re: Remember that Cuomo required 50% of the mortgages the GSE's bought be for low and moderate income families.
Mortgages for "low and moderate income families" (whatever that means) are not bad loans. Mostly they are for low or moderately priced property, many places that were redlined.
re: OFHEO CLASSIFIES FANNIE MAE AS SIGNIFICANTLY UNDERCAPITALIZED FOR THIRD QUARTER 2004 WASHINGTON, D.C. — Armando Falcon, Jr., Director of the Office of Federal Housing Enterprise Oversight (OFHEO), safety and soundness regulator for Fannie Mae and Freddie Mac (the Enterprises), has classified Fannie Mae as significantly undercapitalized under OFHEO’s capital standards as of September 30, 2004.1
...
ofheo.gov
Now was FMN really "pretty solid" prior to 2005?
Yes. Funny how you took that out of context and didn't continue with:
"The Securities and Exchange Commission (SEC), based on OFHEO’s September 17, 2004 “Report of Findings to Date,” undertook a review of Fannie Mae’s accounting and on December 15, 2004 directed Fannie Mae to restate accounting treatments for SFAS 133 and SFAS 91 for previously reported financial statements. The disallowed hedging treatments (SFAS 133) result in an estimated $9 billion cumulative reduction in core capital as of September 30, 2004 as disclosed by Fannie Mae. This capital level places Fannie Mae below its minimum capital requirement and results in a classification of significantly undercapitalized. Fannie Mae’s critical capital level remains above the required threshold and Fannie Mae continues to meet its risk-based capital requirement. (See page 2). OFHEO has directed Fannie Mae to provide OFHEO with a capital restoration plan to bring core capital into compliance with the minimum capital requirement plus a targeted surplus of 30 percent over the minimum capital requirement level, as set forth under OFHEO’s Agreement with the Board of September 27, 2004. OFHEO will work with Fannie Mae’s Board on the capital plan and its implementation."
Nice creative cut and paste...
Politicians in Washington CAUSED the crisis. They used FMN/FRE as a tool to achieve political ends.
Actually social ends. Having low and moderate income people owning homes that they can afford is a very good thing. Most of this problem came from moderately well off and well off people buying homes they couldn't afford. And those loans were issued by orignators, not Fanny/Freddy. And they were sold mostly to investment banks.
re: The first lowering of standards was in response to government mandates. Thats a matter of record. Go back to the Village Voice article and read it again. You'll see "required", "mandated", you'll see specific %'s of loans to go to specific classes of borrowers.
Listen, anyone that bought in or prior to 2001 are not the problem... their houses went up in value and down, but they are still mostly above their mortgage balance.
And I know you don't think low income people should be allowed to own even modest homes, but they are probably lower as a percent of the problem mortgages than medium to high income people. |
