More ancient history.....

Dismantling the Barriers to Homeownership

President Bush issued America’s Homeownership Challenge to the real estate and mortgage finance industries to encourage them to join the effort to close the gap that exists between the homeownership rates of minorities and non-minorities. The Bush Administration and the America’s Homeownership Challenge partners in the private sector are working hard to increase minority homeownership, and are seeing positive results:

There are more than 1 million new minority homeowners in the U.S. since the President’s announcement 18 months ago.

Nearly 1,500 low-income families are now using housing vouchers to pay their monthly mortgage or other costs of owning a home, and HUD is working with public housing authorities to allow the sale of some units to tenants.

The Federal Trade Commission and HUD are working together to protect homebuyers from predatory lenders.

The Federal Deposit Insurance Corporation is continuing to implement the Money Smart program, which is providing financial education services for potential homebuyers.

Through America’s Homeownership Challenge, more than 2 dozen companies have made commitments to increase minority homeownership, including pledges to provide more than $1.1 trillion in mortgage purchases for minority homebuyers this decade.

The Bush Administration has begun the final stage of its effort to reduce closing costs, simplify the settlement paperwork, and eliminate surprise closing costs for American homebuyers by reforming the rules governing the Real Estate Settlement Procedures Act.

Strengthening Economic Activity
According to an analysis released in 2002 by HUD, meeting the President’s goal to close the housing gap will involve $256 billion in economic activity in the form of construction and remodeling jobs, spending on household goods, and other benefits. Because of rising home values, Americans are enjoying more than $2.5 trillion of greater housing wealth than they did at the beginning of 2001.

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