Housing Déjà Vu: Are We Repeating the 2008 Mistake?
(00:00.526)
We got a scary, scary Groundhog Day horror story when it comes to housing. How could that be? What are you talking about? Well, you’re all familiar with Groundhog Day with Bill Murray, right? Same thing again and again and again. Well, we’re going back. We’re going back to right before the Great Recession in the financial crisis. I’m at the Republican.
National Convention. I’m broad. I broadcast in the Republican National Convention Democratic National Convention that year for Bush was 2004 it was some Madison Square Garden, New York City and One of the things because you watch what’s going on They have various different cards and whatnot like posters that they want people to hold up and one of the posters that was out every single night was you know
of Latinos for Bush and ownership society and homeownership for all. And I’m watching all this. This is 2004. Okay, and I’m like, that’s, you know, I’m thinking of myself, it’s just a good thing. This is, you know, this, know, we want people we want to have an ownership society, I believe in an ownership society. Well, I didn’t know what I didn’t know at the time. At the time I
figured it out come the end of well, end of 2005, 2006. I’m like, uh-oh, uh-oh, this is not going to end well, where we warned everybody about what was going to happen. Anyway, why it’s a housing ground dog, hey, Groundhog Day horror story is we’re going back and about ready to make the same mistake again. And what was that mistake? Letting people, letting people have
access to money that they shouldn’t. Well, it’s terrible. should have access to money. Really? Really? Do you honestly believe that? I always think about what you’re saying. Is it smart? Is it smart to lend someone money that is completely irresponsible? Well, you know, there’s certain things. I hear you.
(02:26.208)
I hear you. Now, if you want to go ahead personally and lend them, that’s one thing. know, when we’re going to be lending out money for homes, lending out money for homes, that’s going to be backstop by all of us, the taxpayer. No, no. Right now, right now, the they’re they’re they’re doing their darndest.
They’re trying to juice the housing market. just had 17 % of the contracts were canceled so far this year. Mortgage rates are digging back up again. And the reality is you’ve got the Mortgage Bankers Association. Transaction people. These people aren’t on a hook for anything. They’re mortgage bankers.
They’re more than they get paid when the loan is written. OK, remember, countrywide. Yep. Yep. They get paid transaction. Their job, their job is to get that loan approved and get paid. Well, they are lobbying the Trump administration right now to let lenders underwrite mortgages based on a single
credit report. There’s Oh, you know, this is just gonna lower costs here. It’s just too costly. It’s too expensive. 100 bucks. Just 100 bucks to pull all three reports that that’s what it costs. That expensive when you’re writing a $300,000 loan. I don’t think so. Okay.
The Federal Housing Finance Agency, which oversees both Fannie and Freddie, they require the lenders currently to pull credit reports from all three major bureaus. It’s TransUnion, Equifax, and Experian. Again, they collect from different sources. They collect from different sources. And what happens, and this is from the Wall Street Journal, mortgage lenders typically buy a tri-merge report.
(04:52.354)
that synthesizes information and scores from the three bureaus for about 80 to 100 bucks. Again, you don’t miss anything. You don’t miss anything. Okay. Why? Why do they want to get rid of this? Well, then you can cherry pick your report. If one report is way better than another one, that’s the one that you submit. Now,
We went down a road during the financial crisis where remember the ninja loans? No income, no job, no assets. You’re approved. And actually that didn’t come from the Bush administration. I wrote about this extensively. None other than the former governor of the state of New York, Andrew Cuomo, used to be in charge of housing and urban development. This was under the Clinton administration.
This is where all the funky comedita, all these funky mortgages came from. Came from when Andrew Cuomo was in charge of housing and urban development. So yeah, so basically we’re back to the days where mortgage brokers are gonna be smoothing over, smoothing over reports and trying to make the loan applications as pretty as possible.
Uh-huh. Uh-huh. Again, this means what? This means when Fanny and Freddie, again, you know, people start defaulting because they got a loan that they shouldn’t have gotten in the first place or they weren’t qualified for the loan, guess what? We pay.
taxpayers on the hook again. Did you expect anything different? Watchdog on wallstreet.com.
