This week we watched a video clip in class called, “House of Cards”. It was refreshing to watch a video instead of reading articles as we usually do. This video was about the housing crisis, people’s homes being foreclosed. It was the governments/Wall Streets, and the people who sold the houses fault as they lied about their client’s incomes in order to place them into houses knowing they could not afford them. I felt it was sad to watch a scandal happening to people and ruining their lives completely.
The video started by expanding that middle class income people were in upper class homes and they simply could not afford them anymore so they would get evicted. The house would be on foreclosure. Homes that have been evicted for long can increase crime rate and have a public health impact, as they are not being taken care of.
The credit crisis began and the interest rates where lowered to make it easier for people to borrow money. This, in turn, would make people go out, shop and put money back in the economy, as the cost of borrowing money was cheaper. As the mortgage rates declined, prices of houses rose higher than income. If fewer people can buy the homes then the prices would drop.
Fannie Mae and Freddie Mac were to top two companies who would lend money (loans). The companies would do a very through background check and be very selective—California wanted to change this. The dominating companies lost their power with scandals Wall Street took over to replace them. Countries like China and India were becoming richer and decided to invest to American borrowers. Companies such as Quick Loan Funding emerged providing money to those with bad credit, also known as ‘nasty loans’ or ‘sub prime borrows’. All people needed to do was state their income and did not have to prove it. People could lie about how much money they made and how much assets they had. As stated in the movie, loan officers were not licensed or trained (they were trained to close the loan) some were previously pizza deliverymen. People trusted their brokers who said that all you need to do is buy this house then you can refinance it. It moved people into wealthier neighborhoods thinking they would be able to afford the place and not knowing their broker had placed them into a ‘liar loan’. One of the brokers in the movie had put that her client made triple the amount she actually made and had arranged two loans in her name.
Brokers only cared about making money for themselves and didn’t care where these people would end up knowing they could not afford these homes they were placed in.
This movie really showed how far our government would go just to make money. If you were a broker would you knowing be able to put someone into a ‘liar loan’ for the money? I know I wouldn’t be able to sleep at night knowing that I may have destroyed a family or a persons home/life.