Obama wants banks to make home loans to people with poor credit

my work here is done
If you need more evidence of Obama being a psychopath, here it is.
Recall the Great Recession that began in 2008 was in large part due to the bursting of the housing bubble. That bubble, in turn, was caused by risky mortgage lending to too many people whose financial profiles make them poor candidates for loans.
Today, five years after the collapse of the housing market and contrary to the insistence that the market is “recovering,” the U.S. landscape is still littered with 301,874 “zombie” properties in which homeowners in foreclosure have moved out, leaving vacant  property susceptible to vandalism and degradation. The number of U.S. homes in foreclosure or bank-owned actually increased by 9% to 1.5 million properties nationally in the first quarter of 2013 compared to a year ago, while another 10.9 million homeowners nationwide are “under water” because they owe more than their property is worth. (See DCG’s post of March 28, “Obama’s New America….“)

houses-underwaterNearly 11 million U.S. homes are still under water

And yet the POS is pushing to make more home loans available to people with weak credit, which was exactly what had created the housing bubble and its subsequent bursting!
What if those people default on their mortgages?
Why, the 49% of hard-working Americans suckers who still pay income taxes will make up the difference! That’s wealth redistribution socialism, bro!
Zachary A. Goldfarb reports for The Washington Post, April 2, 2013, that Obama pledged in his State of the Union address to do more to make sure more Americans can enjoy the benefits of the housing recovery. His  economic advisers say the housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, the Obama administration wants banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administrationthat insure home loans against default.Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.Deciding which borrowers get loans might seem like something that should be left up to the private market. But since the financial crisis in 2008, the government has shaped most of the housing market, insuring between 80% and 90% of all new loans, according to the industry publication Inside Mortgage Finance. It has done so primarily through the Federal Housing Administration, which is part of the executive branch, and taxpayer-backed mortgage giants Fannie Mae and Freddie Mac, run by an independent regulator.The FHA historically has been dedicated to making homeownership affordable for people of moderate means. Under FHA terms, a borrower can get a home loan with a credit score as low as 500 or a down payment as small as 3.5%. If borrowers with FHA loans default on their payments, taxpayers are on the line — a guarantee that should provide confidence to banks to lend.
But banks are largely rejecting the lower end of the scale, and the average credit score on FHA loans has stood at about 700. After years of intensifying investigations into wrongdoing in mortgage lending, banks are concerned that they will be held responsible if borrowers cannot pay. Under some circumstances, the FHA can retract its insurance or take other legal action to penalize banks when loans default.
“The financial risk of just one mistake has just become so high that lenders are playing it very, very safe, and many qualified borrowers are paying the price,” said David Stevens, Obama’s former FHA commissioner and now the chief executive of the Mortgage Bankers Association.
But critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars. “If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.
But Administration officials say they are looking only to allay unnecessary hesi­ta­tion among banks and encourage safe lending to borrowers who have the financial wherewithal to pay. An unnamed senior administration official who was not authorized to speak on the record said, “There’s always a tension that you have to take seriously between providing clarity and rules of the road and not giving any opportunity to restart the kind of irresponsible lending that we saw in the mid-2000s.”
Blah, blah, blah.
H/t FOTM’s Christy.
~Eowyn
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DCG
Admin

Madness. Stupid. Irresponsible. Typical Obama…

josephbc69
Guest

Your excellent first graphic pretty well sums his high competence in the two big Ds: Death & Destruction. A track record he can take to his Boss, the Prince of Darkness, and be rewarded w/an A for Effort.

Roy Mcdade
Guest

The SOB is NOT happy that housing market nearly collapsed the economy, Now he is going for the Jugular and trying to finish it off altogether… Would anyone have expected anything less from this Communist.????

lindarm
Guest

HOly Mother, this is what casued so many of our housing problems to begin with!!!!! IS HE CRAZY? Yeah, crazy as a fox. He’s wily, and evil like Satan.

racefish
Guest

isn’t that one of the things that got us into this crap to begin with?????

Dave
Editor
Dave

We have seen this movie before.
I even had a front row seat for the duration.
And the last time it aired, it ended my career of nearly three decades.
-Dave

Old North State
Guest
Old North State

The Feds took over the mortgage market lock, stock, and barrel. Forcing the banks to give loans to unqualified lower income folk is an old tactic Obama employed in his ACORN days. Now imbued with superpowers, King Putt is able to use his position to redistribute wealth in oh, so many ways. The taxpayer will be on the hook for the rubble after deadbeats go belly up. Of course, with the stagnant, no growth economy the Dems have fostered, many hard-working, bill-paying Americans will also lose their jobs and homes. The destruction could be enormous.

Dressage Rider
Guest
Dressage Rider

How very Cloward-Piven of the odumblust.

alice wolf
Guest
alice wolf

Isn’t there one Congressman or Congresswoman brave enough to start the impeachment process? Congress would have to go along with any or all of the schemes that are floated by the Administration, so even if it put it’s foot down, figuretively speaking, and an EO was issued, there is still enough proof that impeachment is warranted. There is no reason for the nation to have to tolerate any more of this behavior, the only reason I can come up with is again, there has to be an angle in all of this for them. There has to be a carrot… Read more »

Smart Bonds
Guest

Is this decision thoroughly thought through? This may make or break the economy, if you ask me.

japoa
Guest

I was always told the definition of insanity is ; “KEEP ON DOING THE SAME THINGS AS BEFORE BUT HOPE FOR A DIFFERENT OUTCOME .” Barry is a psychopath , but he’s not insane . His mission is to destroy the U.S. of A. and he’s following in the footsteps of those who proceeded him . Pumping out that b.s.that everybody has a ” right ” to home-ownership .
The tax-payers of America better start buying up k-y by the boatload because if Barry b.s.’s enough ” public servants ” to fall for this crap again ; B.O.,H.I.C.A.

joandarc
Guest
joandarc

Thank you Dr. Eowyn for this revealing post. The king refuses to learn from history which you set forth above; or, he wants this country to destroy itself through financial demise.

Anonymous
Guest
Anonymous

Um, didn’t we already try this and end up with the housing bubble?

Paula
Guest

This is something that should be thought over and over since we have a history of the housing bubble already! The government should learn from the mistake that happened years ago and avoid the same mistake again today. This will be a totally useless decision to do.

racefish
Guest

” The government should learn from the mistake that happened years ago and avoid the same mistake again today.”
An astute statement. However, we have many years of the Democrats pushing things that have proven to be failures. That is truly the definition of insanity.