What’s this mess anyhow?
This mortgage crisis is the result of the 1977 Community Reinvestment Act, CRA, enacted by the 95th Congress, which was comprised of 353 Democrats and 182 Republicans. This socialistic inspired legislation required lenders to provide home loans to all segments of the community regardless of their net worth, credit rating or income.
No down loans were encouraged and background credit checks and incomes were not verified. After all, it may blow the deal. A segment of borrowers defaulted due to ignorance of the loan terms and loss of income due to layoffs, etc. The other segment were opportunists who saw a free lunch, bought homes with no down and no intention of paying the mortgage and got a free ride until the sheriffs knocked. It was feeding time for the greedy loan sharks who knowingly made the iffy home loans and tossed them over the wall to Fanny and Freddy who bought them and re-packaged them for resale, at a nice profit, to unsuspecting buyers. These loans, predictably, went south and now the CRA has come home to roost.
Jack Singleton