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Based on the above, I will vote for Rand if given the opportunity. For the love of God, America is out of money. Why is that so hard for libs to get? It certainly doesn't speak well of their thought processes.
Gotta agree with this.
We are an autonomus currency issuer with 0.2% inflation......we technically can NEVER be out of money...unless of course if the press breaks down. Inflation is obviously an issue but our inflation rate is so infanticimal right now that it doesn't pose a real problem. Further...given international circumstances theres a hell of a lot more evidence to suggest that spending is helping the economy of will reduce deficits in the long run. Countries that have tried the whole "austerity" thing are in the midst of double and triple dip recessoins (see UK).
I'm all for being a deficit hawk and worrying about the budget....just not when the economy is this fragile.
Last edited by wnewberry22; 02-07-2013 at 11:54 AM..
We are an autonomus currency issuer with 0.2% inflation......we technically can NEVER be out of money...unless of course if the press breaks down. Inflation is obviously an issue but our inflation rate is so infanticimal right now that it doesn't pose a real problem. Further...given international circumstances theres a hell of a lot more evidence to suggest that spending is helping the economy of will reduce deficits in the long run. Countries that have tried the whole "austerity" thing are in the midst of double and triple dip recessoins (see UK).
I'm all for being a deficit hawk and worrying about the budget....just not when the economy is this fragile.
Same here. I'm more comfortable with trimming the budget when unemployment is around 3-4%. The government needs to spend money on public sector jobs (not bailouts) when the economy is bad. NEVER cut the budget during a depression or recession, your deficits only get bigger! The government budget is NOT the same and it does NOT work the same as the family budget
Same here. I'm more comfortable with trimming the budget when unemployment is around 3-4%. The government needs to spend money on public sector jobs (not bailouts) when the economy is bad. NEVER cut the budget during a depression or recession, your deficits only get bigger! The government budget is NOT the same and it does NOT work the same as the family budget
Exactly...I hate the whole "family" comparison...it is LITERALLY 100% irrelevant.
Exactly...I hate the whole "family" comparison...it is LITERALLY 100% irrelevant.
This is so elemtary simple I don't understand how the Paulbots cannot see the forest through the trees. When your local economy collapses and when the "job creators" are on capital strike (like they are now), often times the businesses that do remain rely on the public sector workers to stay afloat in addition to the private sector workers that are left.
If you cut the budget and lay off those public sector workers, what happens? Those public sector workers stop paying taxes (yes, don't give me this crap that public sector jobs are not "real jobs" that exclusively take from taxes), and they stop spending money. When they stop spending money, businesses lay off workers, revenues shrink, tax revenues shrink along with it and you have double the amount of people on unemployment and possibly welfare (however nascent that is these days. Ergo, your deficit got bigger even though you cut the budget! Cutting the budget has a double whammy effect
Here is the most important one...submitted for your review:
2. What role did Fannie and Freddie play in inflating the housing bubble of the mid- to late-2000s?
Contrary to conservative talking points, the answer is very little. During the bubble, loan originators backed by Wall Street capital began operating beyond the Fannie and Freddie system that had been working for decades by peddling large quantities of high-risk subprime mortgages with terms and features that drastically increased the chance of default. Many of those loans were predatory products such as hybrid adjustable-rate mortgages with balloon payments that required serial refinancing, or negative amortization, mortgages that increased the unpaid balance over time.
Wall Street firms such as Lehman Brothers and Bear Stearns packaged these high-risk loans into securities, got the credit-rating agencies to bless them, and then passed them along to investors, who were often unaware or misinformed of the underlying risks. It was the poor performance of the loans in these “private-label” securities—those not owned or guaranteed by Fannie and Freddie—that led to the financial meltdown, according to the bipartisan Financial Crisis Inquiry Commission, among other independent researchers.
hmmm a pro fannie/freddie web site blog opinion piece
Rewind the clock to the early 1990s: President Clinton, with the blessing Democrats in Congress, advanced an agenda which they called, The National Homeownership Strategy: Partners in the American Dream. (Do a Web search.) In short, it encouraged mortgage lenders to loosen-up their requirements for those seeking mortgages, thus making home ownership available to those who otherwise wouldn't qualify - in other words, for those who couldn't afford it.
The government, as a result, relaxed requirements for the federal guarantee on those mortgages: lowered income to payment ratio, relaxed income verification, reduced (or eliminated) down payments, etc. Mortgage lenders, as ones who issued those government backed loans, were encouraged - or possibly directed - to follow suit. (I say directed to follow suit because those lenders had to follow government rules if they wanted to continue to be able to issue FHA loans.)
Fast forward to 2000: The National Homeownership Strategy: Partners in the American Dream, is a "..... public-private partnership working to dramatically increase homeownership opportunity in America. Under the directive of President Clinton, the Partnership was formed in 1995 by nearly 60 national organizations that care about homeownership. Today, the Partnership consists of 66 members representing lenders, real estate professionals, home builders, nonprofit housing providers, and federal, state and local governments.
HUD Secretary Andrew Cuomo said: ?The good news as we mark National Homeownership Week is that homeownership in America is at record levels. But the bad news we face is that many of HUD?s homeownership and other programs are under attack by some members of Congress. The success of our homeownership initiatives proves that HUD in combination with local organizations can further our goal of even more homeownership and fulfill our commitment to liberty and equity for all.?
Fannie Mae Seeks to Ease Home Buying
By KEITH BRADSHER
Published: March 10, 1994
The organization that stands behind many of the nation's mortgages is taking broad steps to make home ownership easier for lower-income Americans, particularly recent immigrants and minorities, people involved in the effort said today.
Under the new rules, banks would have more flexibility in lending to people who already owe a considerable amount of money or who cannot afford a down payment equal to 20 percent of the price of a home, the people said. Tuesday Announcement
The change is to be announced on Tuesday by the Federal National Mortgage Association, popularly known as Fannie Mae. Officials at Fannie Mae would not comment on the plan.
President Clinton is tentatively scheduled to attend the announcement. The Administration is urging that loans be more broadly available to poor and lower-middle-income Americans.
Fannie Mae and the much smaller Federal Home Loan Mortgage Corporation, better known as Freddie Mac, are publicly traded enterprises that were created by the Federal Government to help provide more money for mortgages. They have issued or guaranteed securities made up of about $1 trillion worth of mortgages bought from lenders.
Freddie Mac loosened its guidelines for low-income mortgages a few weeks ago. But Deepak Bhargava, the legislative director of the Association of Community Organizations for Reform Now, a New Orleans-based group of affordable housing advocates, said that Freddie Mac's guidelines remained more restrictive than Fannie Mae's.
For most people, buying a house is the major financial decision of a lifetime. The experience can be fraught with anxiety. And for those who have a fear of numbers, those charts, tables, rates and points can seem like a jumbled spool of data. But it is more like a series of push-pull strands. Among the trade-offs are these:
The more stability the buyer wants in the interest rate, the higher the rate is likely to be. In pricing -- that combination of rates and points -- the fewer points the buyer can afford to pay initially, the higher the interest rate will be, because points are, effectively, a prepayment of interest.
Another trade-off is that the higher the down payment, the lower the monthly payment. But a countering trade-off is that the buyer may wish to make a lower down payment and use some of the cash for, perhaps, an emergency reserve.
Mr. Kent received what his lender, GFI Mortgage Bankers, calls its ''no-doc product'' -- as in no documents needed.
''We've created new products for people who have glitches, hairy credit,'' said Abe Eisner, executive vice president of GFI. ''No-doc means all we need is your name, address and Social Security number, depending on your credit history.''
GFI is a barometer for the industry; its subprime lending currently represents about 25 percent of the company's business. Two years ago, it was 10 percent.
who SETS THE MORTGAGE standards??...... the chief of hud, with freddie/fannie LEADING the way....fannie/freddie/hud SET THE STANDARD for mortgages...therefore BY POLICY they were the cause
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
In a move that could help increase home ownership rates, 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, the Clinton Administration has 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.
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.
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
funny they said this in 1999...but nobody listened
hmmm a pro fannie/freddie web site blog opinion piece
Rewind the clock to the early 1990s: President Clinton, with the blessing Democrats in Congress, advanced an agenda which they called, The National Homeownership Strategy: Partners in the American Dream. (Do a Web search.) In short, it encouraged mortgage lenders to loosen-up their requirements for those seeking mortgages, thus making home ownership available to those who otherwise wouldn't qualify - in other words, for those who couldn't afford it.
The government, as a result, relaxed requirements for the federal guarantee on those mortgages: lowered income to payment ratio, relaxed income verification, reduced (or eliminated) down payments, etc. Mortgage lenders, as ones who issued those government backed loans, were encouraged - or possibly directed - to follow suit. (I say directed to follow suit because those lenders had to follow government rules if they wanted to continue to be able to issue FHA loans.)
Fast forward to 2000: The National Homeownership Strategy: Partners in the American Dream, is a "..... public-private partnership working to dramatically increase homeownership opportunity in America. Under the directive of President Clinton, the Partnership was formed in 1995 by nearly 60 national organizations that care about homeownership. Today, the Partnership consists of 66 members representing lenders, real estate professionals, home builders, nonprofit housing providers, and federal, state and local governments.
HUD Secretary Andrew Cuomo said: ?The good news as we mark National Homeownership Week is that homeownership in America is at record levels. But the bad news we face is that many of HUD?s homeownership and other programs are under attack by some members of Congress. The success of our homeownership initiatives proves that HUD in combination with local organizations can further our goal of even more homeownership and fulfill our commitment to liberty and equity for all.?
Fannie Mae Seeks to Ease Home Buying
By KEITH BRADSHER
Published: March 10, 1994
The organization that stands behind many of the nation's mortgages is taking broad steps to make home ownership easier for lower-income Americans, particularly recent immigrants and minorities, people involved in the effort said today.
Under the new rules, banks would have more flexibility in lending to people who already owe a considerable amount of money or who cannot afford a down payment equal to 20 percent of the price of a home, the people said. Tuesday Announcement
The change is to be announced on Tuesday by the Federal National Mortgage Association, popularly known as Fannie Mae. Officials at Fannie Mae would not comment on the plan.
President Clinton is tentatively scheduled to attend the announcement. The Administration is urging that loans be more broadly available to poor and lower-middle-income Americans.
Fannie Mae and the much smaller Federal Home Loan Mortgage Corporation, better known as Freddie Mac, are publicly traded enterprises that were created by the Federal Government to help provide more money for mortgages. They have issued or guaranteed securities made up of about $1 trillion worth of mortgages bought from lenders.
Freddie Mac loosened its guidelines for low-income mortgages a few weeks ago. But Deepak Bhargava, the legislative director of the Association of Community Organizations for Reform Now, a New Orleans-based group of affordable housing advocates, said that Freddie Mac's guidelines remained more restrictive than Fannie Mae's.
For most people, buying a house is the major financial decision of a lifetime. The experience can be fraught with anxiety. And for those who have a fear of numbers, those charts, tables, rates and points can seem like a jumbled spool of data. But it is more like a series of push-pull strands. Among the trade-offs are these:
The more stability the buyer wants in the interest rate, the higher the rate is likely to be. In pricing -- that combination of rates and points -- the fewer points the buyer can afford to pay initially, the higher the interest rate will be, because points are, effectively, a prepayment of interest.
Another trade-off is that the higher the down payment, the lower the monthly payment. But a countering trade-off is that the buyer may wish to make a lower down payment and use some of the cash for, perhaps, an emergency reserve.
Mr. Kent received what his lender, GFI Mortgage Bankers, calls its ''no-doc product'' -- as in no documents needed.
''We've created new products for people who have glitches, hairy credit,'' said Abe Eisner, executive vice president of GFI. ''No-doc means all we need is your name, address and Social Security number, depending on your credit history.''
GFI is a barometer for the industry; its subprime lending currently represents about 25 percent of the company's business. Two years ago, it was 10 percent.
who SETS THE MORTGAGE standards??...... the chief of hud, with freddie/fannie LEADING the way....fannie/freddie/hud SET THE STANDARD for mortgages...therefore BY POLICY they were the cause
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
In a move that could help increase home ownership rates, 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, the Clinton Administration has 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.
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.
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
funny they said this in 1999...but nobody listened
A website blog opinion piece?!?!?
Everything I posted from the Center for American Progress (not a blog) was cited from studies from one the Federal Reserve's Housing Economists Neil Bhutta with the Federal Reserve Bank of St. Louis.
Did affordable housing goals for Fannie and Freddie play any role in the subprime crisis?
No.
In 1992 Congress established the “affordable housing goals,” which were numerical targets for the share of Fannie- and Freddie-backed lending that went to low-income and minority borrowers. For years conservative analysts have falsely pointed to these goals as a catalyst for the housing crisis, claiming they pushed Fannie and Freddie to take on unprecedented levels of risk, creating a bubble and a bust in the subprime housing market that sparked the financial catastrophe.
That’s simply not true. A recent study from the Federal Reserve Bank of St. Louis found that the affordable housing goals had no observable impact on the volume, price, or default rates of subprime loans during the crisis, even after controlling for the loan size, loan type, borrower characteristics, and other factors. Federal Reserve Economist Neil Bhutta reached a similar conclusion in 2009, finding that the affordable housing goals had a negligible effect on Fannie and Freddie lending during the housing bubble.
That shouldn’t come as a surprise. Fannie and Freddie did not securitize any loans that met the industry definition of “subprime,” and the loans in their riskier securities—commonly identified as “subprime-like” or “subprime equivalent”—experienced delinquency rates that mirrored the prime market. The Alt-A loans that drove their losses were typically made to higher-income households and thus did not qualify for the affordable housing goals. While Fannie and Freddie did hold some subprime mortgage-backed securities in their investment portfolios—many of which qualified for the affordable housing goals—these investments lagged behind the rest of the market and made up only a tiny fraction of total subprime lending during the housing bubble.
Everything I posted from the Center for American Progress (not a blog) .
1. the center for american progress...is a FAR LEFTWING nut job site
2. I posted the actual NEWS from the ACTAUL TIME
the NYT (new york times) and the DIRECTORS OF HUD (cuomo and cisneros) even stated GSE and SUBPRIME...back in the 1990's
U.S. Proposes Rules to Help House Buyers
Published: March 05, 2000
The federal government has proposed new rules that would make it easier for low-income house buyers to qualify for mortgage loans, a move intended to help blacks and other minorities buy houses.
The proposed rules from the Department of Housing and Urban Development would require two of the largest housing finance companies in the country, Fannie Mae and Freddie Mac, to increase the percentages of overall loans that they offer to lower-income families from the current standard of 42 percent to 48 percent in 2000 and to 50 percent in 2001.
Fannie Mae and Freddie Mac fall under federal oversight because they receive special exemptions from Congress from all state and local taxes except property taxes and from Securities and Exchange Commission registration requirements.
The requirements for mortgage purchases were last set in 1995. The goals were up for renewal this year, as required by Congress. The housing administration could have lowered the goals or have left them unchanged. After a 60-day public comment period, a final rule is expected in the fall. U.S. Proposes Rules to Help House Buyers - NYTimes.com
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 In addition, 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.''
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.
====================================
Published: October 3, 1999
But it got greater impetus in 1994 when Fannie Mae, the nation's largest purchaser of mortgages from banks and other home-mortgage originators, introduced pilot programs to stimulate the home sales market in New York and Boston. Fannie Mae packages these loans with other mortgages as securities for sale to investors. Creating a market to which mortgage originators can sell their loans encourages them to lend more
There have been 14,000 Partnership home buyers since 1986, and more and more of the newer houses are three-families. Nowadays the loans are normally sold to Fannie Mae, and the underwriting for them follows Fannie Mae's standards.
the CRA/ fannie/ freddie/ HUD/ and the FED(interest rates) had a FULL effect on ALL mortgages
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(subprime).
Giving Credit Where Credit Was Denied
By DENNIS HEVESI
Published: June 8, 1997
calls its ''no-doc product'' -- as in no documents needed.
''We've created new products for people who have glitches, hairy credit,'' said Abe Eisner, executive vice president of GFI. ''No-doc means all we need is your name, address and Social Security number, depending on your credit history.''
GFI is a barometer for the industry; its subprime lending currently represents about 25 percent of the company's business. Two years ago, it was 10 percent.
One measure of the expanding subprime market is the number of loans that have been packaged and sold as asset-backed securities -- meaning that investors buy shares in those resold loans and then reap the returns as the mortgages are paid off.
Even quasi-governmental agencies have primed the subprime pump. The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) have recently developed computerized underwriting systems that allow lenders to speedily and reliably evaluate an applicant's credit-worthiness. The loans rejected by the automated system are, by definition, subprime.
''In the past, if a loan was rejected by Fannie Mae or Freddie Mac, that was it,'' Mr. Hornblass said. ''They weren't touching that business.
''But now both agencies have set up arrangements with lending companies that buy those subprime loans coming through the automated systems. Freddie Mac and Fannie Mae take a fee, the loans get funneled to a lending company that's willing to buy them, package them and then sell the securities to investors.''
The agencies(fannie/freddie) have also, for the first time, become guarantors of subprime loans. In fact, on May 21, Freddie Mac agreed to guarantee the securitization of $227.3 billion in subprime loans originated by the First Union Home Equity Bank.
Several industry analysts point out that the trend toward subprime lending has been a boon to the nation's affordable housing movement. ''There are more subprime opportunities that dovetail well with C.R.A.-required lending,'' said Mr. Gumbinger.
C.R.A. is the Community Reinvestment Act, a law passed by Congress in 1977 to combat red-lining -- the systematic policy of banks to avoid making loans in poor communities. The law requires Federally regulated banks and savings and loans, but not mortgage banks, to ''help meet the credit needs of communities in which they are chartered.'' If one of those lenders applies to Federal regulatory agencies for a merger or a new charter, it must demonstrate that it has originated a sufficient number of loans in low- and moderate-income neighborhoods.
''Spurred by these statutes, many lenders have substantially increased the loans they originate in low- and moderate-income neighborhoods,'' said Michael Schill, director of the Center for Real Estate and Urban Policy at the New York University School of Law. And as a result, Professor Schill said, ''the disparity in loan approval rates between white non-Hispanic applicants and black and Hispanic applicants, while still substantial, has narrowed.''
According to data provided by Douglas Duncan, a senior economist at the Mortgage Bankers Association of America, 19.2 percent of the nation's home loans in 1993 went to minority-group members. By 1995, that share had risen to 22.2 percent.
Across the country, hundreds of lenders -- from major banks to so-called ''mom-and-pop'' operations -- have moved into the affordable housing market, prompted by a network of community development
Sept. 11, 2003(The New York Times)The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
-snip-
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
---------the measure was voted down, with the biggest critics being Dodd and Barney Frank----------
=======================================
btw the financial reform bill of 2009/10........why did the liberals leave their sacred cow fannie/freddie off the reform bill???
1. the center for american progress...is a FAR LEFTWING nut job site
2. I posted the actual NEWS from the ACTAUL TIME
the NYT (new york times) and the DIRECTORS OF HUD (cuomo and cisneros) even stated GSE and SUBPRIME...back in the 1990's
U.S. Proposes Rules to Help House Buyers
Published: March 05, 2000
The federal government has proposed new rules that would make it easier for low-income house buyers to qualify for mortgage loans, a move intended to help blacks and other minorities buy houses.
The proposed rules from the Department of Housing and Urban Development would require two of the largest housing finance companies in the country, Fannie Mae and Freddie Mac, to increase the percentages of overall loans that they offer to lower-income families from the current standard of 42 percent to 48 percent in 2000 and to 50 percent in 2001.
Fannie Mae and Freddie Mac fall under federal oversight because they receive special exemptions from Congress from all state and local taxes except property taxes and from Securities and Exchange Commission registration requirements.
The requirements for mortgage purchases were last set in 1995. The goals were up for renewal this year, as required by Congress. The housing administration could have lowered the goals or have left them unchanged. After a 60-day public comment period, a final rule is expected in the fall. U.S. Proposes Rules to Help House Buyers - NYTimes.com
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 In addition, 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.''
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.
====================================
Published: October 3, 1999
But it got greater impetus in 1994 when Fannie Mae, the nation's largest purchaser of mortgages from banks and other home-mortgage originators, introduced pilot programs to stimulate the home sales market in New York and Boston. Fannie Mae packages these loans with other mortgages as securities for sale to investors. Creating a market to which mortgage originators can sell their loans encourages them to lend more
There have been 14,000 Partnership home buyers since 1986, and more and more of the newer houses are three-families. Nowadays the loans are normally sold to Fannie Mae, and the underwriting for them follows Fannie Mae's standards.
the CRA/ fannie/ freddie/ HUD/ and the FED(interest rates) had a FULL effect on ALL mortgages
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(subprime).
Giving Credit Where Credit Was Denied
By DENNIS HEVESI
Published: June 8, 1997
calls its ''no-doc product'' -- as in no documents needed.
''We've created new products for people who have glitches, hairy credit,'' said Abe Eisner, executive vice president of GFI. ''No-doc means all we need is your name, address and Social Security number, depending on your credit history.''
GFI is a barometer for the industry; its subprime lending currently represents about 25 percent of the company's business. Two years ago, it was 10 percent.
One measure of the expanding subprime market is the number of loans that have been packaged and sold as asset-backed securities -- meaning that investors buy shares in those resold loans and then reap the returns as the mortgages are paid off.
Even quasi-governmental agencies have primed the subprime pump. The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) have recently developed computerized underwriting systems that allow lenders to speedily and reliably evaluate an applicant's credit-worthiness. The loans rejected by the automated system are, by definition, subprime.
''In the past, if a loan was rejected by Fannie Mae or Freddie Mac, that was it,'' Mr. Hornblass said. ''They weren't touching that business.
''But now both agencies have set up arrangements with lending companies that buy those subprime loans coming through the automated systems. Freddie Mac and Fannie Mae take a fee, the loans get funneled to a lending company that's willing to buy them, package them and then sell the securities to investors.''
The agencies(fannie/freddie) have also, for the first time, become guarantors of subprime loans. In fact, on May 21, Freddie Mac agreed to guarantee the securitization of $227.3 billion in subprime loans originated by the First Union Home Equity Bank.
Several industry analysts point out that the trend toward subprime lending has been a boon to the nation's affordable housing movement. ''There are more subprime opportunities that dovetail well with C.R.A.-required lending,'' said Mr. Gumbinger.
C.R.A. is the Community Reinvestment Act, a law passed by Congress in 1977 to combat red-lining -- the systematic policy of banks to avoid making loans in poor communities. The law requires Federally regulated banks and savings and loans, but not mortgage banks, to ''help meet the credit needs of communities in which they are chartered.'' If one of those lenders applies to Federal regulatory agencies for a merger or a new charter, it must demonstrate that it has originated a sufficient number of loans in low- and moderate-income neighborhoods.
''Spurred by these statutes, many lenders have substantially increased the loans they originate in low- and moderate-income neighborhoods,'' said Michael Schill, director of the Center for Real Estate and Urban Policy at the New York University School of Law. And as a result, Professor Schill said, ''the disparity in loan approval rates between white non-Hispanic applicants and black and Hispanic applicants, while still substantial, has narrowed.''
According to data provided by Douglas Duncan, a senior economist at the Mortgage Bankers Association of America, 19.2 percent of the nation's home loans in 1993 went to minority-group members. By 1995, that share had risen to 22.2 percent.
Across the country, hundreds of lenders -- from major banks to so-called ''mom-and-pop'' operations -- have moved into the affordable housing market, prompted by a network of community development
Sept. 11, 2003(The New York Times)The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.
Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.
The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.
The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.
-snip-
Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.
---------the measure was voted down, with the biggest critics being Dodd and Barney Frank----------
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btw the financial reform bill of 2009/10........why did the liberals leave their sacred cow fannie/freddie off the reform bill???
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Whether you agree with the Center for American Progress (which is a legitmate political think tank...not unlike AEI, Cato, or any others) or not is irrelevant. The CAP merely posted information and quotes (in context) from a study NOT CONDUCTED BY THEM. The study with the information I've cited is from an economist with the Federal Reserve Bank of St. Louis.........You've posted some journalism majors take on housing policy.
The sole proponent of your theory (Peter Wallison) on the Financial Services Inquiry Commission (including three GOP members) has had his ideas on the causes of the crisis discredited as bunk and void of real substance other than political pandering by the other members of the FSIC....
We fight wars and have a strong military presence overseas so we don't have to fight wars HERE. Paul seem to think that the world is a happy, benign place where nothing bad ever happens that would affect America's interests in other countries.
Good grief, are you trying to sound like a parody? If so, bravo.
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