Why Subprime Mortgage Crisis
August 4th, 2009
Why Subprime Mortgage Crisis
Question: Did ACORN help cause the subprime mortgage crisis which lead to the recession?
ACORN was always a huge supporter of the CRA and lobbied the government and protested banks to ensure they were compliant with it. They often worked with and put pressure on politicians to ensure that banks made subprime loans. ACORN even made various deals with the banks to keep those subprime mortgages coming. Did ACORN help cause the mortgage crisis and the recession?
Answer: Did they contribute? Probably.
Are they alone? Not in the least.In the late 90s the Gramm Leach Bliley act was enacted, http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act allowing insurance companies to merge with investment banks and other mergers that were not allowed before. Why is this relavent? Because when one industry gets in trouble it shouldn't dominoe into what we have now.
Then the Republicans pushed for deregulation of the mortgage industry. You can't say it was Dems since the Reps held more seats. Unless you're admitting that your Reps are just not effective at their jobs.
Now, with no regulations and with wall street cronies dictating what rates should be (the Federal Reserve is of course not Federal in any way) they encouraged this run away house prices.
Also with no regulations real estate agents could easily overstate property values. They would hire an estimator (a conflict of interests to have the RE agent do that if you ask me) to come and verify the cost of the house. The RE agent gets a commision on the sale so they want it to be worth the most they can.
Then since your mortgage brokers get commisions, they have no reason to investigate.
The mortgage underwriters jobs were farmed out to contractors, no more hourly wage jobs there. They get paid by the contract that they approve. Do you think they're going to stop the fraud at that point?
The morgage company gets into bad assets so they lump it all together with other bad assets and sell them to China.
China gets enough of that and says NO MORE!
So to blame it all on ACORN is simply ignoring the vast majority of the problem with the entire system top to bottom.
VP Debate - Subprime Mortgage Crisis: Who was at fault in...
If you're new around here, you might want to subscribe to our Upside-Down Mortgage RSS feed. It's quite likely the only feed of it's type on the internet!
Posted in 
Tags: