Saturday, September 27, 2008

PLEASE SEND THIS TO YOUR FRIENDS..THIS, written in 1999, tells us why we're in today's mess. Think CLINTON


I don't usually enlarge the DATE of an article, but you'll see why I have after you've read this. When you hear pundits and politicians talk about how the “free market” system has failed us, please keep this article in mind. Ya, the ECONOMY is that VASE, Clinton is the KITTY. (no offense to kitties)


Fannie Mae Eases Credit To Aid Mortgage Lending
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.

''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.'' (Z: Ya, THAT Franklin Raines who Obama now denies is his economic advisor regardless of the facts)

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.
Z: Just curious. Is everybody SUPPOSED to have a home? I waited till I could really afford a home and finally bought one.......can there BE a homeowner utopia that works other than in N Korea? And think of all the poor people who were sold a bill of goods about the American Dream. The American Dream is there, but you have to work hard and merit it, or rent your home and, SOMEHOW (is that so bad?) have a full and happy life. Right?
z

15 comments:

Anonymous said...

Thanks a lot, Bill. I wonder what other time bombs he left us, besides this and terrorism.

Kris said...

right on z....i have a post in creation that speaks of the same thing
kw

Z said...

Isn't this AMAZING?

Next time a lib friend moans about our conservative FREE MARKET PITFALLS, remind them of THIS.

Send it out, folks....It's one of the most important articles I'VE read in a while.

thanks.

Anonymous said...

Dem laws need a changin' Les makun bettah!

1. No animal shall sleep in a bed with sheets.
2. No animal shall drink alcohol to excess.
3. Four legs good, two legs better!
4. No animal shall kill another animal without cause.
5. All animals are equal, but some animals are more equal than others.

Anonymous said...

Yep, once the heavy hand of the government get's involved in the "free market" the word "free" is an illusion.

Isn't that the definition of fascism, i.e., "private economic enterprise under centralized governmental control"?

Pris

Anonymous said...

When looking for causes, it is always good to look for the obvious, simple ones, and not the complex ones. This is a good example for that.

When thinking about this, something else comes to mind, also connected to the confused liberal thinking: When Liberals detect a cause, they take swift action, without thinking about the long term consequences. And those are the ones biting us all in the b....

1. Giving houses to the poor poor people who cannot really afford it, as described in this article.

2. Reacting to "climate change" (did you notice that nobody talks anymore about Global Warming??) by enticing the use of ethanol is another one. It actually creates more CO2 than it avoids, and is a large contributor to shortage of food, among many other things.

3. Nuclear energy: Obama is not the only one trying to get away from that. The liberal and communist idiots in Germany had the Schroeser Government committed to actually stop all nuclear power plants over time (that is well on its way). Well, the result is that there will be a very serious shortage of electrical energy in Germany in the coming years - a gap which cannot be filled by wind mills (those are actually pretty bad, since they don't deliver continuous energy, and one has to have reserve capacity). But I degress.

Bottom line: Every time the Liberals start one of their programs, there are consequences they didn't think of, and if they did, the solution would be "we will take the money from the rich and solve the problem".

We cannot afford Socialism/Marxism in this country - Obama would just bring more of the above.

Mr.Z

Papa Frank said...

This is what I've been trying to explain to the liberals at work. Glad to have an actual article outlining it. Thanks Z.

Anonymous said...

It is the manipulation of racial politics by Marxists, pure and simple. Does the product of foreclosure reinforce traditional values in the minds of affected minorities, or does it simply convince them that Jeremiah Wright was correct all along ... America is a racist society.

Liberalism = good for no one, with the possible exception of socialist politicians.

helen said...

As much as I believe in the Republicans I am troubled with putting all the blame on Clinton. The current administration had nearly 8 years to find ways to circumvent this hemorrhaging. These same issues existed in the 1980's. It seems to me that both parties took their eye off the ball. Thanks.

Always On Watch said...

Check out this video.

Anonymous said...

Bon soir Madame Z. Ol' Slick Willie could never stop campaingning the whole time he was in the White House and talking about himself,'' buildning bridges'' of hope and this and that. ''Hope''. Wow. Where do you suppose Obama got that ''hope'' stuff from? Hmmm. And while Bill was doing lots of other things we later found out about later , we had a paper-economy , Afganistan had been turned into an al-Qeada truckstop , Americans were being killed around the world and bin Laden was planning 9/11. And to think I voted for this shmuck. Remember I told you I was once a liberal? This man is a moral idiot a reprobate and an utterly abject speciemn of a human being. Johnnymac.

Ottavio (Otto) Marasco said...

Came across this piece faily early...am glad you have posted about it here...Good work z...

Anonymous said...

I do agree with Helen; there is plenty of blame to go around. But the fact is, since 2003 Bush has admonished Congress to act, and they have refused to do so. Democrats have accomplished not a single thing for America since they took control of Congress in 2006.

Today, Pelosi called House Republicans "unpatriotic" because they opposed Democratic add ons ... such as $20 billion for ACORN, which in my view is a criminal organization. Of course, Democrats love ACORN because they provide thousands of registered democrats, and many of those fraudulent voters.

We should therefore ask, "Are Democrats in Congress acting on OUR behalf, or their own?"

We all know the answer. I think the GOP is acting on principle, and responsibly. I get angrier and angrier by the minute just thinking about Congressional incompetence. I think it's Miller Time.

Semper Fi

Anonymous said...

Sorry, Z, but I think it does a terrible injustice to that adorable kitten to compare it with Bill Klintoon.

XXXXX,

FT

heidianne jackson said...

good post, z. i've been trying to get this word out for months and months!!