Quote:
Originally Posted by WilliamSmyth
Where was the easy money coming from at the height of the bubble?
- THE FINANCIAL CRISIS AND THE ROLE OF FEDERAL REGULATORS
But subprime mortgages, pooled and sold as securities,
became subject to explosive demand from investors around the
world. These mortgage-backed securities, being subprime, were
originally offered at what appeared to be exceptionally high
risk-adjusted market interest rates. But with the U.S. home
prices still rising, delinquency and foreclosure rates were
deceptively modest. Losses were minimal. To the most
sophisticated investors in the world, they were wrongly viewed
as a steal.
The consequent surge in global demand for U.S. subprime
securities by banks, hedge and pension funds, supported by
unrealistically positive rating designations by credit
agencies, was, in my judgment, the core of the problem. Demand
became so aggressive that too many securitizers and lenders
believed they were able to create and sell mortgage-backed
securities so quickly, that they never put their shareholders'
capital at risk, and, hence, did not have the incentive to
evaluate the credit quality of what they were selling.
Pressures on lenders to supply more paper collapsed
subprime underwriting standards from 2005 forward. Uncritical
acceptance of credit ratings by purchasers of these toxic
assets has led to huge losses. |
oh please.. greenspud??? he was part of it too
The New York Times
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published:
Thursday, September 30, 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.
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.
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.
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 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 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.
Fannie Mae Eases Credit To Aid Mortgage Lending - NYTimes.com
.................................................. ...
NOTICE THE DATE of the NYT article[b].........30 Sep 1999
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and this is where it starts
http://www.nytimes.com/1994/03/10/bu...me-buying.html
Fannie Mae Seeks to Ease Home Buying
By KEITH BRADSHER,
Published: March 10, 1994
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
In addition to changing its guidelines, Fannie Mae plans a national educational campaign that will seek to teach recent immigrants and minorities how to obtain mortgages. The campaign will be aimed particularly at immigrants in a dozen "gateway" cities where the percentage of home ownership has been declining.
Mortgage experts have estimated that up to two million American households are excluded from buying homes now because of conservative mortgage lending standards. These include Americans with minor blemishes on their credit records, for such things as changing jobs repeatedly or failing to pay utility bills on time. Most mortgage experts assume that even people who fall behind on other bills will struggle to make mortgage payments lest they lose their homes.
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.
Next week's changes in Fannie Mae's guidelines will probably widen the gap between the two institutions' policies, Mr. Bhargava said. Freddie Mac officials did not return phone calls made to their homes and office this evening.
Fannie Mae Seeks to Ease Home Buying
By KEITH BRADSHER,
Published: March 10, 1994
WASHINGTON, March 9— 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
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.
In addition to changing its guidelines,
Fannie Mae plans a national educational campaign that will seek to teach recent immigrants and minorities how to obtain mortgages. The campaign will be aimed particularly at immigrants in a dozen "gateway" cities where the percentage of home ownership has been declining.
"Mortgage-lending criteria have been very conservative, and we have a lot of people who should be creditworthy and have been cut out," said Thomas H. Stanton, a former Fannie Mae lawyer.
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.
Mortgage experts have estimated that up to two million American households are excluded from buying homes now because of conservative mortgage lending standards. These include Americans with minor blemishes on their credit records, for such things as changing jobs repeatedly or failing to pay utility bills on time. Most mortgage experts assume that even people who fall behind on other bills will struggle to make mortgage payments lest they lose their homes.
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.
Next week's changes in Fannie Mae's guidelines will probably widen the gap between the two institutions' policies, Mr. Bhargava said. Freddie Mac officials did not return phone calls made to their homes and office this evening.
In its proposal, the Fed staff said raising the threshold would increase the availability of credit and ease the regulatory burden on banks without endangering the safety and soundness of the banking industry.
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so you still want to spin the 2002-2006 garbage,....... huh
In its proposal, the Fed staff said raising the threshold would increase the availability of credit and ease the regulatory burden on banks without endangering the safety and soundness of the banking industry.
----------------------------------
so you still want to spin the 2002-2006 and only from private lenders garbage,....... huh
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