Check out the date of this NYT article........... 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.'' 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.
http://www.nytimes.com/2008/11/17/business/economy/17gramm.html?pagewanted=all More information about 1999....hmm
http://www.ritholtz.com/blog/2008/12/fdic-chairman-sheila-bair-on-cra-not-guilty/ âLet me ask you, where in the CRA does it say to make loans to people who canât afford to repay? Nowhere.â -FDIC Chairman Sheila Bair
"More and more people own their homes in America today. Two thirds of all Americans own their homes, yet we have a problem here in America cause fewer than half of the Hispanics and half of the African Americans own their home. It's a home ownership gap. It's a gap that we've got to work together to close. And by the end of this decade, we'll increase the number of minority homeowners by at least five and a half million families. And of course one of the larger obstacles to minority home ownership is financing. Fannie Mae and Freddie Mac have committed to provide more money for lenders, have committed to help meet the shortage of capital available for minority homebuyers. Freddie Mac recently began 25 initiatives around the country to dismantle barriers and create greater opportunities for home ownership. One of the programs is designed to help deserving families who have bad credit histories to qualify for home ownership loans. You don't have to have a lousy home for first time home buyers. You put your mind to it, the first time home buyer, the low income home buyer can have just as nice a house as anybody else." --George W. Bush 2002 http://www.youtube.com/watch?v=eW9viaJatpo
you missed the entire premise of the OPs attempt at dis-information. Bush and republicon congress? Phil Gramm and the deregulation of financial derivatives that made sub-prime possible? what? who are they? What are you talking about? you see, for the past 8 years, the world was inside a time wrap. The 8 years of Bush and republicon congress are fabrications of our imagination. Everything that is wrong these days is because of Clinton. And don't forget the time wrap before Clinton. It's back to the Carter administration. Oh yeah, somewhere in there, the aliens are also part of the problem.
November 4,2008: The day republicans could stop blaming Clinton for everything and start blaming Obama. Remember, nothing, certainly not the $1TRILLION Deficit (take a minute to wrap your mind around that) nothing is Bush's fault. Ever.