Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
You can copy and paste all you want, but you're still not getting it.
Facts, schmacts... right?
Fannie Mae was WARNED about the very high default rate of high LTV loans, even in their own experience, and implemented the program anyway to meet their Clinton-era HUD mandate that 50% of all the loans the GSEs bought had to be made to low-income, credit-tarnished, and/or redlined area buyers. And guess which loans defaulted the most.
Fannie Mae was WARNED about the very high default rate of high LTV loans, even in their own experience, and implemented the program anyway to meet their Clinton-era HUD mandate that 50% of all the loans the GSEs bought had to be made to low-income, credit-tarnished, and/or redlined area buyers. And guess which loans defaulted the most.
Agreed. And that's the biggest joke of all. Why do we have to be warned when standards are lowered, efficiency suffers?
Fannie Mae was WARNED about the very high default rate of high LTV loans, even in their own experience, and implemented the program anyway to meet their Clinton-era HUD mandate that 50% of all the loans the GSEs bought had to be made to low-income, credit-tarnished, and/or redlined area buyers. And guess which loans defaulted the most.
But the worst happened under bush jr, not under Clinton.
More loans were made under Bush than Clinton, you brought that up.
No, I didn't. I said more loans were made under Clinton because that's when home ownership grew the most. That's when the GSEs implemented the high LTV loans (mid 1990s).
Quote:
''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.
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."
Reduced down payment requirement - check
Buying loans made to people with less-than-stellar credit ratings to "spur banks into making more of those loans" - check
There's the origination of the mortgage meltdown, right there.
How do you not get that if the largest funding sources for mortgages hadn't done those two things, the housing bubble, burst, mortgage meltdown, and subsequent financial crisis wouldn't have ensued?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
