Friday, August 31, 2007

The Rest of the Foreclosure Story....

There is more than meets the eye here.... "Bush to Offer Proposals To Ease Mortgage Crisis." (WaPo)

Yes, The Decider and Treasury Secretary Henry Paulson, will propose changes in the Federal Housing Administration mortgage insurance program that will allow more people to refinance with FHA insurance if they fall behind on adjustable-rate mortgages.

You know, those are the mortgage loans made at an initial low interest rate...."come into my financial web" said the mortgage loan spider.... and then balloon to stratospheric rates after a few years.

In the next two years, it is estimated that 2 million more mortgage loans to risky, or sub-prime, borrowers will adjust upward fueling what is already a tsunami of foreclosures.... so the government is taking steps to rescue some financially floundering homeowners from opportunistic lenders and prop up our destabilized economy.

But there's a lot more to the story.

In April it was estimated that 50 percent of Blacks, and 40 percent of Hispanics had sub-prime loans.... loans usually made to people with low incomes and/or poor credit.... in the last decade, Hispanic home ownership has shot up by nearly 70 percent!

But, now sub-prime loans with either high interest rates or balloon payments have become unsustainable for those lured into them. Groups like the NAACP and National Council of La Raza have been calling for action, and pressuring the government.

And, herein is the story behind the story.

In 2005, CNN reported: "Banking on Illegal Immigrants." Are you surprised? Yes, banks want their business. A bad idea in more than one way, because besides sending the message to illegal immigrants: break our laws and we'll reward you with a home.... many worried that "lack of knowledge on the part of illegal immigrants could pave the way for abuse in the form of predatory lending."


How was this possible? The government issues ITIN's which are a nine-digit tax processing number, given by the IRS to people who don't qualify for a social security number. And, as legal residency isn't required to obtain an ITIN.... "many illegal immigrants use this form of identification to pay U.S. taxes and buy homes."

Alenka Grealish, manager of the banking group at Celent, an independent research firm, said, "Illegal immigrants are here to stay and banks are recognizing that. If you do a niche market well and know how to price it, banks can have some attractive margins. Banks are counting on the fact that we do a lousy job with interior enforcement.... the chances of being deported are very slim. Banks are banking on that."

In other words, banks can make sub-prime loans with the full faith and knowledge that Bush's government, with a complicit Congress, won't enforce immigration laws, and in fact encourage illegal immigration with their ITINs and no-oversight of usury lending practices.

A back door amnesty policy... now a national financial albatross and a reality check on the American dream for the exploited illegal immigrants.


elgringocolombiano said...

It's bogus how the ReThuglicans are happy to dole out corporate welfare to "bail out" an industry. Especially in this case with the mortgage/financial svcs industry, where they intellectually "knew what they were doing was wrong".

OTOH, for the regular Joe or Jane in Hurricane Katrina, or lost his health care insurance? Will the ReThugs help him? Not so much.

This morgtage industry needs common-sense regulation to avoid these bogus "ARMs". Another example that capitalism works only with proper regulations

Anonymous said...

(found the following web item)


There's a water shortage in the southwest, but Pres. Bush has been helping the situation with his surplus of wetbacks!

elgringocolombiano said...

Down goes Larry Craig [||]

Mad ReThugs are resigning lately, Rove, Snow, Gonzo, Craig. LOL.