RUSH: Bush proposed oversight and Democrats rejected it.
How Democrat Thieves Looted Fannie Mae and Freddie Mac
RUSH: McCain is on message, and Obama is clueless.
McCain Hammers Obama on Connection to Raines, Johnson
Posted on 09/20/2008 4:12:48 PM PDT by Jim Robinson
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
The chickens came home to roost.
Hat tip to Rodger!
"And if you don't like this" said Fanny and the Congressional Black Caucus, "you must be racist".
And so it was................
The answer was NEVER to give ANYBODY a mortgage for ANY AMOUNT with NO MONEY DOWN.
This was during Clinton’s “reign”
MAJOR BUMP!!!!!!
See also:
2005 Video: Fannie Mae CEO addresses Obama & the Democrat Black Caucus, his “Family”
http://www.freerepublic.com/focus/f-news/2085235/posts
Sir, don’t you understand that it is a God given right under our evolving and elastic Constitution that every US resident, including illegal aliens, have a right to finance, with no provable income and no money down, two bedroom condos for $650,000?
Clinton/Cuomo conspired to sue the member banks if they didn't comply, and invented "redlining" - this was the beginning.
Keep in mind, Andrew Cuomo is now New York's Attorney General...
good find!
Reading this was almost eerie, sort of like precognition. The exhuberance of the reportage was clear as if this reduction in standards should have happened years before.
McCain co-sponsored a bill in ‘05 to address problems that he forsaw. Democrats blocked it. Get the word out there.
Also John McCain saw a problem. John McCain 2006 - Warning On Current Housing Crisis.
Yeah, baby! Good find. The truth shall set you free!
Bump
Drive it home....woohoo!
Two bedrooms? You’re selling yourself short. Three at least for any decent home. Master, kids, office
With the internet, it is much harder for the libtards to get away with their lies! Good find.
Hey Jim!
Good old Franklin Delano Raines. The man who took home $90-million from Fannie Mae between 1999-2004. The same Clintonite who is about to pay $24-million in penalites for a stay out of jail card.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
What an amazing find.
bump
fast forward...oops, maybe that wasn’t a good idea afterall!
‘’From the perspective of many people, including me, this is another thrift industry growing up around us,’’ said Peter Wallison a resident fellow at the American Enterprise Institute. ‘’If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.’’
Maybe there was a reason why those loans weren’t being made, do ya think?
Better to bring the nation to it’s knees than have any appearance that some black and Hispanic families might not be a very good credit risks at certain points in time.
This is just one instance of political correctness shaking this nation to its core.
We need to confront destructive political correctness where ever we see it.
It’s time to zero out these agencies. The last thing we need is the government distorting the housing market. Heck, this isn’t even welfare.
We don't want to be painted as bigots do we?
Nice graphic with McCain and the hammer. Hope he uses it!
Thanks for posting this. I was just flipping by CNN where they are talking about the Wall Street Crisis and they are taking calls and one caller called in and basically made the points entailed in this article. Of course the CNN people immediately cut him off and a panelists said the common liberal line “you can’t blame this on poor people” line.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
‘’From the perspective of many people, including me, this is another thrift industry growing up around us,’’ said Peter Wallison a resident fellow at the American Enterprise Institute. ‘’If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.’’
Precognitive? I’ll say.
History shall be rewritten. The end story will be how we “took” the homes of minorities. The fact they couldn’t pay the mortgage will be an insignificant detail.
great post ...
So are these forclosures still going on? Are we bailing out the homeowners too or just the mortgage companies? That’s what I was trying to figure out.
Conservative talk-radio needs to be apprised of this article.
Nice find!
Absolutely unbelievable.
I feel like I'm in the twilight zone.
Are these people INSANE??
Don't answer that - it was a rhetorical question.
Not just that — the real answer is to ALWAYS charge a risk premium commensurate with the credit rating of the borrower. Basic finance principals were ignored by Clinton and cronies for the sake of “fairness.”
Bump for later retrieval
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