Obama administration pushes banks to make loans to people with low credit scores

[red states rule]

Seems libs NEVER learn from their past mistakes. Clinton did this and look where it got us as far as the housing industry.




The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.


President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind (http://www.federalreserve.gov/newsevents/speech/duke20130308a.htm), including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.


Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.


Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates (http://www.treasury.gov/press-center/press-releases/Pages/tg1836.aspx), among other steps.


Obama pledged in his State of the Union address (http://www.washingtonpost.com/politics/state-of-the-union-2013-president-obamas-address-to-congress-transcript/2013/02/12/d429b574-7574-11e2-95e4-6148e45d7adb_story.html) to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.

http://www.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html?hpid=z1

[red states rule]

Eh, we tried this before and look what happened

From the NY Times and notice the date





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.''


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.''


http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html

[Kathianne]

Cars too:

http://pjmedia.com/eddriscoll/2013/04/04/subprime-auto-loans-too/?utm_source=twitterfeed&utm_medium=twitter


Subprime Auto Loans, Too?
Posted By Ed Driscoll On April 4, 2013 @ 4:46 am

Play the tape machine, make the toast and tea, we’re goin’ mobile — with another potential subprime loan bubble: “The Obama administration is pushing banks to make car loans to people with poor credit ratings,” (http://www.thegatewaypundit.com/2013/04/unbelievable-obama-pushing-billions-of-taxpayer-dollars-into-risky-subprime-auto-loans/) Jim Hoft writes at Gateway Pundit, linking to a Reuters piece that notes:

In its efforts to jumpstart the economy, the U.S. central bank has undertaken since November 2008 three rounds of bond-buying and cut short-term interest rates effectively to zero.The purchases of mostly Treasury and mortgage securities – known as quantitative easing and nicknamed QE1, QE2 and QE3 – have injected trillions of dollars into the financial system.


The Fed isn’t alone. Central banks from Tokyo to Frankfurt to London are running their printing presses overtime. The heavily indebted advanced economies are trying to reflate their way out of the prolonged bout of crisis and recession that crystallized with the collapse of Lehman Brothers Holdings Inc in 2008. That crisis, of course, followed a nearly decade-long cycle of easy money and exotic financial products that itself began with the collapse of the tech-mania bubble of the late 1990s.


The Fed’s program, while aimed at bolstering the U.S. housing and labor markets, has also steered billions of dollars into riskier, more speculative corners of the economy. That’s because, with low interest rates pinching yields on their traditional investments, insurance companies, hedge funds and other institutional investors hunger for riskier, higher-yielding securities – bonds backed by subprime auto loans, for instance.


Lenders like Exeter have rushed to meet that demand. Backed by Wall Street banks and big private-equity firms, they have been selling ever-greater amounts of subprime auto loans in the form of relatively high-yield securities and using the proceeds to fund even more lending to more subprime borrowers.
As I asked yesterday about the return of subprime home loans, what could go wrong — again (http://pjmedia.com/eddriscoll/2013/04/03/what-could-wrong-again/)?
Also, isn’t this a case of two administrations in one, with the Obama administration simultaneously wanting higher gas prices (http://pjmedia.com/eddriscoll/2012/04/22/when-a-dog-catches-the-car/), and concurrently, more new vehicles on the road? To flip over a joke once made by President Reagan (http://tinyurl.com/ch97gdd) when his own administration appeared at cross-purposes, in the Obama White House, sometimes the left hand doesn’t seem to know what the far left hand is doing.

[Tyr-Ziu Saxnot]

Well by God, if it was good enough to weaken the nation before why not rinse and repeat!!?? Dem/lib/leftist policies are always good to use again if their destructive results were good enough and they were.. --Tyr

[red states rule]

http://media.townhall.com/Townhall/Car/b/holb_c10838120130405120100.jpg

[aboutime]

Obama must owe Barney Frank something more than just a KISS.
48234824

This is a blessing to endorse the expression about Ignoring History....and being Doomed to Repeat it...

[red states rule]

Barney is the Banking Queen



http://www.youtube.com/watch?v=a5NrqqK60OI

[aboutime]

Barney is the Banking Queen



http://www.youtube.com/watch?v=a5NrqqK60OI


red states rule. Great Stuff.

Reminded me of the first time I heard about FANNY and FREDDY. I connected them with BARNEY, and thought all three were GAY SLURS.

[red states rule]

Another trip down Memory Lane showing Dems and the housing meltdown




http://www.youtube.com/watch?v=cMnSp4qEXNM

[aboutime]

Another trip down Memory Lane showing Dems and the housing meltdown




http://www.youtube.com/watch?v=cMnSp4qEXNM


Just another of the many reminders TOO MANY Americans IGNORED because it ruined their admiration of FALSE PROPHETS.

[red states rule]

Just another of the many reminders TOO MANY Americans IGNORED because it ruined their admiration of FALSE PROPHETS.

and yet Obama thinks THIS TIME it will work

Yea, just like his stimulus, increase in Food Stamp recipients, Obamacare, and economic policies have all "worked"

Of course if the goal is to transfrom America into a second class debtor nation then yes - Obama's policies are working

[red states rule]

I thought at least one loyal Obama foot soldier would step up to the plate and tell us how this time the results would be different if the Feds forced banks to make loans to people with lousy credit scores. LR, FU, Gabby - no comment?