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"WSJ: "Housing Push for Hispanics Spawns Wave of Foreclosures""

26 Comments -

1 – 26 of 26
Anonymous Anonymous said...

It seems 2005 and 2006 were the worst years, when bad loans were handed out like champagne on New Year's. I'm asking non-rhetorically, what was it about those years that inspired all those bad loans? It was post-election for Bush. Had all the "good" loans dried up and they needed to scrape the bottom of the barrel to keep the ship afloat? Or was something else going on that I don't know about? Because it 2005 & 06 seem just like yesterday.

1/4/09, 9:03 PM

Anonymous Jubilee Year said...

Millions of working class Hispanics were the victims in the home-value ponzi scheme bubble, as you have brilliantly pointed out, perpetrated by white collar Hispanics. That is a Big and Important idea, by all means. But now we are all suffering. Can we turn our attention to forward thinking, to solving the crisis? Home prices are now at the same value as spring 2004, before the bubble, and the foreclosure cycle is nowhere near being over.

What happens when a critical mass of home owners goes upside-down? At what point does it become a self-sustaining black hole implosion that cannot end? Would it be when half of all home-owners are upside down? A third, a quarter?

Will the collapse ever end? Have we already crossed over that threshold?

1/4/09, 9:13 PM

Anonymous Anonymous said...

Don't forget during the 90's the Hispanic total fertility rate dropped to 2.65 but has risen to 2.92 in 2006.

It is possible the Bush-Rove policy of inflating minority home ownership caused an increase in Hispanic and, to a lesser extent, black fertility rates.

It will be worth watching the next few years to see whether Hispanic birth rates begin to fall during the Diversity Depression.

1/4/09, 9:15 PM

Anonymous Toadal said...

When I learned in 2005 that Citibank issued mortgage loans to customers having no credit, down payment or job history documentation, I decided to move our family's accounts. After an short search, I found a local credit union whose customer service manager stated in writing that its stringent requirements forbid it from operating that way. I closed my accounts with Citibank and moved them to my current the credit union shortly thereafter.

1/4/09, 10:00 PM

Anonymous jody said...

i generally agree with steve on this topic, but still do not fully understand why the housing bubble did not exist in texas, which is the most or second most mestizo state in america.

i have not found any explanation that was particularly convincing. maybe because there is so much more usable land in texas than there is in california, arizona, and florida?

1/4/09, 11:30 PM

Blogger Steve Sailer said...

Texas: More usable (level and with convenient water supplies) land, much less land use regulation, and lots of institutional memory of the great Texas housing crash of the 1980s.

1/4/09, 11:32 PM

Anonymous headache said...

Steve's one of the few islands of sanity left nowadays but I hope he gets beyond the minority housing bubble. It’s important he stakes his credentials here so I understand we need lots of fact-based articles, but I do hope there's new stuff coming. It’s not as if there's a dearth of happenings.

1/5/09, 12:24 AM

Blogger agnostic said...

That's one thing that apparently has changed between the recent bubble and bust periods: during a bubble, journalists are PR men for the groups who are inflating the bubble. When it blows up in everyone's faces, they're willing to ask tough questions, look up and analyze data, and generally figure shit out.

We hold people who do real work to high industry standards -- a shipment of food can't have more than x particles per million of some toxin, a bridge must be built to withstand so many tons of force, etc.

It's high time we do the same for journalism: no reporting on national trends or "think pieces" unless they're backed up by data analysis.

If nothing else, it'll provide great free entertainment as we get to laugh and throw eggs at all the pundits standing in line to collect unemployment checks.

1/5/09, 2:08 AM

Anonymous Anonymous said...

Don't Dallas and Houston still have excess housing stock from the 80's?

1/5/09, 4:19 AM

Anonymous Anonymous said...

The borrowers typically didn't put anything down so they just walk away when they can't make the payments and never really lost anything. The mortgage payments were just an alternative to rent. You shouldn't be able to buy a house with nothing down (and I suspect you won't be able to for a while now).

1/5/09, 4:28 AM

Anonymous anony-mouse said...

1/ Didn't Steve's heroine Margaret Thatcher do a similar thing in Britain?

2/ Ironically, with prices of homes way down, now would be a great time for lower income people to buy a house, government program or no government program.

3/ Rove? I blame Frank Capra. Hee-haw, George.

1/5/09, 4:55 AM

Anonymous Anonymous said...

This is the most important story since the Iraq war, with policy implications on the two most important issue facing the nation (the economy and immigration) and Sailer was first with it. Why on earth do you wish he “gets beyond the minority housing bubble”???
Too painful?

Initially people, even his readers, said it couldn’t possibly be true. Now even the pro-immigration WSJ is admitting that this is the source of the crisis. You still don't want to hear more about the truth?

Whats wrong with people?

1/5/09, 5:01 AM

Anonymous Anonymous said...

"Millions of working class Hispanics were the victims in the home-value ponzi scheme bubble"
"But now we are all suffering."

We were suffering then, too. Those of us buying homes back then had to compete with all these liars. Whenever they bought houses with their stated high incomes, that pushed up the housing average. My husband and I were pulling our hair out during this. He made more money than average back then, around $60,000, but the homes we could responsibly afford were below average (in Florida). Exasperated and dumb-founded don't begin to describe what we were every time we were shown a house in our price range. We got lucky because I was aggressive and snagged a house (custom built '50s) immediately after it was listed and by an out-of-town realtor (who was trying to help family out and he did not know the area). The house should have sold back then for at least $160, but we got it for $125. A 1960's trailer a couple houses down with add-ons that had siding put on it to make it look like a house, and that had a hole in the bathroom floor when we looked at it was sold a month later to a yuppie woman for $110,000 (same amount of land,too).
She's much more typical of the invisible victims.

1/5/09, 6:49 AM

Anonymous Anonymous said...

I hope he gets beyond the minority housing bubble.

Even people who agree with Steve find the whole idea just...well...unpleasant that minority homeownership's beautiful dream was a nightmare. It's just so...incorrect...or not nice. The main responses appear to be: "not true!" and then, when the person is worn down by evidence, "okay maybe, but let's forget this and get past it, okay?"

I for one hope Steve keeps rubbing it in - hard. You will eat your spinach and you will like your spinach.

1/5/09, 7:07 AM

Blogger RobertHume said...

I don't think poor Hispanics suffered that much. They "lost their home" but they paid out of pocket only about what they would have paid in rent, and got to live in a much nicer home than they could have rented for several years.

The real losers are those who held the paper based on the defaulted loans. Who were those people? I guess we will find out eventually, but very likely they were mostly well-off white people. Very unlikely that they were poor minorities.

1/5/09, 7:33 AM

Anonymous Veracitor said...

I love this passage in the article:

"Many loans to Hispanic borrowers were based not on actual income histories but on a borrower's "stated income." These so-called no-doc loans yielded higher commissions and involved less paperwork." [emphasis added]

Of course that situtation is highly counter-intuitive. Why would a bank pay a salesman more for a loan much more likely to default? Even when you grasp that the 'higher commission' mentioned by the article is probably "yield spread premium" (that is, the salesman earned extra commission by persuading the sucker [borrower] to sign up for a loan at a higher- than- required interest rate), it still seems crazy from the lender's point of view.

The key thing missing from this story is the influence of Federal regulators and the GSE's trying to increase the percentage of loans to likely deadbeats [NAM's]. The salesfolk were being compensated for rounding up borrowers with the right skin color or names ending in 'z'.

The sales people and all the other functionaries worked for fees and their behavior is easy to explain-- as fee earners the riskiness of the loans did not concern them.

However, I think the key influence on the top people was political pressure-- even if some executive had wished to trim back on risky lending at some point, he could not do so: any sudden reversion to prudence would cause his institution to miss its minority quota and that particular executive would be fired.

Since all this crazy lending drove up prices, lenders had to make ever more risky loans to keep financing the same percentage of NAM's.

1/5/09, 7:44 AM

Anonymous Michel Cloutier said...

Maybe all this is an unintended consequence of the massive purchases of oil and manufactured goods America made abroad in the 2000's. All that money came back to the U.S., and was looking for 'somewhere' to go. A few enterprising and/or misguided souls found a home (or homes) for those untold billions.

1/5/09, 8:00 AM

Anonymous Anonymous said...

Hey, Steve,

I'm in an argument with a liberal and *losing* at the moment. I say the mortgage meltdown is largely due to Mexican illegals taking NINJA (no income no job no assets) loans, aka "liar's loans," then skipping out.

But I can't prove it. Is there on the Web somewhere that lays out the #s of home foreclosures in absolute (not just percentage of pop.) terms broken down by ethnicity?

Or is that too politically incorrect a question for our cowardly lyin' gov't / mainstream media to discuss?

1/5/09, 9:08 AM

Anonymous cam said...

Mr. Baca remains opposed to strict lending rules. "We need to keep credit easily accessible to our minority communities," he said in a statement released by his office.

It sounds like people who believe in less government regulation should be excited that Baca still believes in their philosophy.

Get the government out and we'll get back to nirvana.

1/5/09, 10:04 AM

Anonymous Anonymous said...

"cam said...
Mr. Baca remains opposed to strict lending rules. "We need to keep credit easily accessible to our minority communities," he said in a statement released by his office.

It sounds like people who believe in less government regulation should be excited that Baca still believes in their philosophy.

Get the government out and we'll get back to nirvana."

No, Cam. This whole thing is the opposite of free markets. It was gov't anti-redlining legislation and lawsuits by leftist activists alleging "discrimination" that caused bankers to make these lousy loans.

The loan officers knew better and knew these loans would go bad, so they made lemonade of lemons -- made the minority's home loan and then sold it to pension funds in the form of mortgage backed securities.

So legislation lead banks to do what they, if they were operating in the free market, would NOT have, would not have DARED.

Also, part of this is due to the cabal of the Federal Reserve system, which is a privately owned monopoly -- a gov't protected monopoly, NOT the free market.

The Fed PRINTS MONEY out of thin air, then loans it to U.S. gov't, as well as provides it to member banks at cheap rates so they have lots of money laying around to be able to MAKE loans to the bad risks.

If banks truly were operating in the free market, having to lure savers to their banks in order to have money to lend, the interest rates THEY pay US would shoot through the roof to compensate US for OUR risk of loss. And then the interest the bank would have had to charge the mortgagee, in turn, would have made the price upspiral of this bubble impossible.

In a true free market, the whole housing bubble thing could NOT have grown. Only goofy p.c. social engineering legislation and lawsuits alleging "discrimination" enabled this whole debacle.

1/5/09, 1:17 PM

Anonymous Anonymous said...

There's a painful parallel here with affirmative action programs. You're a reasonably bright guy, and an extremely hard worker, who would make a fine CPA, middle manager, nurse, electrician, etc. But then, someone offers you a great opportunity--the very definition of success--they'll let you into (say) Harvard Law School. Bursting with pride and determination, you borrow lots of money to pay the tuition and pursue your dream--a dream which you'd never imagined possible to you, which seems like a golden path to success.

And then, inevitably, you discover at Harvard that you are hopelessly outclassed--everyone in your class is as hard-working and driven as you are, but they're all much, much smarter than you, and most of them are also way better prepared. Your determination only serves to keep you around long enough to really rack up the student loans, before you're finally given the boot.

This seems quite similar with what happened to striving people who weren't really making enough to buy a house. They got screwed.

1/5/09, 1:29 PM

Anonymous Anonymous said...

"This seems quite similar with what happened to striving people who weren't really making enough to buy a house. They got screwed."

I agree with much of your post, but as far the striving people getting screwed, well, W.C. Fields said, you can't cheat an honest man.

For a person to take out a home loan that he really can't afford, he knows in his heart he really can't afford it.

But his greed, on the other hand, is telling him, hey, housing only goes up. If I get into trouble, I'll just sell this turkey for a profit to the bigger fool.

So it was really the immorality of the feeling, I'll just screw someone else, that led to buyers signing for those mortgages.

Which, after all, are promises to pay the mortgage pmt. for the loan term, not the promise to try to find a bigger sucker.

1/5/09, 4:04 PM

Anonymous Anonymous said...

Didn't Steve's heroine Margaret Thatcher do a similar thing in Britain? - anony-mouse

Similar yes, but not the same.

Im sure the Bush/Rove thinking was informed by the Thatcher policy but quite different in execution.

Many Brits (esp. blue collar) lived in council housing up until the '80s, in fact many still do - Im sitting in one right now! This is housing owned by local government.

As a council tenant one had the right to buy the property after a minimum number of years of renting and at a discount, the longer you had rented, the bigger the discount. It tended to be older people who bought their council houses and not in large numbers.

What Thatcher did was expand the 'right to buy' scheme. The minimum rental time was cut down to a few years and the discount element was ramped up.

Lots of people ended up buying their homes and it seems this did have some success in turning them into conservative voters. Of course these are mostly white people of British origin we are talking about.

The success of the 'right to buy' scheme was as much about marketing. It already existed but many people were not aware of it. Even now many people over here think it was entirely the creation of the Thatcher government.

As far as Im aware there was not a sudden appearance of no money down mortgages. Various excesses were seen as the '80s housing boom progressed but not quite the wholesale debauching of the system thats been going on recently.

1/5/09, 6:07 PM

Anonymous Let's! said...

"Well, I told you so."

How nerd-tastic do your communication skills have to be for you to taunt your own readers who mostly agree with you anyway?

No wonder you wallow in self-pity about how you don't have a rich sugar daddy.

1/5/09, 7:27 PM

Anonymous Half Sigma said...

Steve, you should be writing for the WSJ, you wrote about this months before the WSJ.

1/6/09, 12:55 PM

Anonymous Anonymous said...

Every destruction-wreaking gigantic snowball starts with an innocent little clump of mud. In this extraordinary case, I'd put the mud at just over 40% of the total snowball mass.

1/7/09, 6:31 PM

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