posted
Possibly started under the CLINTON administration.
NYT Revealed True Cause of Fannie Mae Crisis -- In 1999!
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.
"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."
posted
Yes, this "homeownership" initiative started under Clinton but was REALLY pushed by Bush. Bush was trying to compete with Clinton's "20 million new jobs" by creating millions of new homeowners, especially among the poor and minorities. Unfortunately, these people were not creditworthy, which is why they weren't already homeowners. This little experiment in social engineering and political correctness was a total failure and has resulted in the mess we're in today.
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posted
I remember reading something about how Bush championed all the new homes for a certain demographic and tried to link it as prosperity brought about by himself.
Now look!
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so.
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easing the credit per se was not, is not, the big problem. It's the adjustable rate, numero uno, and then the lil "tricks" the lenders can pull. For example, it may be no problem for a family (especially a two-salary family) to make an $800/month payment...but probably $1,400/month is too much. Haven't you read about some of the lenders using every trick in the book to push those loans?
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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quote:Originally posted by T e x: Haven't you read about some of the lenders using every trick in the book to push those loans?
Those are the real culprits and doesn't matter if the lenders were Dem or Rep... it wasn't a Dem or Rep created crisis per say... the lenders did the fraudulent applications and such regardless of party affiliation but Bush with his other policies contributed to the crisis...
Btw why does the title say "Sallie" Mae the student loan company and not "Fannie" Mae?
-------------------- Let the world change you... And you can change the world.
easing the credit per se was not, is not, the big problem. It's the adjustable rate, numero uno, and then the lil "tricks" the lenders can pull. For example, it may be no problem for a family (especially a two-salary family) to make an $800/month payment...but probably $1,400/month is too much. Haven't you read about some of the lenders using every trick in the book to push those loans?
Absolutely correct Tex.
What the act was crafted to do was to allow low and moderate income individuals to have a chance to buy homes. There was no directive stating that the rules should be bent or that applications should be doctored to put them in homes they could not afford. It was the industry that decide to use the creative and deceptive financing angle.
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quote:There was no directive stating that the rules should be bent or that applications should be doctored to put them in homes they could not afford. It was the industry that decide to use the creative and deceptive financing angle.
While it MAY be true that there was no WRITTEN directive from Bush to Freddie or Fannie, the Bush administration CLEARLY pressured Freddie and Fannie to buy lower quality loans. Freddie and Fannie dictate the terms of the loans they will buy, thereby effectively regulating the loan terms that banks can use (assuming that they're selling their loans on the secondary market). So, effectively, the Bush administration is DIRECTLY responsible for this crisis.
quote:easing the credit per se was not, is not, the big problem. It's the adjustable rate, numero uno, and then the lil "tricks" the lenders can pull. For example, it may be no problem for a family (especially a two-salary family) to make an $800/month payment...but probably $1,400/month is too much.
Easing the credit (lending standards) IS exactly the problem. At all levels of income, the lending standards were lowered, allowing people that should never have gotten a loan to be financed and allowing others to borrow more than they could handle. Of course, the idiots that borrowed the money are equally responsible.
With proper lending standards, people can't borrow more than they should be able to afford. Some families can afford an $800 per month payment and some families can afford a $5,000 per month payment. Proper lending standards would allow for either.
This homeownership initiative was nothing more than an experiment in social engineering and proved that many people are not responsible enough to own a house.
posted
quote: "This homeownership initiative was nothing more than an experiment in social engineering and proved that many people are not responsible enough to own a house.
Right the lenders that fudged the loan applications in order to qualify people and that told people not to worry about the ARM's because they would be able to refinance their mortgages prior to them kicking in were not responsible for creating this mess.
There's enough blame from top to bottom here.
IMO. it's crazy to say let the banks fail and the market crash. If banks fail who do you think has to make good on the deposits? FDIC. Where does FDIC get it's money from? This whole mess is not just affecting us in the U.S. but the whole world.
There are a lot of simplistic answers here for a very complex situation.
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He truly and honestly believed the free market hype he was weaned on and taught to pay homage to all his ignorant life and HE REALLY DEVOUTLY BELIEVED that the market is never wrong and always will correct itself.
Like Ann said, "Pooooooorrr George ..... he was born with a silver spoon in his mouth".
She should have gone on to point out that Poor George is as dumb as a fence post and thinks everyone comes into this world with their toothless mouthes similarly adorned with a God given pure silver gnawing tool to ward off the itch and pain of growing up enough to assume the presidency of the United States, which God kept in waiting for them, provided they remain absolutely faithful to free market ideals and those sponsored by Pat Robertson, Ted Haggard, Rush Limbough, and Rupert Mudcock.
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posted
So shouldnt these lending firms be criminally charged then if they willingly misled home buyers for the sole purpose of just getting more commission in their pocket? Or do they get off the hook as well?
-------------------- It isn't so much that liberals are ignorant. It's just that they know so many things that aren't so.
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"There are a lot of simplistic answers here for a very complex situation"
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What a mess and it goes way beyond the financial sector.
Bad loans and bad ceo's are in the spot light now but there are a lot more fires to put out than this one, before we have a real recovery.
I just keep thinking of the income that is so unfairly distributed in these large companies and not just the ones in the spot light.
If there was a better distribution of money in companies they would not have had to done these loans, there would be a lot more people that could have and would have qualified for loans, i am not saying these guys were right just looking at one major problem that's still going to exist.
I just like seeing the average young person and their family being able to own a home.
We are seeing some prices drop, but more and more people are out of work so that is even worst. I still do not think that prices will drop enough in the areas where the majority of jobs are as to let a lot more indivuals qualify for a home with incomes the way they are.
Like you say it goes way beyond this and is not simple even in just the financial sector.
We are seeing a lot of ticked off people and for good reason, but we better get this right in a long run.
Most people do not even know anyone they can ask about what the depression was like to get a real view, the only way they can get an idea is by reading books etc.
I do not think we will see another depression but i still worry for families and even more so for their kids.
There are a lot more people now and a lot less farms, if we have another depression it will be much worst than the last one, if that is even possible.
Lets hope that our Congressmen and Senators get this one right in the long run and just don't stop at puting out the immediate fire.
I guess the what shoulda been dones do not make much difference now unless some good comes out of this whole mess for the long run not just the quick fix.
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quote:Originally posted by CashCowMoo: So shouldnt these lending firms be criminally charged then if they willingly misled home buyers for the sole purpose of just getting more commission in their pocket? Or do they get off the hook as well?
it's difficult to prove that someone was misled..
signed contracts can only be "canceled" by the Federal courts.. that's what bankruptcy is, a canceling of contracts..
there have already been alot of proseciutions of people getting mortgages on houses that were not even owned by the so-called seller.. that's how bad the situation was..
people were selling other peoples houses and pocketing the money.. that shows how little research was being done by lenders..
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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quote:Originally posted by CashCowMoo: So shouldnt these lending firms be criminally charged then if they willingly misled home buyers for the sole purpose of just getting more commission in their pocket? Or do they get off the hook as well?
There have been some mortgage brokers and such prosected for fudging applications. In alot of cases without the applicant knowing it was being done.
-------------------- Let the world change you... And you can change the world.
posted
Another thing that has been going on for some time now is Foreclosure Relief Scams. People that may have had a chance to save their homes were taken in by these scams. The people perpetrating this scams borrowed more money on the properties usually maxing them out.
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