Misommar1246 t1_itl6jho wrote on October 24, 2022 at 1:45 PM

Reply to comment by NetQuarterLatte in Where Are the Free Housing Attorneys NYC Promised to Tenants Facing Eviction? - Hell Gate by LittleWind_

I don’t know, we kind of fucked up when we made it easier for tenants to get home ownership and it all came crashing down in 2008.

NetQuarterLatte t1_itl8ep1 wrote on October 24, 2022 at 1:59 PM

>I don’t know, we kind of fucked up when we made it easier for tenants to get home ownership and it all came crashing down in 2008.

Home ownership in NYC didn't even get close to 60% leading to 2008. High home ownership rate was absolutely not the issue with 2008.

Chart with home ownership rate per year: https://www.osc.state.ny.us/reports/homeownership-rates-new-york

Misommar1246 t1_itl8rg1 wrote on October 24, 2022 at 2:01 PM

Ownership itself wasn’t the problem, relaxing the conditions such as credit score requirements were though. It caused a lot of people who realistically couldn’t afford homes to sign up for one.

NetQuarterLatte t1_itlab0j wrote on October 24, 2022 at 2:13 PM

>Ownership itself wasn’t the problem, relaxing the conditions such as credit score requirements were though. It caused a lot of people who realistically couldn’t afford homes to sign up for one.

Even in the peak of the great financial crisis, NYC had less than 29,000 delinquent mortgages/foreclosures.

That shouldn't be the reason why people need to be handcuffed into a lease agreement with their landlord.

tuberosum t1_itlrlb8 wrote on October 24, 2022 at 4:11 PM

The fault lies entirely in the banks and rating agencies that sold those mortgages as parts of CDOs that had been rated AAA when, in fact they definitely weren't.

The fact that the banks could make more money selling those CDOs than the profits from the actual mortgages led to banks being far more willing to issue loans to people who couldn't demonstrate a sufficient ability to pay. Who cares, after all, it's not the mortgage that'll make money for the bank!

And with banks playing fast and loose with mortgages, it allowed an influx of a lot of money into the market which ended up bringing up the prices of housing stock. Since, if money is cheap and available to the buyers, the sellers would have to be fools not to increase their prices.

And when the bank's irresponsibility finally caught up to them, the whole system fell like a house of cards.

How this would have played out in a normal world without commercial banks being investment banks as well: bank would issue mortgages, and since they rely on the return of those mortgages to finance their profits, they make sure that those receiving the mortgages have the ability to pay. Some foreclosures still happen since shit happens, but the banking system in it's entirety chugs along as per usual.