Yup,Barney Fag,Reno’s warning to mortgage lenders not to deny loans to minorities and “liar loans” were what did it.
“Yup,Barney Fag,Reno’s warning to mortgage lenders not to deny loans to minorities and “liar loans” were what did it.”
I personally witnessed the effect of the CRA inflating housing prices in the hood areas. Contractors and investors were snapping up run down foreclosures for next to nothing, and rehabbing with new paint/floor covers/kitchen/baths then flipping them and doubling their total investment.
These houses were being sold to credit risk borrowers with payments that took two low wage incomes to make. when one person lost their job the house payments went into the tank.
The investors made their money and after a year or two had enough to move into higher income neighborhoods and repeat the process, driving prices up further.
Meanwhile, builders started producing the cheapest big box houses with chinese drywall and selling them exclusively to minorities these lending programs favored.
Enter the mortgage back securities which contained hundreds of thousands if not millions of these inflated value homes occupied by credit risk borrowers who soon could not make payments and the whole house of cards came tumbling down.
Barney Frank’s fault—yes indeed.