There’s always something to howl about

Promoting Affordable Housing

I didn’t believe it when I read it; the bailout bill is “earmarked” and ACORN is one of the beneficiaries of the largesse.   ACORN may control up to 20% of the $700 billion proffered by the Bush/Obama Bailout Plan.

ACORN?  Are you kidding me?  THIS is what ACORN really is (from Sol  Stern):

ACORN’s bedrock assumption remains the ultra-Left’s familiar anti-capitalist redistributionism. “We are the majority, forged from all the minorities,” reads the group’s “People’s Platform,” whose prose Orwell would have derided as pure commissar-speak. “We will continue our fight . . . until we have shared the wealth, until we have won our freedom . . . . We have nothing to show for the work of our hand, the tax of our labor”—claptrap that not only falsifies the relative comfort of the poor in America but that also is a classic example of chutzpah, given ACORN’s origins in a movement that undermined the work ethic of the poor. But never mind—ACORN claims that it “stands virtually alone in its dedication to organizing the poor and powerless.” It organizes them to push for ever more government control of the economy, as if it had learned no lessons about the free-market magic that made American cities unexampled engines of job creation for more than a century, proliferating opportunity and catapulting millions out of misery.

Remember, ACORN has been one of the largest groups to criticize “predatory lending” and the use of sub-prime loans.  Here’s ACORN President Maude Hurd, speaking about last night’s Presidential Debate:

“Given the recent turmoil in our financial markets and the ongoing negotiations around a bailout package for Wall Street, it’s not surprising that much of the debate focused on the current economic crisis, which was in many ways predictable.  ACORN has been sounding the alarm for years as more and more deregulation stripped protections for consumers and basic safeguards of sound lending.

Senator McCain failed to acknowledge the trigger of this explosive crisis: predatory lending, which entrapped hundreds of thousands of homeowners into toxic mortgages they could not afford fueling record numbers of foreclosures.  If Mr. McCain is unwilling or unable to acknowledge such facts, how is he suitable to lead our country out of the worst financial mess since the Great Depression?

Okay.  Forget that opportunistic borrowers used subprime loans to cash in on the housing boom.  Forget that close to 70% of the early-default borrowers lied on their loan applications.  Forget that even if the default rate rises to 25%, 3 out of 4 of those “toxic” loans were successful in completing the mandate of a driveway for every family.  Remember, if you will, the original loan program designed to grant credit to borrowers with disregard for their history of and ability to repay those loans; the Community Reinvestment Act.  Who was behind this “predatory” loan program?

You got it, ACORN:

The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various “neighborhood organizations,” as they like to call themselves, such as “ACORN” (Association of Community Organizations for Reform Now). These organizations claim that over $1 trillion in CRA loans have been made, although no one seems to know the magnitude with much certainty. A U.S. Senate Banking Committee staffer told me about ten years ago that at least $100 billion in such loans had been made in the first twenty years of the Act.

So-called “community groups” like ACORN benefit themselves from the CRA through a process that sounds like legalized extortion. The CRA is enforced by four federal government bureaucracies: the Fed, the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Deposit Insurance Corporation. The law is set up so that any bank merger, branch expansion, or new branch creation can be postponed or prohibited by any of these four bureaucracies if a CRA “protest” is issued by a “community group.” This can cost banks great sums of money, and the “community groups” understand this perfectly well. It is their leverage. They use this leverage to get the banks to give them millions of dollars as well as promising to make a certain amount of bad loans in their communities.

What do you think ACORN will be doing with the $140 Billion they get?  Promote the agenda of “keeping Americans in their homes“.  Homes they clearly can not afford.  THAT, ladies and gentlemen, is predatory lending defined.

There is one way to promote affordable housing; reject the Bush/Obama Bailout bill. Rates will go up (temporarily) and housing prices will plummet….but houses will be a WHOLE lot more affordable.

Market pricing, without government intervention, may be the best affordable housing program going.  Of course, that ain’t gonna happen cuz someone has to get paid off.  Let’s just hope it won’t be ACORN.

UPDATE:  My initial statement was incorrect.  I said:

ACORN may control up to 20% of the $700 billion proffered by the Bush/Obama Bailout Plan

The earmark for ACORN is for 20% of the hopeful profits from the bill.  I still don’t like funding a socialist organization with profits from a planned economy policy.


15 Comments so far

  1. Robert Kerr September 27th, 2008 9:57 pm

    Forget that even if the default rate rises to 25%, 3 out of 4 of those “toxic” loans were successful in completing the mandate of a driveway for every family.

    Bad math, Brian.

    The default rate is dynamic and its effects cumulative. It could be 0% right now, but that wouldn’t mean that none have defaulted.

  2. Brian Brady September 27th, 2008 10:50 pm

    The default rate is dynamic and its effects cumulative.

    Explain, please.

    More importantly, have more borrowers benefited from sub-prime loans than not?

  3. Barry Cunningham September 28th, 2008 5:44 am

    Brian, without sounding like an Active rain member…GREAT POST!!!


    I have been railing against ACORN for months and this BS is the icing on the cake! Jim Cramer said it and it’s becoming so true…”We’re All Communists Now”!!

    This needs to be written by everyone who has a blog and we can’t let these people control that kind of money. It is absolutely absurd if not criminal to allow this shakedown to take place.

    ACORN??? Why not just stand on the corner and hand out cash? This just riles me!

  4. Greg Swann September 28th, 2008 6:25 am

    These are the same agitators who brought the Zillow shakedown. Giving them billions of dollars is a recipe for disaster.

    Appended below is a very tendentious film, but it documents a lot of the underlying history of our current predicament:

  5. Tom September 28th, 2008 7:07 am

    My question is this, how can the government create the crisis with social management and ill conceived laws and then create a bailout situation that will buy the assets for pennies on the dollar?

    And to top it off, reward those that set in motion many of the issues that we face now?

    The Mob isn’t even this good or this callous.

  6. Doug Quance September 28th, 2008 8:24 am

    It is sad that on the social networks OUTSIDE of real estate, most want to blame the Republicans for this problem… and the MSM is, as usual, not doing anything to set the record straight.

    It is unbelievable.

  7. Teri Lussier September 28th, 2008 8:47 am

    Excellent job Brian.

    >We will continue our fight . . . until we have shared the wealth,

    That literally makes my blood run cold.

  8. Sharon Alters September 28th, 2008 10:14 am

    Appreciate your insight, Brian. I confess to being fairly ignorant about ACORN and I’ll bet a lot of Americans who didn’t know that acronym will be sadly aware of it now.
    Ditto with Doug’s comment – the Republicans are blamed for many problems they didn’t create but are left to figure out.

  9. Robert Kerr September 28th, 2008 3:47 pm

    The default rate is dynamic and its effects cumulative.

    Explain, please.

    The default rate tells us how many loans are in trouble right now. It doesn’t tell us how many, total, have gone bad.

    More importantly, have more borrowers benefited from sub-prime loans than not?

    I don’t have that data.

    My instinct tells me that if we’re talking about subprimes from ’04 to ’07, it’s possible that close to half of them have already turned bad.

  10. Brian Brady September 28th, 2008 6:38 pm

    Thanks for the explanation, Robert. My guesstimates aren’t bleak as yours but they’re bad.

    Nice to see you here, Sharon.

  11. Jillayne Schlicke September 28th, 2008 7:26 pm

    Sometimes people within our industry have a hard time understanding that keeping people in homes they can’t afford is dis-respectful.

    Loan modifications are defaulting at a rate of 40%.

    Perhaps it’s more respectful to allow folks to re-enter the housing market as a renter today, so that they can begin rebuilding their credit rating for the future.

    I’m hearing stories now of loan mods like a 2% fixed rate for 3 years and extending the life of the loan.

    What’s going to happen in 2011? Another spike in defaults, dragging this whole mess out for many, many years.

  12. Brian rady September 28th, 2008 8:29 pm


    I can’t think of a nicer way to say what you just did. Robert Kerr once called it loan sharking and I picked up on that idea.

    The principles are the same but, in this case (ACORN’s loan mod program) the principals are different.

  13. Robert Kerr September 28th, 2008 10:53 pm

    Jillayne, keeping an underwater homeowner underwater, by extending the term or inserting a period of low- or no-interest, helps the lender, not the owner!

    This is a classic Sopranos strategy. (No offense intended, Brian)

    You continue to bleed the borrower at a slower rate, one that extends the life of the loan, because once the borrower gives up and walks away, it’s a 40-50% write-off in this market.

    No one should be surprised that those kind of mods are failing.

    But! Loan mods that forgive enough principal to almost bring the borrower back above water actually help the homeowner and would be much less inclined to fail.

    I think lenders are going to look at their losses, which are mounting rapidly, and eventually start forgiving principal. They’ll lose less money in the long run with that strategy, IMO.

    Note: is that the kind of loan mod ACORN is proposing?

  14. Dan Melson September 29th, 2008 11:03 am

    Actually, the word I have is that the ACORN pork is currently out of the bill. John McCain used his presidential campaign to shine some light on the Dodd bill, with the consequence that Nancy Pelosi said she wouldn’t bring it up to vote without 100 Republicans agreeing to vote for it (lest the Repubs use it against her and she become minority leader Pelosi), which gave the House Republicans some bargaining power. There’s a lot more insurance, a lot less direct bail out.

    Q and O (a libertarian website) has a bulletable list of differences between the three versions here

  15. […] quarterbacking is one thing but over-regulation is how the United States got into this mess.  The Federal government forced banks to make non-prime loans and removed the risk of those less than worthy borrowers by guaranteeing those loans.  The Clinton […]