Welfare payments and unemployment as valid income

In an article titled “They Gave Your Mortgage To A Less-Qualified Minority” we see the effect of Clinton-era changes. Did these changes set the stage for the subprime crisis? You be the judge, but the system was abused, and went well beyond minorities. “Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton’s secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.

Instead of looking at “outdated criteria,” such as the mortgage applicant’s credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness, such as having a good jump shot or having a missing child named “Caylee.”

Threatening lawsuits, Clinton’s Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn’t a joke — it’s a fact. ” (see full article)

By 2005 brokers encouraged people to claim they were 1 percent Native American, and in one facinating case, actually gave a $480,000 mortgage to an illegal alien from Mexico. By 2007 it was not uncommon to encourage people to borrow money, boosting their checking account balance before closing, but before the loan was seen on a credit report. The borrower had to lie about the source of the funds.