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Blagojevich And The Minority Mortgage Meltdown
Via Overlawyered, I learn that Blagojevich is not only an illegal immigration enthusiast, who's been accused of corruption in trying to sell the Senate seat vacated by Barack Obama, but he was also heavily involved in the mortgage meltdown:
BLAGOJEVICH: Subprime Governor To Bailout Governor
John Carney | Dec 9, 08 3:41 PM
Long before he would become a blazing symbol of political corruption, Illinois governor Rod Blagojevich was making Illinois into one of the leaders in risky mortgage lending. He pushed a program, called Opportunity I-Loans, that would make loans for up to 97% of property value, with borrowers making only a 3% downpayment. When the state legislature resisted, he went ahead and created the program through an executive order.
How did that program turn out? We haven't been able to uncover the default or foreclosure rate on those loans. But shortly after he created the I-Loan program, Illinois became one of the leaders in mortgage defaults. Defaults under the I-Loan program would likely have been even higher than the state average because the combination of minimal downpayments and declining property values is a recipe for rising loan defaults.
Rather than react with regret about the loose mortgage climate he helped create, Blagojevich became one of the earliest political leaders to call for a housing bailout. [More, which makes Blagojevich look even worse.]
Here's how bad the program was--not only was it, according to Blagojevich himself, only the second such program in the nation (which means it was wilder and crazier than almost anything else of its kind) it was designed to provide mortgages to minorities and immigrants who didn't have bank accounts.
The "unbanked" are people who for whatever reason don't have bank accounts, mostly poor people who aren't that well organized, and can't afford to keep any money in the bank. They're the customers of check cashing agencies, and welfare workers worry about them, while activist try to get the banks to offer them free services. But it's crazy to think of offering someone like that the mortgage on a house. It gets worse--two other groups he was trying to help borrow six-figure sums were
- People with no credit rating (because of their "unbanked" status)
- People with no Social Security numbers (because they were illegals)
How could that possibly go wrong? See the details here:
CHICAGO â€“Building on his commitment to help working families realize the American Dream of homeownership, Governor Rod R. Blagojevich today launched a new mortgage program designed to help hardworking, taxpaying individuals and families from the immigrant and minority communities. The program, called Opportunity I-Loan, will help those individuals and families who do not have a traditional checking account or have not been able to establish a credit history, qualify for low-interest mortgage loans and buy their first home. This program will make Illinois only the second state in the nation to provide affordable, 30-year fixed rate mortgage loans for qualifying individuals and families that live and work and pay taxes but have no credit history or social security numbers. The Program will also offer further protections from predatory home loans.Â OFFICE OF THE GOVERNOR--ROD R. BLAGOJEVICH - GOVERNOR December 11, 2005 Gov. Blagojevich launches program to help working families in immigrant and minority communities buy homes | Program is only second in the nation to accept alternative credit and ITIN numbers [PDF]