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People charged higher interest rates than average also have higher rates of payments, defaults and foreclosures. The market has accurately assessed the risks. (Pg. 6)
From Pg. 16-17: While housing payments often made up more than half of income in Los Angeles and New York, the percentage of median income required to buy a house in Tampa was 21% and in Dallas 13%. These latter two places had few buildings restrictions.
The more the government intervenes in the housing market, the more expensive the housing.
Bond rating agencies such as Moody had no way to judge bonds backed by fancy new mortgages. Moody’s and co had the data on conventional mortgages, but they had little data on subprime mortgages and the like. All they could do was guess.
On page 29, Dr. Sowell writes that “government agencies not only approved the more lax standards for mortgage loan applicants, government officials were in fact the driving force behind the loosening of mortgage loan requirements.”
Regulatory agencies not only permitted lower mortgage lending standards, they required lower mortgage lending standards.
On pg. 59, Dr. Sowell notes that banks lose about $40,000 per home foreclosed.
