Posted on 01/08/2013 12:45:55 PM PST by whitedog57
According to data gathered by the Federal Housing Finance Administration (FHFA), the government mortgage enterprises (mostly Fannie Mae and Freddie Mac) averaged 30% risky loan purchases from 2001-2008.
My definition of risky loan is 1) FICO score 80%.
This table is just for fixed-rate mortgages. Notice that Enterprise purchases peaked in 2003, but the percentage of risky purchases rose from 27.43% in 2005 to 36.79% in 2007.
In terms of 90 day delinquencies, the risky loans fared worse than less risky loans. The yellow/orange cells are the worse, blue cells are the best.
Of course, we know that government housing policy starting with President Clinton encouraged the government mortgage enterprises to take on more risk by streamlining underwriting and encouraging lower down payment loans. The government encouraged lenders to do likewise. The result? A credit-created housing bubble! nhsdream2
As Barney Frank leaves the House of Representatives, he leaves behind his legacy of a housing bubble and near financial collapse.
I’ll say it again - the first and most important pillar of the Progressive state is the Federal Reserve.
The whole sub-prime debacle was an incestuous triangle between the Gov’t and their political ends, banks who originated and sold Fannie/Freddie the bad loans, and the Fed who encouraged it with low rates, and later with zero interest rates to capitalize its member banks.
“back in the ‘90’s when the FM’s were under the control of HUD, Clinton and two HUD secretaries set the goal of 50% FM purchases of sub-prime mortgages - to help the poor buy houses at taxpayer expense, doncha know - the two were Henry Cisneros and Andrew Cuomo, who’s now governor of New York - apparently such economic and political recklessness and exploitation aren’t a big deal.....”
GW and his two appointees, Martinez and Jackson, did the same kind things. In fact, Bush increased the purchasing rate to 54%.
In any event it's interesting that only a few minutes ago Rush Limbaugh was talking about a story just out today saying that federal regulators are now going to require lending institutions to provide documentation that mortgage recipients have the ability ot repay their loans - so twenty years after forcing banks and other lenders to abandon prudent lending practices so free houses could be given to the poor at taxpayer expense, the government is going to save us all by making those lenders return to those abandoned practices - it is to laugh.....
HUD was a cabinet organization during Bush's presidency so any action they took fell under his purview.
That June Post story focused its critical reassessment of HUD's affordable-housing goals on the department's 2004 decisionduring the Bush re-election campaignto juice them up again, pushing the target to 56 percent by 2007. Though the story never mentioned Cuomowhose three-year, eight-point goal hike exceeded Bush's more gradual six-point increaseit did quote his top aide William Apgar, who helped craft the 2000 policy, saying: "It was a mistake." Apgar, who now teaches at Harvard, conceded, "In hindsight, I would have done it differently."
For a primer on the GSE failures go here....
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