No-one likes to admit it, but minority or lower-income loans default at 3 to 5xs times the rate middle class loans do. The average default rate is 5%. Minority mortage default rates in most cities run 13-19%. Clearly, people are getting loans by being indigent (under $20,000 yr households) in an order to 'balance the housing equation.' Chicago has close to 25% minority default rate, yet somehow 20K earners are still getting home loans there, partially due to the banks voluntary capitulation to C.R.A. and other government housing giveaways. You see, it's not always the rich who benefit from financial transactions. Its you, as the next loanee, who are affected by the higher interest rates and loan rejections; much as it is us, the 401K possessor, who will pay nearly $3,000 per household for this massive bailout.
To be fair, a combination of bad mortgage loans AND credit loans that caused this financial debacle (coupled with equity being wiped out by 'reverse mortgages' and the nationalization of our banks (which resulted in the wholesale selling of loans to banks who no longer had a vested interest in a local community where the loan was first obtained.) Oh yes, let's not forget the incredibly high CEO compensations and bonuses, some in excess of $25,000,000 for running their company into the ground. Can anyone say 'caps?'
[This message has been edited by threadbear (09-24-2008 12:10 AM).]