Before the recent real estate meltdown, banks were lending to anybody with a pulse. The reason was during the Clinton administration banks were being pressured to make riskier loans. This pressure came particularly from Andrew Cuomo the youngest Housing and Urban Development Secretary in history. Cuomo pushed for equal housing opportunity for low income families. For some strange reason this information was hardly talked about in the news. Everyone was blaming the banks for the melt down which was only partially true.
During 1997 – 2001 Cuomo made a series of decisions with Freddie Mac and Fannie Mae that promoted lenders to plunge into risky subprime investments. This pressure lowered the bar on credit score and down payment requirements for mortgage loans. This was the beginning of a subprime and a- paper loan disaster.
So who is to blame for this? I blame the banks and the government. I particularly blame the Clinton administration for pressuring banks to lend to people who really did not have the financial strength to buy a home. On the other hand banks are to blame as well. They know what type of borrower will default on a loan and should have never given in to the government pressure.
Now most Americans are forced to save their money and work on their credit. This is the case especially for families that want to buy a home or get some type of credit.
During 1997-2006 we were in a false economy that was stemmed from government pressure towards banks to lend to low income families. I believe everyone has a right to home owner ship as long as they qualify.
As a result of this disaster we now are faced with a long road to recovery. The banks I believe have learned not to give into government pressure. The American people have learned that you will need better credit scores and money in the bank to qualify for a mortgage loan.
You have to admit that we have been extremely spoiled over the last 15 years. Now lending is back to the basics. You need good credit scores, money in the bank and a job with provable income.
Like the famous singer Shirley Bassey, said…. “It’s all just a little bit of history repeating……” I hope she is wrong…..
Author: Mike Clover
CreditScoreQuick.com
