Quote:
Originally Posted by Rick Lee
On the contrary, a lot of banks WERE protecting themselves by offering these kinds of loans. Banks, unlike mortgage companies, are subject to the Community Reinvestment Act (CRA), whereby they have to give FHA-backed loans at below market rates to first-time buyers who would not normally qualify for conventional mortgages. It became a race to the bottom. Gov't. loans were getting so competitive, that the private sector went a step further with subprime, almost pre-empting the gov't., which often comes after banks and mortgage companies for not giving enough loans to enough deadbeats and/or minorities (and I'm not at all implying the two are related). No bank wants to lose money. And when they can find investors who are willing to buy subprime loans, thereby spreading out the risk, why shouldn't they do so? It was very profitable for them. Suddenly, a lot of folks who never would have been able to get even an FHA loan, were able to get into houses.
I could go out today and get into a Ferrari at the local dealership. It would get repo'ed pretty quickly, but I could get into the car and get it home. Would the dealership be at fault for that?
|
I think my statement about non-stupid people was too general.
I meant folks to got into loans they could afford and are maintaining the status quo. Right now there are hopes that the banks will be bailed out, the consumers will be bailed out and that everyone will be 'okay' while the folks to were smart enough to not be dumb get the burden of dealing with whatever new regulations are required to get the people on both sides of the table to be stupid.
Still, the article is about banks who do not conform to the TILA and not about people who may or may not be stupid. A bank cannot change the terms of the loan after the paperwork is signed.