Regarding CRA, Sub-Prime Loans, Carter, Clinton and GWB and the Democratic House and Senate over the years.....
This will probably get lost in the noise…..but still…..This mess happened a long time before GWB came on the scene….Think Carter and 1974-78…..CRA !!!!!! And Banks being FORCED to give sub-prime loans to people who couldn’t afford to pay back the loan…..
georgewbush-whitehouse.archives.gov
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Time: Business: Feud over Fannie Mae
Monday, Feb 27, 1978
time.com
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In 1999, Fannie Mae came under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the CRA of 1977.[17] Because of the increased ratio requirements, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers at interest rates higher than conventional loans. Shareholders also pressured Fannie Mae to maintain its record profits.[17]
en.wikipedia.org
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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.
• Bad Credit Home LoansFree Quotes and No Upfront Costs Apply Online Today For More Info www.ParamountEquity.com
''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.
nytimes.com
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Miraculous Financial Engineering or Toxic Finance? The Genesis of the U.S. Subprime Mortgage Loans Crisis and its Consequences on the Global Financial Markets and Real Economy
Ivo Pezzuto
Swiss Management Center
October 7, 2008
papers.ssrn.com
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[KLP Note: These links from above Wiki Link:]
References
1. ^ a b Fannie Mae (FNMA) annual SEC income statement filing via Wikinvest
2. ^ a b Fannie Mae (FNMA) annual SEC balance sheet filing via Wikinvest
3. ^ Pickert, Kate (2008-07-14). "A Brief History of Fannie Mae and Freddie Mac". Time. time.com.
4. ^ "About Fannie Mae". Fendral National Mortgage Association. 2008-10-07. fanniemae.com. Retrieved 2008-10-28.
5. ^ Fabozzi, Frank J.; Modigliani, Franco (1992), Mortgage and Mortgage-backed Securities Markets, Harvard Business School Press, p. 2, ISBN 0-87584-322-0
6. ^ a b c 2006 Annual Report, Fannie Mae.
7. ^ [1] Alford, Rob. "What Are the Origins of Freddie Mac and Fannie Mae?"
8. ^ Fabozzi, Frank J.; Modigliani, Franco (1992), Mortgage and Mortgage-backed Securities Markets, Harvard Business School Press, pp. 19–20, ISBN 0-87584-322-0
9. ^ [2] Alford, Rob: "What Are the Origins of Freddie Mac and Fannie Mae?"
10. ^ According to Fannie Mae's timeline, the corporation continues to operate under the charter, with subsequent amendments to the charter, notably a 1968 amendment which allowed Fannie to issue mortgage-backed securities. See 12 USC 1716-1723
11. ^ Krishna Guha, Saskia Scholtes, James Politi: Saviours of the suburbs, Financial Times, June 4, 2008, page 13
12. ^ a b Fabozzi, Frank J.; Modigliani, Franco (1992), Mortgage and Mortgage-backed Securities Markets, Harvard Business School Press, p. 20, ISBN 0-87584-322-0
13. ^ Fabozzi, Frank J.; Modigliani, Franco (1992), Mortgage and Mortgage-backed Securities Markets, Harvard Business School Press, p. 23, ISBN 0-87584-322-0
14. ^ a b Fabozzi, Frank J.; Modigliani, Franco (1992), Mortgage and Mortgage-backed Securities Markets, Harvard Business School Press, p. 21, ISBN 0-87584-322-0
15. ^ law.cornell.edu
16. ^ law.cornell.edu
17. ^ a b Holmes, Steven A. (September 30, 1999). "Fannie Mae Eases Credit To Aid Mortgage Lending". New York Times. nytimes.com.
18. ^ Holmes, Steven A. (September 30, 1999). "Fannie Mae Eases Credit To Aid Mortgage Lending". The New York Times (The New York Times Company). query.nytimes.com. Retrieved 2008-10-16.
19. ^ Berenson, Alex (August 7, 2003). "Fannie Mae's Loss Risk Is Larger, Computer Models Show". The New York Times. query.nytimes.com.
20. ^ The Black Swan: Quotes & Warnings that the Imbeciles Chose to Ignore
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22. ^ [America’s Financial Apocalypse: How to Profit from the Next Great Depression. 2006. ISBN 978-0-9755776-5-3]
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24. ^ Leonnig, Carol D. (June 10, 2008). "How HUD Mortgage Policy Fed The Crisis". Washington Post. washingtonpost.com.
25. ^ Mudd, Daniel (April 17, 2007). "Opening Statement as Submitted to the U.S. House Committee on Financial Services". Fannie Mae. fanniemae.com.
26. ^ Gill, Kathy (September 18, 2008). "Republican Congress Talked About Financial Reform, But Did Nothing". About.com. uspolitics.about.com.
27. ^ "S. 190 Introductory Remarks", Sen. Chuck Hagel, 2005-01-26
28. ^ "S. 190: Federal Housing Enterprise Regulatory Reform Act of 2005". 109th Congress. GovTrack.us. 2005-07-28. govtrack.us. Retrieved 2009-04-17.
29. ^ "S. 190 Cosponsor Record". Congressional Record - 109th Congress. Library of Congress. 2006-05-25. thomas.loc.gov@@@P. Retrieved 2009-04-17.
30. ^ "S. 190 Cosponsorship Statement", Sen. John McCain, 2006-05-25
31. ^ "Statement of Administration Policy Opposed to H.R. 1461", (PDF), President George W. Bush, OMB - the White House, 2005-10-26
32. ^ "H.R. 1461: Federal Housing Finance Reform Act of 2005". 109th Congress. GovTrack.us. 2005-10-31. govtrack.us. Retrieved 2009-04-17.
33. ^ a b c d A. J. Levitin, S. M. Wachter “Explaining the Housing Bubble”, online at ssrn.com
34. ^ Davidson, Paul (2010-10-22). "Fannie, Freddie bailout to cost taxpayers $154 billion". USA Today. usatoday.com.
35. ^ a b Duhigg, Charles, "Loan-Agency Woes Swell From a Trickle to a Torrent", The New York Times, Friday, July 11, 2008
36. ^ Michael M. Grynbaum: Woes at Loan Agencies and Oil-Price Spike Roil Markets, New York Times, July 12, 2008
37. ^ Paulson stands by Fannie and Freddie Statement by Secretary Henry M. Paulson, Jr. on Fannie Mae and Freddie Mac, 2008-07-11
38. ^ On the Brink, Henry Paulson
39. ^ a b On the Brink, Henry Paulson
40. ^ a b c Lockhart, James B., III (2008-09-07). "Statement of FHFA Director James B. Lockhart". Federal Housing Finance Agency. ofheo.gov. Retrieved 2008-09-07.
41. ^ a b c "Fact Sheet: Questions and Answers on Conservatorship" (PDF). Federal Housing Finance Agency. 2008-09-07. ofheo.gov. Retrieved 2008-09-07.[dead link]
42. ^ a b Goldfarb, Zachary A.; David Cho and Binyamin Appelbaum (2008-09-07). "Treasury to Rescue Fannie and Freddie: Regulators Seek to Keep Firms' Troubles From Setting Off Wave of Bank Failures". Washington Post: pp. A01. washingtonpost.com. Retrieved 2008-09-07.
43. ^ a b Hilzenrath, David S.; Zachary A. Goldfarb (2008-09-05). "Fannie Mae, Freddie Mac to be Put Under Federal Control, Sources Say". Washington Post. washingtonpost.com. Retrieved 2008-09-05.
44. ^ a b Labaton, Stephen; Andres Ross Sorkin (2008-09-05). "U.S. Rescue Seen at Hand for 2 Mortgage Giants". New York Times. nytimes.com. Retrieved 2008-09-05.
45. ^ a b Hilzenrath,, David S.; Neil Irwin, and Zachary A. Goldfarb (2008-09-06). "U.S. Nears Rescue Plan For Fannie And Freddie Deal Said to Involve Change of Leadership, Infusions of Capital". Washington Post: pp. A1. washingtonpost.com. Retrieved 2008-09-06.
46. ^ Paulson, Henry M., Jr.; (Press release statement) (2008-09-07). "Statement by Secretary Henry M. Paulson, Jr. on Treasury and Federal Housing Finance Agency Action to Protect Financial Markets and Taxpayers". United States Department of the Treasury. treas.gov. Retrieved 2008-09-07.
47. ^ Herszenhorn, David (2008-07-27). "Congress Sends Housing Relief Bill to President". New York Times. nytimes.com. Retrieved 2008-09-06.
48. ^ Herszenhorn, David M. (2008-07-31). "Bush Signs Sweeping Housing Bill". New York Times. nytimes.com. Retrieved 2008-09-06.
49. ^ See HR 3221, signed into law as Public Law 110-289: A bill to provide needed housing reform and for other purposes.
Access to Legislative History: Library of Congress THOMAS: A bill to provide needed housing reform and for other purposes.
White House pre-signing statement: Statement of Administration Policy: H.R. 3221 – Housing and Economic Recovery Act of 2008 (July 23, 2008 ). Executive office of the President, Office of Management and Budget, Washington DC.
50. ^ All the Devils are Here, Bethany McClean, Joe Nocera, Penguin/Portfolio 2010
51. ^ Hilzenrath DS. (2008). Fannie's Perilous Pursuit of Subprime Loans. Washington Post.
52. ^ Morgenson, Gretchen; Charles Duhigg (2008-09-06). "Mortgage Giant Overstated the Size of Its Capital Base". New York Times. nytimes.com. Retrieved 2008-09-07.
53. ^ Krovvidy S. (2008). Custom DU: A Web-Based Business User-Driven Automated Underwriting System. AI Magazine. Free-full text (abstract).
54. ^ CATO Institute, November 17, 1997
55. ^ Vernon L. Smith, The Clinton Housing Bubble, Wall Street Journal, December 18, 2007, p. A20
56. ^ Fannie and Freddie ride again, The Economist, 2007-07-05
57. ^ Fed Chief Warns of a Risk to Taxpayers, N.Y. Times, 2004-02-25
58. ^ Capital Adequacy Guidelines for Bank Holding Companies: Tier 1 Leverage Measure, Appendix D to 12 C.F.R. Part 225, FDIC's Law, Regulations & Related Acts Index
59. ^ Congressional Budget Office, Assessing the Public Costs and Benefits of Fannie Mae and Freddie Mac, May 1996
60. ^ All The Devils are Here, Bethany McClean, Joe Nocera, published by Portfolio / Penguin, 2010. p 41-44
61. ^ McClean, Nocera, p 48-49
62. ^ ofheo.gov[dead link]
63. ^ 6-15-00, Statement of William Michael Cunningham
64. ^ Countrywide Friends Got Good Loans - The Wall Street Journal
65. ^ Friends of Angelo program, article
66. ^ CNN
67. ^ "Feud over Fannie Mae". Time. February 27, 1978. time.com. Retrieved 2006-12-30.
[edit] External links
• Fannie Mae Official website
• Fannie Mae Profile, BusinessWeek
• Fannie Mae Profile, New York Times
• Pezzuto, Ivo (2008). Miraculous Financial Engineering or Toxic Finance? The Genesis of the U.S. Subprime Mortgage Loans Crisis and its Consequences on the Global Financial Markets and Real Economy, ISSN 1662-761X. available on SSRN: papers.ssrn.com
• Pezzuto, Ivo (2010). The miracle still goes on for someone, available on Baseline Scenario: baselinescenario.com
• Pezzuto, Ivo (2010). Miraculous Financial Engineering or Legacy Assets? on Robert W. Kolb's book Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future ,ISBN: 978-0-470-56177-5. Publisher: Wiley (June 8, 2010) eu.wiley.com
• Kolb, Robert (2010). “Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future” (Robert W. Kolb Series), Publisher: Wiley ISBN-10: 0470561777, ISBN-13: 978-0470561775 |
