Fannie Mae Eases Credit To Aid Mortgage Lending

[stephanie]

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.''

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.

read the rest..
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1

[Said1]

Isn't Fannie may a public institution, now?

[Yurt]

Community Reinvestment Act
From Wikipedia, the free encyclopedia

George W. Bush Administration Proposed Changes of 2003
In 2003, the Bush Administration recommended what the NY Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." [10] This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank (D-MA) claimed of the thrifts "These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Representative Mel Watt (D-NC) added "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing."[11]

[Said1]

Community Reinvestment Act
From Wikipedia, the free encyclopedia

George W. Bush Administration Proposed Changes of 2003
In 2003, the Bush Administration recommended what the NY Times called "the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago." [10] This change was to move governmental supervision of two of the primary agents guaranteeing subprime loans, Fannie Mae and Freddie Mac under a new agency created within the Department of the Treasury. However, it did not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enabled them to issue debt at significantly lower rates than their competitors. The changes were generally opposed along Party lines and eventually failed to happen. Representative Barney Frank (D-MA) claimed of the thrifts "These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Representative Mel Watt (D-NC) added "I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing."[11]

This is from 2003, I'm talking more recent, like 2008. Or is it recent, I can't tell, no link.

[PostmodernProphet]

you scared the crap out of me with that title.....I thought they were making something stupid even worse....

[Yurt]

This is from 2003, I'm talking more recent, like 2008. Or is it recent, I can't tell, no link.

yes, it is from 2003, i wasn't responding to your post, merely pointing out the hyprocrisy of the left when it comes to blame.

i don't have a link, but the government took over both companies and controls the corporations, if that is not state ownership, i don't what is. the government seized the entire company, including the mtgs. so uncle sam now owns approx. 60% of this country. legal owner said1, not governmental "owner" that has to go to court to get property, but the legal title holder. i stress this is only my opinion and i have not researched it so i could be wrong.

the deal is they call this a "conservatorship".


Both companies have now been placed into a government conservatorship under the recently created Federal Housing Finance Agency, in a plan announced by Treasury Secretary Henry Paulson and FHFA Director Jim Lockhart.

http://www.foxbusiness.com/story/markets/government-seied-fannie-mae-freddie-mac/

my question is, who is the conservatorship for? when a court approves a conservatorship, the conservator merely oversees the assets, whatnot of a person (usually) who has been deemed incompetent. the consevator does not own the property, but controls it. in this case, who owns the two companies? they are government created companies.


It also brings both Fannie Mae, which was created by Congress during the Great Depression to help with home ownership, and Freddie Mac, created in 1970 as a competitor to Fannie Mae, back into the fold of the government after a multi-decade attempt at privatization.

the last word is important. what does it mean? what is private about these companies now?

[Yurt]

here is a link from today Said1:


The plan, bollixed up for days by election-year politics, would give the administration broad power to use taxpayers' money to purchase billions upon billions of home mortgage-related assets held by cash-starved financial firms.

http://news.yahoo.com/s/ap/20080928/ap_on_bi_ge/financial_meltdown


albeit, not directly relating to fannie and freddy, but it does seem to support my fears about the government's interference in this matter. and no, i do not consider it helping this country.....overall and over time. it may be a quick fix, but i do not support this. unless someone convinces me otherwise, from what i see, this is our government BUYING us out....with OUR MONEY. its like a wealthy private investor buying out both companies and now controlling......wait, no owning all the mtgs.

step back and ask yourself if you would feel comfortable with...say....warren buffet buying those two companies out. he just bought out another company in similar troubles. would it bother you that one person would own all those mtgs?