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NYT 1999: Fannie Mae Eases Credit To Aid Mortgage Lending
The New York Times | 1999 | By STEVEN A. HOLMES

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.


TOPICS: Breaking News; Crime/Corruption; Government; News/Current Events; Politics/Elections
KEYWORDS: 1999; aei; billclinton; clinton; clintonlegacy; clintonomics; clintoon; corruption; democrats; economy; elections; fanniemae; financialcrisis; hangemhigh; housingbubble; hud; lp; minorities; multiculturalism; nobama08; peterwallison; robberbarons; slickwillie; spartansixdelta; subprime; wallison; x42
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1 posted on 09/20/2008 4:12:49 PM PDT by Jim Robinson
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To: Jim Robinson

The chickens came home to roost.


2 posted on 09/20/2008 4:15:52 PM PDT by neodad (USS Vincennes (CG 49) "Freedom's Fortress")
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To: Rodger Schultz

Hat tip to Rodger!


3 posted on 09/20/2008 4:16:51 PM PDT by Jim Robinson
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To: Jim Robinson
Yep......

"And if you don't like this" said Fanny and the Congressional Black Caucus, "you must be racist".

And so it was................

4 posted on 09/20/2008 4:17:00 PM PDT by Cold Heat (Well....................................That's .....that.........)
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To: Jim Robinson

The answer was NEVER to give ANYBODY a mortgage for ANY AMOUNT with NO MONEY DOWN.


5 posted on 09/20/2008 4:17:10 PM PDT by wagglebee ("A political party cannot be all things to all people." -- Ronald Reagan, 3/1/75)
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To: Jim Robinson
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

The smoking gun. The Clinton administration was behind this fiasco.
6 posted on 09/20/2008 4:17:10 PM PDT by Signalman
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To: neodad

This was during Clinton’s “reign”


7 posted on 09/20/2008 4:17:10 PM PDT by forYourChildrenVote4Bush (Today, July 16th I no longer donate money for Israel)
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To: Jim Robinson
This tells it all.
8 posted on 09/20/2008 4:17:36 PM PDT by stripes1776 ("That if gold rust, what hall iron do?" --Chaucer .)
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To: Jim Robinson

MAJOR BUMP!!!!!!


9 posted on 09/20/2008 4:18:31 PM PDT by nmh (Intelligent people recognize Intelligent Design (God).)
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To: All

See also:

2005 Video: Fannie Mae CEO addresses Obama & the Democrat Black Caucus, his “Family”

http://www.freerepublic.com/focus/f-news/2085235/posts


10 posted on 09/20/2008 4:18:33 PM PDT by Jim Robinson
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To: Jim Robinson

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?


11 posted on 09/20/2008 4:18:45 PM PDT by Chet 99
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To: Jim Robinson
"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."

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...

12 posted on 09/20/2008 4:19:17 PM PDT by xcamel (Conservatives start smart, and get rich, liberals start rich, and get stupid.)
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To: Jim Robinson

good find!


13 posted on 09/20/2008 4:19:52 PM PDT by RXSalesman
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To: Jim Robinson

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.


14 posted on 09/20/2008 4:20:07 PM PDT by downtownconservative (Intelligence sans reason is vainglorious pulp)
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To: Jim Robinson
President Bush tried to head this off in 2003. New Agency Proposed to Oversee Freddie Mac and Fannie Mae . It's amazing to me how unformed the public (and some FReepers) are.

Also John McCain saw a problem. John McCain 2006 - Warning On Current Housing Crisis.

15 posted on 09/20/2008 4:20:30 PM PDT by McGruff
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To: Jim Robinson

Yeah, baby! Good find. The truth shall set you free!


16 posted on 09/20/2008 4:20:59 PM PDT by Obadiah (I remember when the climate never changed, then Bush stole the election.)
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To: Jim Robinson

Bump


17 posted on 09/20/2008 4:21:42 PM PDT by nickcarraway
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To: Jim Robinson

Drive it home....woohoo!


18 posted on 09/20/2008 4:21:53 PM PDT by Earthdweller (Socialism makes you feel better about oppressing people.....)
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To: Chet 99

Two bedrooms? You’re selling yourself short. Three at least for any decent home. Master, kids, office


19 posted on 09/20/2008 4:23:05 PM PDT by Domandred (McWhathisname / Palin - 2008)
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To: Jim Robinson

With the internet, it is much harder for the libtards to get away with their lies! Good find.


20 posted on 09/20/2008 4:23:16 PM PDT by dynachrome (Henry Bowman is right)
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To: Jim Robinson
Ah-HA!!!
21 posted on 09/20/2008 4:23:30 PM PDT by LUV W (McCain/PALIN!!!!--'nuff said! :D)
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To: Bobkk47
Andrew Cuomo and Freddie and Fannie
22 posted on 09/20/2008 4:25:09 PM PDT by mass55th (Courage is being scared to death - but saddling up anyway...John Wayne)
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To: Jim Robinson

Hey Jim!


23 posted on 09/20/2008 4:25:22 PM PDT by SkyPilot
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To: Jim Robinson
This is the second time that real estate lending practices have led to banking meltdowns. Its time to put an end to this manipulation of the banking system.
24 posted on 09/20/2008 4:25:24 PM PDT by quadrant
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To: Jim Robinson
>>>>>''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.

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.

25 posted on 09/20/2008 4:26:15 PM PDT by Reagan Man (With Palin on the ticket, McCain Earned My Vote --- MOST conservatives should be satisfied.)
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To: Jim Robinson
McCain need to press this matter to the hilt; damn the Rat & MSM torpedoes, full steam ahead.
26 posted on 09/20/2008 4:26:32 PM PDT by Shqipo (McCain/Palin rallies.... No rock bands required.)
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To: Jim Robinson

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.


27 posted on 09/20/2008 4:27:24 PM PDT by jessduntno (.Well King, This case is CLOSED.)
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To: Jim Robinson

What an amazing find.


28 posted on 09/20/2008 4:27:39 PM PDT by Chunga (Vote Republican)
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To: Jim Robinson

bump


29 posted on 09/20/2008 4:27:53 PM PDT by fso301
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To: Jim Robinson

fast forward...oops, maybe that wasn’t a good idea afterall!


30 posted on 09/20/2008 4:28:00 PM PDT by nobamanada
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To: Jim Robinson

‘’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.’’


31 posted on 09/20/2008 4:29:30 PM PDT by jessduntno (.Well King, This case is CLOSED.)
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To: Jim Robinson

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.


32 posted on 09/20/2008 4:29:32 PM PDT by DoughtyOne (McCain, the Ipecac president... Obama the strychnine president...)
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To: All

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
33 posted on 09/20/2008 4:31:12 PM PDT by Miss Didi ("Good heavens, woman, this is a war not a garden party!" Dr. Meade, Gone with the Wind)
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To: quadrant

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.


34 posted on 09/20/2008 4:31:45 PM PDT by TrevorSnowsrap
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To: Jim Robinson
Affirmative action for the housing market.

We don't want to be painted as bigots do we?

35 posted on 09/20/2008 4:32:27 PM PDT by right way right (Do not mistake religion for God.)
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To: Miss Didi

Nice graphic with McCain and the hammer. Hope he uses it!


36 posted on 09/20/2008 4:33:49 PM PDT by right way right (Do not mistake religion for God.)
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To: Jim Robinson

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.


37 posted on 09/20/2008 4:35:22 PM PDT by fkabuckeyesrule (Sarah Palin 2012)
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To: Jim Robinson
Good catch Jim, bears repeating:

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.

38 posted on 09/20/2008 4:37:22 PM PDT by DouglasKC (.)
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To: downtownconservative

‘’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.


39 posted on 09/20/2008 4:38:07 PM PDT by EDINVA
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To: DouglasKC
BTTT
40 posted on 09/20/2008 4:38:11 PM PDT by ConservativeMan55 (Obama is the Democrats guy. They bought the ticket, now they must take the ride.)
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To: Jim Robinson

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.


41 posted on 09/20/2008 4:38:37 PM PDT by enduserindy (Just say NO to the curtain!)
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To: Jim Robinson
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines.
42 posted on 09/20/2008 4:38:47 PM PDT by BenLurkin
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To: Jim Robinson

great post ...


43 posted on 09/20/2008 4:43:07 PM PDT by davidosborne (SARAH PALIN for VP ---- McCain is just the "baggage" that comes with that VOTE !!)
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To: enduserindy

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.


44 posted on 09/20/2008 4:44:26 PM PDT by arichtaxpayer (We will not tire, we will not falter, and we will not fail.)
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To: Jim Robinson

Conservative talk-radio needs to be apprised of this article.


45 posted on 09/20/2008 4:45:35 PM PDT by Signalman
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To: Jim Robinson

Nice find!


46 posted on 09/20/2008 4:45:57 PM PDT by Mad_Tom_Rackham ("The land of the Free...Because of the Brave")
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To: Jim Robinson
Unbelievable, ain't it?! The country cannot survive this kind of corruption, incompetence and crookedness on a continuing basis, and it's been going on for a long time. God knows what else is going on out there. The trouble is, people are losing confidence in our institutions and government and who can blame them? The bull crap and lies tossed around during this election season is enough to gag a maggot - we, as a nation, are in deep, deep trouble.
47 posted on 09/20/2008 4:47:04 PM PDT by Eighth Square
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To: 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.

Absolutely unbelievable.

I feel like I'm in the twilight zone.

Are these people INSANE??

Don't answer that - it was a rhetorical question.

48 posted on 09/20/2008 4:49:32 PM PDT by politicket (Palin-tology: (n) - The science of kicking Barack Obambi's butt!)
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To: wagglebee

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.”


49 posted on 09/20/2008 4:49:45 PM PDT by ProtectOurFreedom
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To: Jim Robinson

Bump for later retrieval


50 posted on 09/20/2008 4:50:14 PM PDT by fedupjohn (If we try to fight the war on terror with eyes shut + ears packed with wax, innocent people will die)
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