Bloomberg home loans

In the post war decades many vets were looking to follow the American dream and become home owners. There were financial requirements regarding down payment and income. Many qualified for FHA loans which meant 3.5% down but many others could not meet the monthly payment rule of the principal and interest payment plus insurance and taxes not exceeding 28% of gross income. Throughout the 50's and 60's home ownership grew at record levels but low income people were left out. Many low income Blacks applied for loans but were declined because the could not meet the 28% rule. So many were turned down that a practiced developed called red lining. On a map of the city certain areas had red circles drawn around them indicating that if a person came into the bank seeking a loan and they lived in that area they were automatically turned down. In 1977 The Community Reinvestment Act was passed saying that red lining was illegal. This set the stage for President Clinton who in the 80's declared that the government should help lower income people become home owners. Clinton told HUD director Henry Cisneros to use creative financing to increase home ownership. Over the next few years standards were lowered and came to the extreme of NINA loans. No income and no assets became the norm and many people were given loans who could not afford them and when the mortgage crisis hit in 2006 most of these NINA loan defaulted. This was only a minor part of the problem which was exacerbated by banks bundling these loans and selling them around the world as investments. Candidate Bloomberg has suggested that home owners defaulting caused the crisis and he forgets about the major part that banks played in this debacle