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Government failure is to blame for this mess in the housing market. The truth about Fannie and Freddie is right there, in the face of everyone. If we had an honest and objective news media this Fannie and Freddie problem would have been over long ago, and the crooks, like Barney Frank, Chris Dodd, Jamie Gorelick, Franklin Raines and others, would not have taking out millions of our dollars. This country is being stripped of its wealth on a daily basis, the law makers side with the law breakers and guess who’s side this media is on, they side with the law breakers against the American people. They need to be held accountable, they are destroying our country.Morning Bell: Fannie and Freddie Failure Forever
Morning Bell: Fannie and Freddie Failure Forever | The Foundry: Conservative Policy News.
By Conn Carroll
Yesterday, Sen. Chris Dodd (D-CT) told reporters about his financial regulation bill, “We’ve ended the ‘too big to fail’ debate. So no longer do I expect any argument to be made that this bill exposes the American taxpayer.” Really. Someone might want to tell Sen. Dodd that in other news yesterday, Freddie Mac announced that it lost another $6.7 billion in the first quarter of 2010 and therefore needed another $10.6 billion in cash from U.S. taxpayers. Since formally nationalizing Freddie in 2008, the federal government has already spent $50.7 billion bringing the Freddie bailout total to $61.3 billion so far. Combined with Fannie Mae’s raid on the Treasury, the Congressional Budget Office estimates that the American people will spend $389 billion bailing out the two Government Sponsored Entities by 2019. So much for American taxpayers no longer being exposed to “too big to fail.”
The main problem, IMHO, is the blatant over-estimation of the own capacities by free market ideologues. The ideology of supply side economy and power of unleashed markets, with the hilariously bold claim that what's good for the market is good for the general population by default, that became en vogue in the second half of the 70s, flowered in the 80s and dominated the mainstream in the 90s and first half of the 00's found many supporters in politics and it was deregulated, privatized and flexibilized for the sake of it, without ever considering the risks.
Fannie and Freddie are ONLY an problem because they cater to lower income people of the US and they are the first to get hit by a recession and hence unable to replay their loans. But like it or not, Fannie and Freddie did not start the crisis, that was the private sector and their greed and the total lack of regulation.
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.
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. ''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. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
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. 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 contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
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.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
Fannie and Freddie are ONLY an problem because they cater to lower income people of the US and they are the first to get hit by a recession and hence unable to replay their loans. But like it or not, Fannie and Freddie did not start the crisis, that was the private sector and their greed and the total lack of regulation.
In the end you stand between a choice. Do you want American's to own their own houses or not? If not, then fine get rid of Fannie and Freddie and let 50+% of the American population rent their housingbecause they aint gonna get any loans to buy one.
In the end you stand between a choice. Do you want American's to own their own houses or not? If not, then fine get rid of Fannie and Freddie and let 50+% of the American population rent their housing because they aint gonna get any loans to buy one.
I don't want anyone to own homes if they are not capable and responsible enough to do so. It obviously has put all of us at risk.
I'm not excusing the banks and lenders, but if you really look closely at the relationship between our government and the banks, it's easy to see why financial corporations thought they could get away with it, and felt fairly assured that our government would bail them out. It was never a formal agreement, but implied. The banks got what they wanted, congress got what it wanted, on both sides of the aisle. We taxpayers are picking up the tab for both.
Fannie and Freddie are ONLY an problem because they cater to lower income people of the US and they are the first to get hit by a recession and hence unable to replay their loans. But like it or not, Fannie and Freddie did not start the crisis, that was the private sector and their greed and the total lack of regulation.
In the end you stand between a choice. Do you want American's to own their own houses or not? If not, then fine get rid of Fannie and Freddie and let 50+% of the American population rent their housing because they aint gonna get any loans to buy one.
The only thing too big to fail is the United States. Along with eliminating “Too big to fail”, we need to add, “Too unethical and too arrogant to serve” as it relates to Sen. Dodd and his lack of ethics to serve in the Senate.
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Watched Chris Wallace interviewing Axelrod today. When asked about F&F not being included in the reform bill he had some lame excuse about it being to complicated or some such garbage. He then said they are looking into reforming F&F in a seperate reform bill. Anyone buying that?
Government failure is to blame for this mess in the housing market. The truth about Fannie and Freddie is right there, in the face of everyone. If we had an honest and objective news media this Fannie and Freddie problem would have been over long ago, and the crooks, like Barney Frank, Chris Dodd, Jamie Gorelick, Franklin Raines and others, would not have taking out millions of our dollars. This country is being stripped of its wealth on a daily basis, the law makers side with the law breakers and guess who’s side this media is on, they side with the law breakers against the American people. They need to be held accountable, they are destroying our country.
There is little doubt in most people’s minds that Freddy and fanny had a pivotal role in the recent meltdown. Government is responsible for the housing loans failures of Fannie and Freddie. It is also true that not everyone should own their home when there is no way they will be able to pay for it. The believe that “every American deserves to own a house “, is unreasonable. This idea pushed by the Clinton administration to get Freddie Mac to stand behind mortgages given to low-income homebuyers who did not show an ability to make the mortgage payments was unsustainable, destine to fail.
the bush administration pursued the same policies.....do you remember when bush touted home ownership at the highest levels ever? that said, did you know that everyone is walking away from their homes, rich and poor?
the crisis was precipitated by more than just "bad loans".......else it would have begun as soon as those bad loans were made. we also had a decade of growing income disparity, on which only a small percentage of workers saw their income rise.
EGZAKLY!! "Every American deserves to own a house" is ridiculous. Every American who can AFFORD to own a home ought to be able to buy one. That should be the mantra.
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