ldsdemocrat

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2 years, 9 months ago
  • ldsdemocrat commented on the blog post The Roundup for May 22, 2012

    2012-05-22 19:00:59View | Delete

    Black Mormons and the Politics of Identity

    I was raised on Chicago’s South Side and attended a multiracial Mormon ward (congregation) where many of my leaders and teachers were black. Our ward was also full of people across the political spectrum so I guess it is about time the NY Times caught up with the racial and political diversity among the LDS population. After all, it has been a reality in my faith and in my life for decades now.

    http://www.nytimes.com/2012/05/23/us/for-black-mormons-a-political-choice-like-no-other.html

  • ldsdemocrat commented on the blog post Nevada AG Masto Sues LPS for Document Fraud

    2011-12-17 19:13:43View | Delete

    Cotez Masto is in fact a Democrat:
    http://www.democraticags.org/catherine.html

    However, the point remains that she is excellent in her service and unparalleled in commitment to getting to the bottom of this mess.

    Her integrity and competence surely transcend party lines, as you suggest.

    And yes, I have also noted that she is a woman and that this is not irrelevant.

    Will be checking in to FDL daily to stay tuned to this story.

  • But you are right indeed that 2% in 2007-Q1 is the floor estimate of sub-prime exposure, and that it grew throughout 2007 and (may have) likely perhaps reached 10% in 2008.

    However, since alt-A exposure was growing far more quickly, and stood at 18% in 2007-Q1, it must have made up a far larger share than sub-prime by 2008.

    Again, I was focusing on the 2007-Q1 figures, and sub-prime loans were only funded through 2007-Q3 (August 2007) so I think that is at least somewhat useful. True enough that the exposure continued to grow, but subprime and subprime-like need to be better investigated by myself and others!

    Thanks again for your attention to detail.

  • Yes, the issue is that subprime-like includes alt-A loans. I agree with the spirit of your comment, but sub-prime and alt-A were different, to different borrowers and in different neighborhoods, with the former being foisted on urban areas since the early 1990s and the latter exploding in 2004-2007 chiefly among suburban and Sun Belt locales.

    See this book review that cites the academic evidence on these flawed measurements of Fannie’s sub-prime exposure that should be better characterized as non-prime (alt-A + sub-prime):

    http://www.nybooks.com/articles/archives/2011/oct/27/did-fannie-cause-disaster/?pagination=false

  • Yes, it may take a while for the truth to get out that poor people did not cause the crisis, but eventually it will. Sadly, it will be too late.

    Because, unfortunately, those with fewest resources or most segregated on the basis of race, ethnicity, and income were the first to lose their homes–and hence be the least likely to be compensated under the flawed leaked terms of the AG settlement since they were more likely to have lost their homes pre-Sep 2008.

    Once the foreclosure crisis hit these alt-A borrowers (later) did it become a national issue, even though urban communities in Chicago, Los Angeles, Cleveland, Memphis, and Miami had more than a decade of experience with foreclosures induced by targeted abusive sub-prime lending.

    Rugh and Massey (2010)* found that Community Reinvestment Act lending did not statistically significantly raise metropolitan foreclosure rates, and would have actually lowered them were it not for the wave of high cost lending that inundated so many communities, much of it alt-A and not all of it sub-prime. Sub-prime and alt-A lending cancelled out the protective effect of responsible lending to lower and moderate income communities. Bostic and other economists have more recent studies that find same problem.

    *Source: http://www.asanet.org/images/journals/docs/pdf/asr/Oct10ASRFeature.pdf [PDF, article starts on 5th page of PDF](Table 3 on page 640 and end note 5).

  • Most important nugget buried in press release:

    –> Nearly 1 in 5 Fannie loans were alt-A loans! Only 1 in 50 were sub-prime!

    These alt-A loans were made to borrowers with higher credit scores, higher incomes, and more likely to be investors compared to sub-prime borrowers.

    Note that Fannie Mae’s exposure to risky alt-A loans was severely understated, making up 18% of its single family portfolio instead of the 11% reported as of March 31, 2007. The alt-A exposure appears to have been about NINE times greater than the exposure to risky sub-prime loans, which only appear to have made up just over 2% of their single-family portfolio (see below).

    Further evidence that the proximate cause of the collapse of Fannie Mae (and Freddie Mac) was due to exposure to alt-A loans much, much more so than sub-prime loans.

    In short, speculation, exotic loan products, and unsustainable home price appreciation are to blame, not efforts to expand home ownership among lower income sub-prime borrowers (who could have qualified for FHA and prime loans, but were targeted for sub-prime or steered away from FHA/prime–see mountains of sworn statements/evidence in recent legal cases).

    FROM SEC PRESS RELEASE:

    The SEC’s complaint against the former Fannie Mae executives alleges that, when Fannie Mae began reporting its exposure to subprime loans in 2007, it broadly described the loans as those “made to borrowers with weaker credit histories,” . . . Fannie Mae reported that its 2006 year-end Single Family exposure to subprime loans was just 0.2 percent, or approximately $4.8 billion, of its Single Family loan portfolio. Investors were not told that in calculating the Company’s reported exposure to subprime loans, Fannie Mae did not include loan products specifically targeted by Fannie Mae towards borrowers with weaker credit histories, including more than $43 billion of Expanded Approval, or “EA” loans.

    Fannie Mae’s executives also knew and approved of the decision to underreport Fannie Mae’s Alt-A loan exposure, the SEC alleged. Fannie Mae disclosed that its March 31, 2007 exposure to Alt-A loans was 11 percent of its portfolio of Single Family loans. In reality, Fannie Mae’s Alt-A exposure at that time was approximately 18 percent of its Single Family loan holdings.

    Source: http://www.sec.gov/news/press/2011/2011-267.htm