Prediciton From 1999...
Fannie Mae Eases Credit To Aid Mortgage Lending
"Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements. 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."
Franklin D. Raines
Fannie Mae's chairman and CEO in 1999
By STEVEN A. HOLMES
Published: 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.
Read more @ NY Times.
1 comment:
Sunny,
Here’s another relevant quote, from a 2003 New York Times article:
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
This crisis is truly a bipartisan affair, which impugns the leadership and judgment of politicians on both sides of the aisle. Perhaps that is why they all banded together to “rescue” us from it by committing us to paying upwards of $1 Trillion to bail out failing banks and financial institutions. Wall Street has showed its contempt for the effort this week, dropping over 1800 points since Congress and the President acted so imprudently.
This Bush administration big-government plan, which Congress approved and which as put the US in the mortgage and banking business, is the most recent example of why many conservatives think the Republicans need to be sent into the political wilderness for awhile. The leadership of the GOP has lost its bearings, and needs to reconstitute and rededicate itself to the small-government principles that put it in power in the first place.
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