Monday, July 11, 2011

The New Justice: More Lousy Loans!!

Eric Holder, again.

In what could be a repeat of the easy-lending cycle that led to the housing crisis, the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by IBD.

....[T]he government has ordered Midwest BankCentre to set aside almost $1 million in "special financing" for residents living in predominantly black areas of St. Louis. The program includes originating conventional home loans at fixed prime rates for African-American borrowers "who would ordinarily not qualify for such rates for reasons including the lack of required credit quality, income or down payment." --IBD quoted at MoonBattery.

Gunrunner, mortgagerunner, all the same.


Jim said...

Actually, the DOJ is enforcing the law and is NOT asking anyone to make loans that are un-creditworthy.

From Media Matters:

First, DOJ settlements explicitly state that banks are not obligated to lend to unqualified individuals, only that they must begin providing services to minority communities they've allegedly ignored. As their agreement with Midwest BankCentre states, banks are not required to "make any unsafe or unsound loan" and must offer services only to potential customers "whose credit history does not present an unacceptably high risk to the Bank or indicate a history of fraudulent transactions."

neomom said...

Media Matters? Yeesh - the Weekly World News is a more reliable source.