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workingclass. Go research which mortgages failed the most. You might be surprised.
uhm..mortgages failed at all levels
the flipper who bought interest only, trying to fix it up and sell high
the poor guy, getting a mortgage he couldnt afford
the middleclass guy getting too big of a house for his pocket
the upperclass guy thinking everything was gravy
the middleclass guy , whos job got outsourced/eliminated
you name it it was all levels
but the rules were chaneg for the POOR and minorities
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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 easier standards 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. Fannie Mae Seeks to Ease Home Buying - NYTimes.com
1997..
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.
============================
Homeowners Record Is Set in Third Quarter - NYTimes.com
Homeowners Record Is Set in Third Quarter
By STEVEN A. HOLMES
Published: November 1, 1997 In 1993, Clinton ordered the two Federally chartered lending companies, Fannie Mae and Freddie Mac, to increase their loans to low- and moderate-income borrowers. In 1995, seeking to save his department from elimination by the newly elected Republican-led Congress, Housing Secretary Henry G. Cisneros adopted a ''national homeownership strategy'' that eased requirements to qualify for Federal Housing Administration-insured loans and reduced closing costs
=================================== Fannie Mae Eases Credit To Aid Mortgage Lending - NYTimes.com
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
WASHINGTON, Sept. 29— 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.
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
''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.''
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.
.S. Proposes Rules to Help House Buyers
Published: March 5, 2000
WASHINGTON, March 3— 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.
The companies would be required over the next 10 years to buy $2.4 trillion in mortgages from banks and other lenders to assist the 28 million American families with low and moderate incomes. Many of those families are minorities, housing officials said.
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.
''This rule will greatly expand the supply of affordable housing across the country,'' said Housing Secretary Andrew M. Cuomo. (((now the Governor of New york)
The companies buy mortgages for homes and apartment buildings from banks, savings and loans and other mortgage lenders, and package and sell the loans to investors. When Freddie Mac and Fannie Mae buy mortgages from lenders, they provide the lenders with cash to issue new mortgages.
----------------------------
if you notice..all links are from the New York Times..and are not a ''look back hindsight view from today of yesterday", but from the actual era
the rule changes were intended to help the poor and the minorities...........nice idea...bad deal
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 loans rejected by the GSEs, because they didn't conform, were being sold to companies that would handle non-conforming loans.
Quote:
...
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.)
HUD Secretary Andrew Cuomo said: " 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."
yep liberals got their wish..equality for all...a bubble that went bust for nearly all
None of the links you posted offered any indication that Investment Banks, like Bear Streans, Lehman Brothers, Merrill Lynch, etc were covered by a government housing mandate.
The Investment banks were not covered by the CRA or the HUD standards. They were securitizing mortgages outside the GSE pipeline. They were not selling loans to the GSEs so they didn't need to conform to any GSE or HUD standard. They were selling the securitized mortgages, that they themselves had securitized, direct to investors, bypassing GSE involvement. By 20005/2006 this non-agency securitization had the majority of the market.
The housing boom that began in the late 1990s and the concomitant rise of “private label mortgage-backed securities” (PLS) shown in Figure 3-1 posed a challenge to the GSEs. This is because the PLS involved non-conforming mortgages (securitized, for instance, by investment banks) that were of lower quality than the mortgages that met the GSEs’ usual underwriting standards or were for amounts that exceeded the GSE conforming loan limit.
why wont the fascist liberals own up to their screwup
Investment banks were not covered by the CRA. They didn't follow the CRA. The non-agency investment banks had the largest share of the market in the 2005/2006 height of the bubble.
When will some take their blinders off that only allow them to see the role of Fannie and Freddie or other government players?
For that we have to look to the government’s distortion of the mortgage finance system through the Community Reinvestment Act and the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac .
In a recent meeting with the Council on Foreign Relations, Barney Frank–the chair of the House Financial Services Committee and a longtime supporter of Fannie and Freddie–admitted that it had been a mistake to force homeownership on people who could not afford it. Renting, he said, would have been preferable. Now he tells us.
Long-term pressure from Frank and his colleagues to expand home ownership connects government housing policies to both the housing bubble and the poor quality of the mortgages on which it is based. In 1992, Congress gave a new affordable housing “mission” to Fannie and Freddie, and authorized the Department of Housing and Urban Development to define its scope through regulations.
Shortly thereafter, Fannie Mae, under Chairman Jim Johnson, made its first “trillion-dollar commitment” to increase financing for affordable housing. What this meant for the quality of the mortgages that Fannie–and later Freddie–would buy has not become clear until now.
On a parallel track was the Community Reinvestment Act. New CRA regulations in 1995 required banks to demonstrate that they were making mortgage loans to underserved communities, which inevitably included borrowers whose credit standing did not qualify them for a conventional mortgage loan.
To meet this new requirement, insured banks–like the GSEs–had to reduce the quality of the mortgages they would make or acquire. As the enforcers of CRA, the regulators themselves were co-opted into this process, approving lending practices that they would otherwise have scorned. The erosion of traditional mortgage standards had begun.
Shortly after these new mandates went into effect, the nation’s homeownership rate–which had remained at about 64% since 1982–began to rise, increasing 3.3% from 64.2% in 1994 to 67.5% in 2000 under President Clinton, and an additional 1.7% during the Bush administration, before declining in 2007 to 67.8%. There is no reasonable explanation for this sudden spurt, other than a major change in the standards for granting a mortgage or a large increase in the amount of low-cost funding available for mortgages. The data suggest that it was both.
As might be expected, the market for subprime and Alt-A loans grew along with the rise in homeownership. Some have argued that unregulated groups such as mortgage brokers and bankers, working with subprime lenders such as Countrywide Financial, supplied both the easier credit and the lower loan standards, but the facts belie this.
From 1995 until 2004, subprime loans by the traditional subprime lenders like Countrywide averaged slightly more than 5% of all mortgages, far too few to account for the growth in either homeownership or the housing bubble. CRA loans, totaling 3% of originations, were also too few. Where, then, did all the low-quality loans come from?
From 1994 to 2003, Fannie and Freddie’s purchases of mortgages, as a percentage of all mortgage originations, increased from 37% to an all-time high of 57%, effectively cornering the conventional conforming market. With leverage ratios that averaged 75-to-1, and funds raised with implicit government backing, the GSEs were pouring money into the housing market. This in itself would have driven the housing bubble.
But it also appears that, perhaps as early as 1993, Fannie Mae began to offer easy financing terms and lowered its loan standards in order to meet congressionally mandated affordable housing goals and fulfill the company’s trillion-dollar commitment. For example, in each of the years 2000 and 2001, the first years for which data are available, 18% of Fannie’s originations–totaling $157 billion–were loans with FICO scores of less than 660 (the federal regulators’ cut-off point for defining subprime loans). There is no equivalent data available for Freddie, but it is likely that its purchases were proportionately the same, amounting to an estimated $120 billion.
why wont the fascist liberals own up to their screwup
Former Dem Congressman Barney Frank admitted it on C-Span.
The Federal Reserve is under no time table to unwind their QE purchases of MBS securities. Some speculate they will just let them mature, thereby unwinding their purchases over a couple of decades.
That simple change switched the loss risk of those $1.5 trillion in compromised GSE MBS from the Fed to the U.S.
taxpayers.
And remember, the GSEs had been buying and bundling more and more higher LTV and compromised credit loans in order to meet the HUD mandates I linked earlier. For example, Fannie Mae had an "affordable lending" program with Countrywide that didn't require a FICO score or any established credit history at all from borrowers. I can post the Fannie Mae/Countrywide document again, if necessary.
You really need to start reading some later documents. The document is from the Jan 2011. Back in the 2010 time frame a lot of things were still up in the air. There were lots of potential dangers. In the last 4 years since has the Federal Reserve incurred losses on their QE purchases?
That simple change switched the loss risk of those $1.5 trillion in compromised GSE MBS from the Fed to the U.S.
taxpayers.
And remember, the GSEs had been buying and bundling more and more higher LTV and compromised credit loans in order to meet the HUD mandates I linked earlier. For example, Fannie Mae had an "affordable lending" program with Countrywide that didn't require a FICO score or any established credit history at all from borrowers. I can post the Fannie Mae/Countrywide document again, if necessary.
Officials have said they will probably never sell mortgage debt outright, and they haven’t decided whether to sell Treasuries. They will allow their portfolio to shrink “in a gradual and predictable manner,” mainly by ceasing reinvestments and allowing the portfolio to run off over time as securities mature, according to a September statement.
“When the FOMC chooses to cease reinvestments, the balance sheet will naturally contract,” Vice Chairman Stanley Fischer said in a March 23 speech in New York. “This runoff of our securities holdings will also gradually remove accommodation, an effect that we will need to take into account in setting the stance of policy.”
The Federal Reserve is under no time table to unwind their QE purchases of MBS securities. Some speculate they will just let them mature, thereby unwinding their purchases over a couple of decades.
Did you see the rule change? The Federal Reserve isn't taking any of the losses on their $1.5 trillion of GSE MBS. The losses are transferred to the U.S. Treasury as a liability, and therefore to the U.S. taxpayers.
The only reason for doing that is because they know there will in fact BE losses.
Did you see the rule change? The Federal Reserve isn't taking any of the losses on their $1.5 trillion of GSE MBS. The losses are transferred to the U.S. Treasury as a liability, and therefore to the U.S. taxpayers.
The only reason for doing that is because they know there will in fact BE losses.
There haven't been losses or liabilities transferred to the Treasury.
The Federal Reserve Board on Friday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $98.7 billion of their estimated 2014 net income to the U.S. Treasury.
...
The Federal Reserve Banks' 2014 estimated net income of $101.5 billion was derived primarily from $115.9 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities).
Since 2010 the payments to the US Treasury from the interest income has exceeded 70 billion a year.
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