When borrower credit requirements are lowered, housing prices rise in response. Flat wages and an employment market composed of part-time jobs paying minimum wage should inhibit home ownership- but, alas, Wells Fargo has a solution! In fact- it’s the same solution they had back in the early 200s when they gave out loans to unqualified buyers, knowing the loans would fail, and then bet against their own investments- while knowing future government (tax payer) subsidies would fund any claims of “loss”. It was one of the most perfectly orchestrated criminal schemes ever perpetuated on the American public- that continues to this day.
The second wave of the market crash has now appeared on the horizon and with a slow down in the real estate market- the Fed and the Banks must again resort to drastic measures to incentivize prospective buyers into the market. The nation’s largest lender, Wells Fargo, is offering a low down payment mortgages, and is claiming the risk of offering low down-payment loans is safe, in part, because they are partnering with Fannie Mae. That would be absolutely correct- Fannie Mae’s guarantee passes the risk on to unsuspecting investors and the American taxpayer- all the bank has to do is sign up the victim.
The banks are still originating loans, concealing the true creditor from the homeowner, failing to transfer the Notes to the Trusts, and kicking the risk down the road. Not a thing has changed in the last decade. The Truth in Lending Act isn’t worth the paper it was written on when there is no enforcement.
“We are fully underwriting the borrowers, we are partnering with Fannie Mae to originate and sell these loans, we are insuring the borrowers have an ability to repay and that they’re qualified for home ownership, but we’re simplifying things for the homebuyer,” said Brad Blackwell, executive vice president and portfolio business manager at Wells Fargo.
How do you ensure a homeowner has the ability to repay when there are a record number of business defaults, layoffs and stagnant wages that don’t keep up with inflation? You don’t. You aim for plausible deniability and simply assign the note over and over, fleece the investors, take out insurance and hope the government and judiciary will continue to look the other way. It also helps to originate notes with other people’s money who have no idea that they are purchasing an investment backed by a fabricated illusion. It is 8-years post-bubble and NOTHING has CHANGED. What could go wrong?
Record numbers of people are buying homes at all time high prices as the economy shows a repeat performance of the recession. The cheap money is inflating home prices beyond their value, while people leverage to borrow as much as they can. Meanwhile the Too-Big-To-Fail banks are preparing to short the markets with the knowledge that the Oligarchy is untouchable.
Looking at housing, which normally historically rises 1.5% per YEAR:
From 2008 to 2016 property values have soared way above 1.5% a year.
No doubt the banks will be pushing 3% down adjustable rate mortgages and laughing all the way to the bank and eventually thousands of pensions and investment accounts will fail.
Americans Bought The Most New Homes In 8 Years Just As The Median Price Hit An All Time High
Fasten your seat belts. But don’t worry- the Federal Reserve, Federal government and World Banks are prepared for this eventuality and may introduce a bank holiday, a new currency and step in to take care of the nation’s elderly when the pensions and social security fail.
Despite being in the midst of a so-called recovery, the global economy is still in a recession and American workers aren’t benefiting from the long-in-the-tooth bull market, underemployment remains high, inflation is much higher than the U.S. government’s official tally, and a third of Americans have no emergency savings.
This is all after the Feds spent trillions of dollars and years of meddling from the Federal Reserve and other central banks around the world. As a result, the U.S. could experience an economic collapse if the same practices are repeated.
Interestingly, according to a recent survey, 2018 is the year most economists believe the next downturn will hit the U.S. If not 2018, 2020 is the next date on the calendar before the U.S. economy falters. I think they’re both wrong-and the 3% down on an inflated home is the onset of the fall. (Source: Bloomberg.com, last accessed May 22, 2016.) Buyer beware.
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