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Home buyers are increasingly using mortgages that make it easier for them to stop making their monthly payments and walk away from the loan if the home floods or becomes unsellable or unlivable.

More banks are getting buyers in coastal areas to make bigger down payments — often as much as 40 percent of the purchase price, up from the traditional 20 percent — a sign that lenders have awakened to climate dangers and want to put less of their own money at risk.

And in one of the clearest signs that banks are worried about global warming, they are increasingly getting these mortgages off their own books by selling them to government-backed buyers like Fannie Mae, where taxpayers would be on the hook financially if any of the loans fail.

Finding an investor to take each of those risks is a job of the Rube Goldberg contraption that is the U.S. housing-finance industry.

. Fannie Mae FNMA 1.27% and Freddie Mac FMCC 0.87% buy loans from originators, guarantee them and resell them to investors as agency mortgage securities. So in turn, many originators’ economics are ultimately driven by the volume of loans they produce and sell via Fannie or Freddie. This business model also avoids lending risk and requires less capital, making it appealing to investors.

But selling loans is rather complicated. To get anyone else interested in buying or trading loans negotiated by third parties, a lot of things need to happen to commoditize a 30-year mortgage. Originators primarily sell into standardized pools of mortgages that are organized into half-point buckets of interest rates, like 2.5% or 3%. Investors buy slices of these pools in the form of a securitization.

interest-rate rises have now returned mortgage rates to levels not seen for decades. A year ago the 30-year fixed-rate mortgage in America was below 3%. Today it is only a little shy of 7%

Three factors will determine where the pain is most acute, and thus where these consequences are most likely. The first is recent price growth. Housing markets where prices have surged since the pandemic are especially vulnerable to cooling demand

Borrowing levels are the second factor. The higher household debt is as a share of income, the more vulnerable owners are to higher mortgage payments and defaults.

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The right has all the advantages, just as the devil has all the best tunes. Conservatism appeals to our selfishness and fear, our desire and self-interest; they neatly nurture and then harvest the inherent and incubating individualism. I imagine that neurologically the pathway travelled by a fearful or selfish impulse is more expedient and well travelled than the route of the altruistic pang. In simple terms of circuitry I suspect it is easier to connect these selfish inclinations.

This natural, neurological tendency has been overstimulated and acculturated. Materialism and individualism do in moderation make sense.

One way to determine whether JPMorgan has gotten off lightly is to calculate the settlement payments as a percentage of the subprime and Alt-A mortgages that the bank sold. From 2004 through 2007, JPMorgan, along with Washington Mutual and Bear Stearns, sold around $1 trillion of mortgages, according to Inside Mortgage Finance, an industry publication. So far, JPMorgan has paid or set aside about $25 billion to meet claims that the loans should not have been sold. In other words, that sum is 2.5 percent of the total, though that figure could increase as the bank strikes other settlements.

Since the crisis, many attempts have been made to assess how many of the subprime and Alt-A mortgages inside the bonds were of too low a standard. The results are staggering.

Occupancy was a focus of one of the lawsuits that was wrapped into the government settlement. The suit, brought by Federal Housing Finance Agency, alleged that, in one bond deal, 15 percent of the loans were for a second home, five times the level stated in the deal’s prospectus. Most of those loans probably defaulted, which means the ultimate loss rate on the bond was probably far higher than 2.5 percent.

The culprits: rising mortgage rates, a tax bill that reduces the incentives for homeownership and a growing weariness among first-buyers being priced out of the market—all of which are expected to damp demand for homes this year.

“It’s still going to be a tight market, but we’re moving from an extremely tight market to one that has some wiggle room around the edges for buyers,” said Daren Blomquist, a senior vice president at the housing-research firm Attom Data Solutions.

Lawrence Yun, chief economist at the National Association of Realtors, said he expects sales to be flat this spring from a year earlier. Roughly 2.06 million homes were sold between March and June 2017, up from about 2 million in the same period a year earlier, according to the National Association of Realtors.

Ramsey, the well-known and intensely followed 63-year-old conservative Christian radio host, has 4.4 million Instagram followers, 1.9 million TikTok followers and legions more who listen to his radio shows and podcasts.

His message is brutal and direct: Avoid debt at all costs. Pay for everything in cash. Embrace frugality.

Plenty of 20- and 30-year-olds are pushing back, largely on TikTok. The hashtag #daveramseywouldntapprove, for instance, has 66.8 million views. Many say they don’t want to eat rice and beans every night—a popular Ramsey trope—or hold down multiple jobs to pay off loans. They also say Ramsey is out of touch with their reality.

Bank of America's Countrywide Financial unit has been found liable for defrauding two US government-backed mortgage companies by a federal jury.

ruling is a major win for the US government, which launched the case in the wake of the financial crisis.

The month-long trial focused on a Countrywide programme that was internally called "Hustle" or "high-speed swim lane"

However, language remains one of the biggest barriers to ownership for many Hispanic and Latinx immigrants who move here from such Spanish-speaking countries as Mexico, the Dominican Republic, Spain and El Salvador. Not only is purchasing a home one of the biggest financial decisions a person or family can make in their life, but the complex process requires research and guidance — services not often provided in Spanish.

Spanish-speaking immigrants have more than $1.7 trillion in buying power, yet continue to be underserved and underrepresented because vital documents such as prerequisite explanations, loan applications, appraisal documents and closing contracts are rarely presented in Spanish.

And because Hispanic and Latinx people are more likely to make less money than the national average, it takes them longer to save. This also means that they are buying homes later in life. 

Text Size Regular Medium Large "A MASTERPIECE OF INVESTIGATIVE nonfiction moviemaking," wrote the film critic of the Boston Globe. "Rests its outrage on reason, research and careful argument," opined the New York Times. The "masterpiece" referred to was the recently released Inside Job, a documentary film that focuses on the causes of the 2008 financial crisis.

THE STORY RECOUNTED in Inside Job is that principles like safety and soundness were flouted by greedy Wall Street capitalists who brought down the economy with the help of certain politicians, political appointees and corrupt academicians. Despite the attempts and desires of some, including Barney Frank, to regulate the mania, the juggernaut prevails to this day, under the presidency of Barack Obama.

This version of the story contains some elements of truth.

As Federal Reserve Chair Jerome H. Powell and Treasury Secretary Steven Mnuchin scrambled to save faltering markets at the start of the pandemic last year, America’s top economic officials were in near-constant contact with a Wall Street executive whose firm stood to benefit financially from the rescue.

Laurence D. Fink, the chief executive of BlackRock, the world’s largest asset manager, was in frequent touch with Mr. Mnuchin and Mr. Powell in the days before and after many of the Fed’s emergency rescue programs were announced in late March.

Mr. Fink planned alongside the government for parts of a financial rescue that his firm referred to in one message as “the project” that he and the Fed were “working on together.”

The searing summertime debate over racial justice isn’t really about George Floyd

After World War II, she noted, the federal government pumped millions of dollars into programs to build houses to develop the soon-sprawling suburbs—but under policies that denied those benefits to Black Americans. “So houses were sold at a very, very cheap rate that allowed for generational wealth to be developed in the white population, and did not in the Black population,” she said.

The topic of systemic racism is more complex than are questions about simple racist behavior or police overreach—and much less given to easy consensus.

middle-class neighborhoods do not really exist in Manhattan

“When we got here, I didn’t feel so out of place, I didn’t have this awareness of being middle class,” she said. But in the last 5 or 10 years an array of high-rises brought “uberwealthy” neighbors, she said, the kind of people who discuss winter trips to St. Barts at the dog run, and buy $700 Moncler ski jackets for their children.

Even the local restaurants give Ms. Azeez the sense that she is now living as an economic minority in her own neighborhood. “There’s McDonald’s, Mexican and Nobu,” she said, and nothing in between.

, rich and poor neighborhoods like these house a growing proportion of Americans, up to 31 percent compared with 15 percent in 1970, according to a recent study by Sean F. Reardon and Kendra Bischoff. Meanwhile, iconic middle-income suburbs are shrinking in numbers and prospects.

another truth about suburban places: their tendency to sustain and reinforce inequality. Bradbury and Azusa have maintained their spots in the top and bottom tiers of the Los Angeles suburbs for decades. The sociologist John Logan described this “stratifying” feature long ago, noting that localities held on to social advantages and disadvantages over time. Patterns are established, and successive waves of pressure — fiscal, political, social — tend to keep things moving in the same direction.

Some of this is obvious. High property values support high-achieving schools, which in turn increase property values and personal wealth. Racial redlining holds property values down, limiting investment in schools and preventing families from building equity, disadvantages that pass to the next generation like a negative inheritance. The point is not simply that rich and poor people live in different places through a kind of class sorting in the marketplace. The places themselves help to create wealth and poverty. Because of this power of places to fix inequity over time, current patterns are likely to outlive their residents.

On a muggy morning in July 2008, hundreds of customers stood outside IndyMac Bank branches in Southern California, trying to pull their savings from the lender, which was doomed by losses on risky mortgages.

Steven Mnuchin didn’t know much about IndyMac as he watched the scenes on CNBC from his Midtown Manhattan office. But he immediately saw an opportunity and began figuring out how to buy the bank.

Regulators seized IndyMac, foreshadowing a vicious banking crisis. Six months later, Mr. Mnuchin and his investment partners acquired IndyMac with a helping hand from the U.S. government. The deal eventually earned him hundreds of millions of dollars in personal profits.

anyone leaving a screening of Inside Job will still be left with a dim understanding of the root causes of what happened, and thus a dim grasp of what should be done to prevent it from happening again. Government officials are presented as either failed reformers or as the agents of greedy capitalists. How government, a la Barney Frank, can take an active role in upending the economic system—in this case, with the aim of promoting such otherwise commendable goals as full employment and affordable housing for the poor—was apparently not the job of Inside Job to enlighten us about.

it's impossible to understand what happened without grasping the proactive role played by government. "The banking sector did not decide out of the goodness of its heart to extend mortgages to poor people," commented University of Chicago Booth School of Business Finance Professor Raghuram Rajan in a telephone interview last week. "Politicians did that, and they would have taken great umbrage if the regulator stood in the way of more housing credit."

On the outsize role of the GSEs and other federal agencies in high-risk mortgages, figures compiled by former Fannie Mae Chief Credit Officer Edward Pinto show that as of mid-2008, more than 70% were accounted for by the federal government in one way or another, with nearly two-thirds of that held by Fannie and Freddie.

Explaining the origins of the financial crisis, Mr. Fuld avoided any mention of investment banks’ eagerness to issue subprime mortgages. (Lehman had an enormous portfolio of subprime loans.)“It’s not just one single thing,” Mr. Fuld said. “It’s all these things taken together. I refer to it as the perfect storm.”

At the root of the crisis, in his view, was the government’s push for homeownership. At the same time, hedge funds, private equity firms and sovereign wealth firms grew rapidly, supercharging the global financial system and driving up equity values, balance sheets, the volume of financial products and the need for financing, he said.“There was very little regulation or market supervision

Then in 2007, the Fed raised interest rates, essentially ending the housing boom it had encouraged, Mr. Fuld said.“The increased rates led to increased mortgage rates and payments, a huge number of residential foreclosures,” he said. “Banks wrote down and sold assets.”In the wake of this, companies began cutting costs and jobs, Mr. Fuld said, and it became “a self-fulfilling economic loop.”

e has persisted and produced an intelligent explanation of the mechanisms that produced the crisis and the response to it. We continue to live with the consequences of both today.

By 2007, many were warning about a dangerous fragility in the system. But they worried about America’s gargantuan government deficits and debt

it was not a Chinese sell-off of American debt that triggered the crash, but rather, as Tooze writes, a problem “fully native to Western capitalism — a meltdown on Wall Street driven by toxic securitized subprime mortgages.”

While the final Senate bill has not been released yet, lawmakers are expected to make two major changes -- narrowing eligibility for the stimulus checks and nixing an increase in the federal minimum wage to $15 an hour.

The bulk of the Senate legislation will, however, largely mirror the $1.9 trillion package approved by the House and laid out by President Joe Biden in January.

Senate Democratic leaders are facing more hurdles to advancing the legislation since the party can't afford to lose a single member thanks to the 50-50 split in the chamber. Plus, they must adhere to the strict rules of reconciliation, which they are using to approve the bill without any Republican support.