For anyone who thinks the foreclosure crisis is the fault of former President Jimmy Carter or irresponsible home buyers you need to watch CNBC's "House of Cards" set to re-air at 8 p.m. Wednesday.
The informative report follows the origins of the global economic crisis, with first person accounts from home buyers, mortgage brokers, investment bankers and investors – "most of whom let greed blind them, leading to the greatest financial collapse since the Great Depression," according to the synopsis of the documentary.
Anyone who uses the GOP talking point that President Obama's Homeowner Stability Initiative will "pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills" needs to watch this.
In 2008, there were 3.2 million foreclosure filings in the US, according to an estimate from RealtyTrac. That’s an 81 percent increase over 2007, and this is the rhetoric coming from the right?
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This article from September 30, 1999 in the New York Times, says it all.
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://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260
“Says it all?” It says what? You cannot possibly be using this article to prove it wasn’t the fault of people trying to get rich quick that caused the meltdown?
Are you honestly trying to claim that “a pilot program involving 24 banks in 15 markets” that “encourage those banks to extend home mortgages to individuals whose credit is generally - note the word generally - not good enough to qualify for conventional loans” was responsible for an economic meltdown that caused 3.2 million foreclosure filings in the US in 2008 alone? No way.
“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.” Are you honestly claiming that program is responsible for the foreclosure crisis? No way.
But the real reason is in the article: It “felt pressure from stock holders to maintain its phenomenal growth in profits.” And, “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.”
Not only is nonnymouse a biased little prick, he's unable to do simple math.
Every time you use language like that I get hammered. But, I don’t necessarily disagree with you.
Pearl clutching little fucks.
They just want to be upset about something and profanity is an easy target.
It allows them to parrot their wing-nut masters instead of thinking.
Fuck'em. Got enough ammo now, nonnymouse? You little cunt.
Gee, I must have struck a chord here. You're telling me what I can't possibly be saying and it brought KaDargo out of hiding to give us his display of lack of vocabulary again.
I noticed that you selected only parts of this to quote. Let me help you with the part you missed.
"has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people ".
Imagine that. What I've been saying all along was actually written in 1999 in the New York Times. The Clinton administration increasing the pressure for them to expand mortgage loans among low and moderate income people. These would be people that didn't qualify under normal circumstances and couldn't qualify for the "subprime" mortgages until pressure was put on them by the Clintong administration.
As for the stockholders, naturally they are wanting it expanded because stockholders are interested (GASP) profits. Who'da thunk it?
So now it's the stockholders AND the Clinton people that pushing Fannie Mae to give more loans to people that didn't qualify for loans, not even subprime loans.
In answer to one of your questions the answer is no. I'm not saying that this caused 3.2 million homes to go into foreclosure. First of all, I don't know where you got the 3.2 million, but I don't care. Even if you're accurate, it doesn't matter in this context.
What this story means is that it was one of the steps that led to the economic meltdown, the freezing of the credit market. Note, I said ONE OF THE STEPS. It's not the be all and end all. It did, however, contribute to the problem in a large way.
The pilot program was with those banks in those markets, was a direct result of the pressure from the Clinton Administration and the stockholders.
The story is really self explanatory. I don't know why you need it explained to you. Well, that's probably not true. I do understand why you need it explained. You make it perfectly clear with your editing out of the Clinton Administrations role in this but you jump all over the stockholders and their desire for profits.
I noticed you also excluded this part of the story.
"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."
And this...
"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."
And then there is this part that you ignored, which turns out to be almost prophetic:
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.''
Seems that's what we're doing. Bailing them out on the backs of the American people that don't qualify for bailouts because they paid their payments on the homes they bought.
Still unable to do math, nonnymouse?
Still unable to grasp basic facts, nonnymouse?
Still clutching your pearls when someone swears you little bitch?
I find it completely disingenuous when wingnuts wrap themselves in the blanket
of fiscal responsibility and show concern for the backs of the American
people.
For one, it's a complete and utter fucking myth regarding Republicans and fiscal
conservatism. They have been the worst stewards of our money by far, every
goddamn one of the Republican presidents has raised our national debt. All these fucking claims
of socialism...yes, it's socialism when the people are assisted by the government...but what is it called
when the government assists the wealthy and corporations? Oh, I forgot, the American-fucking-way, followed by
pissing on the poor and those least able to protect themselves.
Clinton, yes, the right-wing's favorite blow job receiver, got it under control,
handed over a fucking surplus to that dumbfuck Connecticut Yankee posing as
our president and he turned right around and redistributed it to the already
wealthy.
There were a lot of things which contributed to the bailout, of which FM/FM was
a small part. The CRA only applied to federally insured banks and thrifts.
Where did the bulk of the bad loans come from? Certainly not from there, but
you wouldn't ever hear a partisan hack wingnut scumbag say that...it doesn't
go along with the lie they've told themselves regarding poor people and brown
people.
The major part of this cluster fuck was the credit default swaps and
the PONZI scheme written by Gramm and left unpoliced by that dumbfuck who left
office a little over 30 days ago. Again, another thing wingnuts would never
say, because they refuse to take responsibility for any-fucking-thing.
They've told themselves this lie regarding the free market and how it will regulate itself.
Congrats...you had a free market for 8 goddamn years and you fucked up the entire country, you fetid yeast infection.
You and folks like you should feel fortunate folks that know what happened don't hunt your ass down.
Asshole.
You "struck chord here?" How did he reach that misguided conclusion? I don't control when he, or anybody else, says or when they decided to comment.
Yes, you are correct; I did only select parts of this to quote, and that's because they are the most important.
Yes, President Clinton may have – and I hope he did –applied "pressure to expand mortgage loans among low and moderate income people." You need to look up redlining. Plus, it did not say there were unqualified to pay back the loan, and in such a small scale that the pilot program was applied in it would have had little effect.
Yes, stockholders "are wanting (sic) it expanded because stockholders are interested (sic) (GASP) profits." But when mortgages are being advertised on late night infomercials like Ronco juicers then there is a problem. There is a huge difference between profits and greed.
Those 3.2 million foreclosures in 2008 came from RealtyTrac. It doesn't matter? You are blaming the economic meltdown on Carter and Clinton when the fact is it was caused by greed, a lack of oversight and the drop in wages and loss of jobs under Bush. A push by President Clinton to stop the illegal practice of redlining did not cause the economic meltdown, or even contributed to it, and a 10 years-old article certainly proves that.
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