Did you know the New York Times warned us about our economic crisis in 1999?

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If you think Bush caused our economic crisis then have you read this article put out by the New York Time 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, theFannie 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 rescuesimilar 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 disc

F&F UNDER CLINTON

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

13 Comments
  1. Reply
    Joe
    February 6, 2011 at 2:23 am

    There are many warning. The stocks falling is when people finally realize it is screwed up.

    It started with deregulation by Regan. Clinton get the ball rolling. Bush acknowledged there was a problem in 2003 but congress ignored him. Congress pushed the loans and the banks finished it by mortgage meltdown.

    Over many many years.

  2. Reply
    Bon Bon
    February 6, 2011 at 3:10 am

    I never read the New York Times, I hope they go bankrupt! All I know is that anything printed favorable to the Bush presidency, they will probably disavow. Thanks for the information, it makes me feel better knowing that there are other people out there that did not forget 9/11 and the remarkable job that our President did to keep us safe since then. God Bless the USA.

  3. Reply
    Truth
    February 6, 2011 at 3:56 am

    Yes, the Klinton Administration really screwed us up. Just proves once again that government getting involved is worse for Americans.

    Scariest sentence known to man: “I’m from the government and I’m here to help.”

  4. Reply
    suzy home maker
    February 6, 2011 at 4:14 am

    Yes we know that it was the democrats that are always for any handout program, it was their fault. They are and their followers are like immature school kids on the playground, always saying “no he did it”. never owning up to anything, only misplacing the blame.

    Now they want more stimulus packages, I thought they criticized the Republicans for the same thing?. Their own ignorance and lack of boundaries will be their own demise. They cannot survive without us balancing them, I am looking forward to a great fall!.

    President Bush did do a great job protecting our country Bon Bon, you were right. I saw a clip of him waving, and I got tears in my eyes. I waved back at the t.v. and said goodbye, we will miss you. Our country will miss the last Godly man they will ever see in office. Boy does his face look like an angel compared to the devil they are gonna put in there.

    Queentut I look forward to your questions, please be diligent, don’t give up the good fight. It is you and your tenacity and service to our country that is the glue that holds us all together.

  5. Reply
    knappneedleman
    February 6, 2011 at 4:20 am

    It is all to convenient to put the blame for all of our countries ills on Bush. No doubt he has to carry it for many things, but not everything. The foundation for the current “crisis” was laid in the Clinton era. The deregulation started the ball rolling there.

  6. Reply
    Bethany J
    February 6, 2011 at 4:48 am

    Sadly, not many people read that left wing liberal rag “The New York Times” Good info though so thanks.

  7. Reply
    justgetitright
    February 6, 2011 at 5:41 am

    Yes I had heard about this and read the Article, I would also like to correct Joe, deregulation started with the Carter Administration with the Community Reinvestment Act, this is what started and eventually ended the Savings and Loans business and cost the US citizens boat loads of money then, today’s crisis is costing us more than any boat could handle and things are going to get a lot worse for our economy.

    If we had have had some bipartisanship back then we could have avoided this whole mess we are in today, instead we had special interest groups that fought against the warnings instead of fighting to fix the problems.

    Look at how much we have already allocated, $ 300 billion a few months ago to bail out Bear Stearns and others, $ 80 billion for AIG and now $ 700 billion for Fannie and Freddie, meanwhile the CEO’s of these companies are still raking in their huge bonus checks each year.

  8. Reply
    scramble4202
    February 6, 2011 at 6:23 am

    The New York Times was smarter than our Congress. The loans that HUD pushed are now helping to bring down the financial system.
    I could go on but I’m too disgusted.

  9. Reply
    some dude
    February 6, 2011 at 6:49 am

    Goes to show, there is enough blame to spread around.

  10. Reply
    unionjack07
    February 6, 2011 at 7:06 am

    Yes I did and tried to tell people what was happening but I was looked at as a radical that did not know what he was talking about. When I told people to read the NY Times article they either ignored me or said they did not have time. Now I am beginning to believe that even if they could read it they do not have the comprehension to understand it and these people are the ones that voted Obama into office. Pure ignorance,plain and simple.

  11. Reply
    Spud
    February 6, 2011 at 7:46 am

    No

  12. Reply
    Bob S
    February 6, 2011 at 7:50 am

    This is exactly what caused the meltdown. Spud, the poster above me hasn’t a clue what he is talking about and that is why he won’t post much of an answer.

    Here is what happened.
    Jimmy Carter established the system of securitization of home loans to give himself a temporary appearance of promoting economic prosperity with a housing bubble which would burst on the next president or the one after him, but it would take a two-term presidency to implement it and most of another two-term presidency for it to pop.

    Reagan stopped that second term and stopped the securitization scam.

    Clinton reopened securitization.

    What is securitization? It is the bundling of loans into packets which could be bought and sold as securities on the stock market. With investors’ money providing the capital for the loans instead of that of actual lending institutions, it became very lucrative for them to accept most any risk, regardless of the future of the payor or the payees. It is difficult at best to track these loans to their current owners, but the value of the money they paid for the packets is now significantly higher than the value of the money they can get for these packets, most of which are full of bankrupt loans whose payors are not paying anymore. The assets upon which they are supposedly secured are worth only a small fraction of the initial capital.

    Back to the story…Fannie Mae, Freddie Mac, Wachovia Bank, Citi Group and Deutsche Bank are among the largest propagators of securitized loans in the USA. Obama is credited by Freddie Mac and Fannie Mae as their greatest advocate for extending the dream of homeownership to the poorest sector with the highest risk. Their execs were on his campaign staff and are in his cabinet.

    W did *NOTHING* to stop this. NOTHING. Granted, he didn’t spur it along, but he did not try to stop it.

    It was a known disaster with a known time frame of collapse, and now the ones who caused it are the ones in power.

    One of them, Rahm Emanuel, even said that a good crisis should not be wasted but be used as an opportunity to do things they couldn’t otherwise do.

    Is it any surprise that the usual suspects are the ones embarking on a new venture just like the other one?

    Three guesses who gets to pay for it when the deals collapse.

  13. Reply
    hsmomlovinit
    February 6, 2011 at 8:15 am

    Yep, pretty much. This was what several people warned about over the past 10 years, but poor Bawney Fwank just “didn’t see the danger”.

    Please, people in the banking and real estate industry knew this was coming years ago…they simply tried to get everything they could out of it before the bubble burst.

    I’m all for getting people into decent housing, I really am…but putting thousands of people into situations they obviously can’t afford – and telling them that it’s their “right” – is a dangerous game our government never should have played. Unfortunately, we’re paying for it now, and we will be for some time to come.

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