The Big Short: What they left out

[Brandon G.]

I just finished watching The Big Short, a movie about the real estate bubble.  I enjoyed the information in the movie but I was very let down by the fact that they never acknowledged the fact that subprime mortgages were pushed on the American people under the tired guise of racial and minority discrimination.  It was this trump card (no pun intended considering today's political climate) of discrimination that allowed the no-contest argument against solid reasoning, labeling anyone against such subprime mortgages a racist or prejudice.  
I feel this would have been an immensely important lesson to learn so that it could be applied to so many facets of society and politics today.

For references, I refer anyone interested to this book, which itself cites sources for its source material for statistics.
 http://www.amazon.com/Housing-Boom-Bust-Revised/dp/0465019862/ref=sr_1_1?s=books&ie=UTF8&qid=1457247632&sr=1-1&keywords=the+housing+boom+and+bust

(edited because I linked to the wrong book)

[Jay Hinrichs]

@Brandon G.  @Chris Mason  point counter point !

Well I was in the thick of it back in the day.. both as a HIGH volume real estate agent ( owned and office and had a team) and HML in the Deep south. so I think I can speak to this a little.

For the CA borrowers it was all credit score driven... and just like today were you see posts I live in LA but need to invest other places.. lenders made those loans far to easy for folks who eventually lost the assets..

in the DEEP SOUTH  and I mean Mississippi can't get any more deep south than that I was the largest hard money lender in the state for many years doing 300 plus loan in Jackson a year. for fix and flippers who sold not only to investors for rental purposes ( see above almost all out of  state) to homeowners..

the issue that caused much of this is CRA never mentioned and most don't know what it is .. its the Community Reinvestment ACT that Clinton put in.. it basically forced banks if they wanted to work in certain areas they MUST provide loans for the citizens who live there... Now you take Jackson which is 70% or more AA and average credit score of 600 state wide.. and you force banks to make loans to those in the communities and you had a bunch of folks that probably did not know enough about finance's and homeownership and had a history of not being able to manage their personal finances buying homes when they should not have in the first place. I got one line of credit from Community bank in Jackson for 1 million dollars to use for my HML's and I got it because they could book at as CRA because I was lending on Jackson properties it worked great for them they could book a big fat CRA loan and lend to a guy like Me.. LOL which is not a sub prime borrower but funds were going to sub prime neighborhoods.

The banks know were the foreclosure clusters are.. a friend of mine works for company that  that is all they do is analyze risk by demographic and geographic areas they can tell a bank up front basically what they will deal with with defaults and how much to put aside.

There were PLENTY of high wage earners 700 plus ficos in CA that got wiped out.. and they also borrowered as Chris pointed out ( crappy loans) because of the RE craze.. it was all over the place.