I'm not trying to make you angry here, but intellectual honesty demands that I point out the fact that these clauses do not state that banks must lend to minorities. They state that banks must meet '...the credit needs of its entire community, including low- and moderate-income neighborhoods..." A 'low- and moderate-income' neighborhood in the process of redevelopment has a surprisingly large credit need, though not much of it goes to the 'low- and moderate-income' people living there. I have already gone over the redevelopment thing above. Further, the clause goes on to state, '...consistent with the safe and sound operation of such institution;'. Which is the loop hole that most financial institutions use to get out of their CRA lending obligations when no redevelopment is happening in qualified neighborhoods. In short, banks don't have to lend if they think lending will affect their safe operation.
So you have submitted a set of clauses that say that banks must lend to economically disadvantaged neighborhoods. The clauses you reference do not say that banks must lend to economically disadvantaged people. This is my material point, and the pivot on which the majority of urban redevelopment turns.
Just as an aside, lending encompasses more than just mortgages. For example, I can also qualify for a lot of CRA, or TIF type help if I construct . . . say . . . a small business incubator in one of these economically disadvantaged neighborhoods. The only reason I say that is because I am starting to get the feeling that you believe the entire USD4.2 Trillion was given on mortgage loans for minorities.
I feel like I'm reading comments from a (smarter) alternate universe version of myself. I run a small real estate company in Atlanta and bilbo0s is nailing the CRA on the head.
Minorities could not walk into a bank and get a mortgage because they were a minority. That is patently false. However, in my neck of the woods, Atlanta, GA (in Fulton County one of the 35 worst), money was made by developers who "invested" in low income areas.
Areas like the West End and Lakewood saw tons of development during the real estate boom, and then developers disappeared, after they removed the equity from these homes. There are now streets in these neighborhoods where the average price of a home sold is under $35,000, but the foreclosed properties are listed at more than $300K.
@bilbo0s, I would LOVE to talk to you. I'm doing a foreclosure bus tour in a month, and I would love to be able to explain the CRA situation as eloquently as you did on this forum. You can email me at broderick at sktrealty dot com.
Thanks a lot to skrealty and tortilla. I don't do blogs, because I believe there are too many as it is. I try to encourage people to go to actual reliable data sources to get information. My thinking is that this will lead to a more informed discussion, and get at least a few more people in the habit of questioning and verifying news and information sources. I think we are all responsible for what Maria Montessori called, "...Creating that habit of hearts and minds necessary to the functioning of a great democracy..."
In this case however, I think I may have hit a nerve here, and that was not my intention. People seem to be getting really angry, so I thought it was best for me to stop commenting.
I'm out of real estate investing now, and currently do tech investing stuff. Mostly gaming like everyone else it seems, but it is keeping me very busy. I do wish you luck with the endeavor though.
Thanks again guys, it is good to know that there are at least a few people I did not offend.
Not sure why you think I'm getting angry. I'm glad to be speaking with someone who is pretty knowledgeable about this topic. I just don't think you read between the lines :-) Have you read Tom Wolfe's "Mau-Mauing the Flak Catchers"? I have, and perhaps it's for this reason that whenever I see some sort of "Community Activist Organization" I immediately think of one type of organization.
Or how about Phil Gramm speaking at the American Enterprise Institute (http://www.aei.org/events/eventID.1862,filter.all/transcript...):
"We ended up when the bubble finally broke with three different quotas. One quota was for below-average-income borrowers and that was a requirement that 56 percent of the loans bought by Freddie and Fannie had to conform to that guideline. The second quota had to do with the low-income individuals. These were individuals with 60 percent of the income of the census tract in which they lived, and by the time the bubble broke, that quota was 27 percent of all mortgages held by Freddie and Fannie had to fit within that quota. And the final quota that was set in proportional terms was geographically targeted principally at inner cities and depressed areas, and that was a quota that said 35 percent of all the loans held by Freddie and Fannie or purchased by them had to fall into that category."
Then there's Countrywide (not a bank and hence not covered by CRA), which originated something like 20% of America's subprime mortgages (Countrywide did not hold on to these mortgages but sold them to banks). Here's a great 2007 NYTimes article about their wonderful lending practices: http://www.nytimes.com/2007/08/26/business/yourmoney/26count...
And a great presentation at Harvard by their CEO talking about the 600 billion he's pledging for "previously underserved Americans" - http://www.jchs.harvard.edu/publications/homeownership/M03-1...
So you have submitted a set of clauses that say that banks must lend to economically disadvantaged neighborhoods. The clauses you reference do not say that banks must lend to economically disadvantaged people. This is my material point, and the pivot on which the majority of urban redevelopment turns.
Just as an aside, lending encompasses more than just mortgages. For example, I can also qualify for a lot of CRA, or TIF type help if I construct . . . say . . . a small business incubator in one of these economically disadvantaged neighborhoods. The only reason I say that is because I am starting to get the feeling that you believe the entire USD4.2 Trillion was given on mortgage loans for minorities.