Posted on 01/09/2013 9:51:49 PM PST by Brad from Tennessee
There are as many starting points for the mortgage meltdown as there are fears about how far it has yet to go, but one decisive point of departure is the final years of the Clinton administration, when a kid from Queens without any real banking or real-estate experience was the only man in Washington with the power to regulate the giants of home finance, the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), better known as Fannie Mae and Freddie Mac.
Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that—in combination with many other factors—helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded "kickbacks" to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.
What he did is important—not just because of what it tells us about how we got in this hole, but because of what it says about New York's attorney general, who has been trying for months to don a white hat in the subprime scandal, pursuing cases against banks, appraisers, brokers, rating agencies, and multitrillion-dollar, quasi-public Fannie and Freddie. . .
(Excerpt) Read more at villagevoice.com ...
Cuomo is basically being rounded up to reduce the vote for some other Democratic candidate. He’s a lousy speaker and just a front-guy for Wall Street wannabe players.
Indeed. The crash occurred a month later as I recall.
Career politicians like this POS are the root of all evil. Divisive and self-serving.
A mafiosa in high office.
A significant factor from the consumer side that I have never seen acknowledged is the change in the 1997 tax law. Before that, you had to be above a certain age before you could sell a property that had gained value and take a $125,000 deduction from your capital gain. The new law enables anyone to live in a property 2 out of 5 years before selling it and take $250,000 off the capital gain if single, and $500,000 if married.
A significant number of entrepreneurial folk including quite a lot of Hispanics took advantage of this new tax break. I noticed the phenomenon around 2000, and urged my 2 sons to look for a good deal to buy before the prices exploded out of their reach. I borrowed from my equity line of credit, and gave each of them enough for a downpayment and some closing costs and they each bought in 2001.
That sudden consumer demand for 2nd homes which could be bought, lived in for two years, fixed up and sold is one important factor in the bubble. This stimulated the rapid inflation of value that made it seem to even the professionals that a house could not loose value, no matter how loosely applied the credit standards.
You give him far too much credit. He wouldn't be a pimple on a Good Fellow's ass.
“Perhaps the only domestic issue George Bush and Bill Clinton were in complete agreement about was maximizing home ownership, each trying to lay claim to a record percentage of homeowners, and both describing their efforts as a boon to blacks and Hispanics.”
I hope this doesn’t come across as racist, but the state of our politics is very sad. The protected voter bloc classes - blacks and hispanics - always get a pass. They can deal drugs, murder, get welfare for life, buy homes they can’t afford - and no one in government thinks twice about continuing to give them perverse incentives that destroy their lives. It’ll be the same with gun controls when it comes to enforcement - white people will have to abide, the voter blocs will get a pass.
Cuomo and Bill Clinton are the two biggest architects of the financial disaster of 2007. Add Janet Reno to the mix, and you have a triumvirate of evil. Read Paul Sperry’s “The Great American Bank Robbery” for the details of how these three geniuses of doom created and organized the financial debacle. Which underscores the old saying: the road to hell is paved with good intentions.
The Clinton admin, under Janet Reno's direction, threatened banks and lending institutions with severe penalties if they didn't relax their standards and allow black and Hispanic mortgage seekers easier terms. The lending institutions had applied, on average, stiffer qualifications to blacks and Hispanics for a good reason: they defaulted on their loans at a much higher rate than whites or Asians. And standards for whites were stiffer than that for Asians for a good reason as well: whites defaulted on loans at a higher rate than Asians.
In short, the standards the lending institutions applied were all fair based on statistical evidence. The Clinton admin almost completely wrecked those standards. And incidentally, the current tyrant, King Barack, would like to return to those days of easy credit for unqualified borrowers. Which means we can look forward to another financial debacle.
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MASSIVE MORTGAGE FRAUD ON CAPITOL HILL:
The Congressional Hispanic Institute, Inc, is an entity organized by Cong Joe Baca (D-Cali) in his capacity as head of the Congressional Hispanic Caucus.
Cong Baca created "HOGAR" (Spanish for home) in 2003 to work with the mortgage industry, F/M, lenders, banks and latino community groups to increase mortgage lending to what savvy observers consider to be unqualified Latinos.
"HOGAR" colluded w/ Cong Baca in what was to become a massive bilking of taxpayers. Cong Baca calculatedly hyped the fact that the national Latino homeownership rate was 47%, compared with 68% for the overall population.
HOGAR was coached to call the figure "alarming," and to say "a concerted effort was required to ensure that by the end of the decade Latinos will share equally in the American Dream of home ownership."
HOGAR and Cong Baca conned the public, failing to note that most of the "dreamers" were illegals, citizens of Third World countries who had violated US borders.
Predictably, HOGAR colluded w/ co-conspirators which included:
(a) shaky mortgage companies that ran into big trouble;
(b) Fannie Mae and Freddie Mac, both now under federal control after billions in taxpayer bailouts;
(c) Countrywide Financial Corp., sold to Bank of America Corp;
(d) Washington Mutual Inc., taken over by the US government and sold to J.P. Morgan Chase & Co.; and,
(e) New Century Financial Corp. and Ameriquest Mortgage Corp, both now defunct, killed by defaulted subprime Latino mortgages.
HOGAR's ties to the subprime mortgage industry were substantial. Bribery and self-dealing were rampant:
<><> Companies that donated $150,000 to Cong Baca got the right to have their own research fellow who would conduct fraudulent studies, which were cunningly used by industry lobbyists to pump lending.
<><> Bribery and extortion in the form of $100,000 annual donations to Cong Baca, for which HOGAR provided phony news releases from Cong Baca's Hispanic Caucus promoting a lender's commercial products to the Latino market,
<><> The most shocking example of bribery well-substantitated by Hogar's literature..... HOGAR announced it worked with Freddie Mac on a self-serving two-year examination of Latino homeownership in 63 congressional districts.
The "study" found Hispanic ownership on the rise thanks to "new flexible mortgage loan products" that the industry was adopting at the urging of Cong Baca's collusive coterie.
<><> HOGAR conned lenders into even more lenient down-payment and underwriting standards.
<><> As the subprime debacle unfolded, HOGAR declined repeated requests for comment despite the economic havoc their activities precipitated.
The mortgage schemes demonstrated the criminal activities of border violators with multiple identities---perhaps violent, terrorist-connected foreigners---colluding and conspiring to defraud private companies and public entities. And mortgage racketeering enterprises which employed sub rosa finance and business practices to carry out deceptions and frauds.
The alleged ring of swindlers---a Congresman, individuals with multiple identities, banks, insurance companies, mortgage nrokers--might be charged with cheating the US govt, taxpayers and bank share holders out of hundreds of millions of dollars via an elaborate web of mortgage and bank frauds.
The mortgage Dreamers used multiple phony identities, fraudulent Social Security numbers, purchased from identity forgers in order to obtain govt-subsidized benefits.
L/E will find that individuals with multiple identities obtained fraudulent mortgages then flipped the houses at ever-higher prices to family member who then absconded to foreign countries, sticking banks (and taxpayers) with hundreds of millions in fraudulent mortgages.
BACKGROUND A Wall Street Journal investigative report related that, according to the Federal Financial Institutions Examination Council examination of the borrowing spree, uncovered financial schemes by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, all colluding in fraduent schemes to increase homeownership among Latinos with forged documents which enabled massive fraud.
This was not simply the mortgage market at work. It was fueled by avarice, greed, and Congressional enabling fraudulent practices. In 2005 alone, mortgages to Hispanics jumped by 29%; Latinos with multiple fraudulent identities in low-paying jobs obtained subprime mortgages for prime properties---soaring to 169%.
(Research provided by Wall Street Journal. Some material excerpted from the NY Times).
Have those New Yorkers, residents of one of the highest taxed states in the union, voting for Andrew Cuomo to be their next governor allowed their ideology to trump sound reasoning? As many Americans across this great land continue to struggle with the loss of their homes, savings and retirement resources, those that were complicit in not regulating the government sponsored enterprises (GSEs) in the second market namely Fannie Mae and Freddie Mac causing the subprime loans to detonate are jockeying for power.
Sadly, we are giving those same culprits the honor of office through our votes. Note: the use of the term 'we' and 'our' is a reference to the electorate and not suggestive of the voting record of the author.
In 1993 President Bill Clinton appointed Andrew Cuomo to the Department of Housing and Urban Development (HUD) as Assistant Secretary. In 1997 Cuomo took over as HUD chief replacing Clinton appointee Henry Cisneros. During Cisneros tenure he championed Clinton's goal of social engineering within the housing market forcing lenders to issue loans to those that would not financially qualify for the lending.
Cisneros left office in a scandal involving lying to the FBI over payouts to a mistress, Cisneros subsequently pleaded guilty to a misdemeanor and though never sent to prison received a pardon from Bill Clinton in 2001.
Andrew Cuomo took the HUD reins and not only furthered Cisneros and Clinton's policies but greatly expanded them.
Henry Cisneros moved the GSEs toward a requirement that 42 percent of their mortgages serve low and moderate income families. Andrew Cuomo raised that number to 50 percent and dramatically hiked GSE mandates to buy mortgages for the "very-low-income."
These bad loans were purchased and sold throughout the secondary market and the pyramid grew and the bottom collapsed resulting in the subprime crisis we are still reeling from today.
In 2008, the Village Voice published a compelling report detailing Andrew Cuomo's policy decisions "that gave birth to the country's current crisis."
The report touched on how Cuomo's 187-page rules "opened the door to abuse." The rules explicitly rejected the idea of imposing any new reporting requirements on the GSEs. In other words, HUD wanted Fannie and Freddie to buy risky loans, but the department didn't want to hear just how risky they were.
Many New York voters have been distracted by the gubernatorial candidate Carl Paladino's racist joke email forwards, what some are failing to see is the actual harm to the minority community directly caused by Cuomo's policies...and that is no laughing matter.
Cuomo's top aide said, "We believe that there are a lot of loans to black Americans that could be safely purchased by Fannie Mae and Freddie Mac if these companies were more flexible." Andrew Cuomo doubled down and had this to say about his HUD standards, "GSE presence in the subprime market could be of significant benefit to lower-income families, minorities, and families living in underserved areas."
How's that working out for the minority community, where foreclosures and unemployment rates have hit the hardest as a result of such failed policies and blatant social engineering?
SOURCE http://voices.yahoo.com/cuomos-social-engineering-as-hud-chief-contributed-7077218.html
Community nincimpoop Nobama sued lenders to force them to give out toxic mtge loans to unqualified deadbeats...... and now......as President---he is suing them for complying, and actually lending the money.
Speaking of “shocking examples”, have you seen this one which I just discovered in today’s Barrons. Apparently AIG’s former head, Maurice Greenberg, in charge from 1968 to 2005, for some reason wants AIG to help sue the government that bailed out AIG. He wanted AIG to join the suit for including unfair stipulations in the bailout loan agreement. I guess he is mad that we the long-suffering taxpayers actually ended up with a $22 billion profit on the deal. Wisely AIG refused to join the class action suit. One good result out of TARP.
Yeah-—that was allover Fox News.
Greenburg’s got a lotta gall showing his filthy head-—there was a lotta hanky-panky there, when he headed AIG-—that’s why he’s out.
Hasta be the reason they backed down on the lawsuit, as well.
The doctrine of “clean hands” prevails in court-—a litigant must come to court sparklingy clean-—w/out any criminal dirt on his hands.
Franklin Raines, Fannie Mae’s former chief executive officer, OFHEO’s report shows that over half of Mr. Raines’ compensation for the 6 years through 2003 was directly tied to meeting earnings targets (by cooking the books).
Ex-Fannie CEO Franklin Raines (Clinton appointee) is a parasitic crook of the first order. This thief cooked the FM books precipitating losses of $9BILLION (that we know of) for the single purpose of creating $50 million fraudulent bonuses for himself (and millions for other F/M insiders).
The SEC investigation freporte Raines broke accounting rules by playing with risky derivatives. The US Government filed suit against Franklin Raines when the depth of the F/M accounting scandal became clear.
READ IT HERE http://housingdoom.com/2006/12/18/fannie-charges/
The Government noted, “The 101 charges reveal how the individuals improperly manipulated earnings to maximize their bonuses, while knowingly neglecting accounting systems and internal controls, misapplying over twenty accounting principles and misleading the regulator and the public.....explains how they submitted six years of misleading and inaccurate accounting statements and inaccurate capital reports that enabled them to grow Fannie Mae in an unsafe and unsound manner.”These charges were made in 2006.
The Court ordered Raines to return $50 Million Dollars he received in bonuses based on the misstated Fannie Mae profits. (Soon going to trial?). On top of the $50M he looted from the govt (for cooking the books for which he was fired), Raines also walked away with a tax-paid exit package worth about $100 million.
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THE DEMOCRATS' CRIMINAL ENTERPRISE / By Michelle Malkin
Fannie/Freddie are centerpieces of the criminal enterprise called the Democrat Party-—where Dem cronies and collaborators loot the organization, get cushy jobs, bonuses, and the like.
Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the home ownership mania, and spread “charitable” contributions to housing advocates across the congressional map.
Fannie Mae serves as an industrial-sized patronage factory — sharing profits with political allies, spreading taxpayer funds to voting blocs——like ethnic groups-——and doling out jobs to left-wing academics, Washington has-beens and back-scratching buddies. Obama insider Fannie Mae exec Jim Johnson got sweetheart loans from shady subprime Countrywide. Pols raked in six-figure salaries as F/F engaged in Enron-sstyle accounting, plunged into debt and helped usher in the subprime housing meltdown through cockamamie lending practices.
Bill Clinton appointed Franklin Raines, Daley and Rahm Emanuel just as the quasi-governmental F/M engaged in rampant book-cooking so that F/M insider could help themselves to massive bonuses. The Chi/Tribune exposed how Emanuel’s “profitable stint” was low-show w/ no work involved. Emanuel was not even assigned to committees, according to company proxy statements.
Immediately upon joining the board, Emanuel and other insiders qualified for $380,000 in stock and options plus a $20,000 annual fee, public records indicate. W/ Wall Street Emanuel there, accounting tricks were used to mislead shareholders about outsize profits F/M reaped from risky investments. The goal was to cook the books to keep fraudulent earnings on the books, to make Freddie Mac look profitable on paper-——AND to fraudulently obtain humongous annual bonuses for political insiders.
NOTE Franklin Raines was fired from F/M for cooking the books in order to get to get fraudulent bonuses. Yet, he walked away from the job with an exit package of about $100 million (yes, one hudred million) dollars.
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THE BIG F/M FISH THAT GOT AWAY WITH A BUNDLE
The Office of Federal Housing Enterprise Oversight’s report says that F/M CEO Franklin Raines---a Clinton appointee---and other Fannie Mae bigwigs, deliberately and intentionally manipulated financial reports to artificially hit earnings targets in order to trigger multi-million dollar bonuses for senior F/M executives.
Ex-Fannie CEO Franklin Raines should be behind bars for life. He is a crook of the first order. This thief Raines cooked the FM books precipitating losses of $9B (that we know of) for the single purpose of creating bonuses for himself and other F/M insiders. The SEC said Raines broke accounting rules by playing with risky derivatives.
RAINES COOKS THE F/M BOOKS---WALKS AWAY A MULTI-MILLIONAIRE After Raines was fired and exposed as a fraudster for cooking the govt books, Raines walked away w/ $90 million dollars, a $26 million parachute, PLUS..... Raines gets a MONTHLY pension of $116,300 for life. Raines had already collected $4.87 million in "special performance" shares. Raines owns options giving him $5.8 million in net profit after redemptions, plus another $8.7 million in deferred compensation for his six years at the F/M helm. There's more.
Raines keeps $5 million of paid-up life insurance. He and his spouse get free medical and dental benefits for life, worth over $1 million. NOTE: Raines earned $20 million in salary, bonuses and stock awards (that we know of) in one year.
To keep Raines happy within philanthropic circles, Fannie Mae will match Raines' charitable contributions by $10,000 a year.
After he was fired, Raines told the F/M board that he's entitled to get paychecks until June 22 giving him another $600,000, which triggers a $2,000 monthly raise in his lifetime pension. He also said he's entitled to disputed options with a gross value of about $5.6 million.
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GENESIS OF THE F/M BILKING--- CEO Franklin Raines' Letter to Shareholders--excerpted from 2003 Fannie Mae Annual Report
Excerpt ...Ten years ago the typical conforming mortgage required a down payment of 10-20%, and low-down payment mortgages were considered too risky. But then we helped to standardize the 3-5% down payment loan, brought it to global capital markets, and made it available to lenders and communities nationwide. Now low-down payment loans are commonplace. And we just adopted a new variance in our underwriting standards that will make the $500 down payment loan widely available as well...
In 1994, we pledged to provide $1 trillion in capital to ten million underserved families by the end of 2000. Thanks to our housing and industry partners, we met that goal early.
Then in 2000, we launched our American Dream Commitment, a pledge to provide $2 trillion in capital to 18 million underserved families by the year 2010, including $400 billion targeted specifically for minority families (later raised to $700 billion in response to President Bush’s Minority Homeownership Initiative). After four of the strongest years in housing and mortgage finance history, we’ve already surpassed the top-line goals of this commitment. But our work is far from complete.
So in January 2004, we announced our Expanded American Dream Commitment and pledged significant new resources to tackle America’s toughest housing challenges. Our new commitment has three main goals.
First, we will expand access to homeownership for six million first-time home buyers in the next ten years, including 1.8 million minority first-time home buyers.We also will help raise the national minority homeownership rate from 49 percent to 55 percent, with the ultimate goal of closing it entirely.
Second, we will help new and long-term homeowners stay in their homes through a series of initiatives, and commit $15 billion to preserve affordable rental housing and $1.5 billion to support the revitalization of public housing communities.
Third, we will increase the supply of affordable housing and support community development activities in at least 1,000 neighborhoods across the country through our American Communities Fund, and through targeted investments like Low-Income Housing Tax Credits that help finance affordable rental housing.
It is because of initiatives like our Trillion Dollar Commitment and our American Dream Commitment that we have exceeded our HUD affordable housing goals for ten consecutive years. END EXCERP.
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