Fannie Mae Eases Credit To Aid Mortgage Lending (from September, 1999)

[Wretched Excess]

anyone still wonder how we got here?  deregulation wasn't the problem, insane regulation was the problem.  and I have
read that franks and dodd are still trying to fight any attempt to undo this insanity by whining about "fair housing practices".

Fannie Mae Eases Credit To Aid Mortgage Lending

 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.''

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[TheSarge]

Isn't the "easing of credit" what got all these mortgage banks into the mess they are in right now?

Those who don't learn from history....

[Wretched Excess]

Isn't the "easing of credit" what got all these mortgage banks into the mess they are in right now?

Those who don't learn from history....

absolutely.  and this story is about how we got into this mess.  the mortgage underwriters were forced to government to approve loans to those that should not have gotten them.  this is the kind of trouble you get into when government tries to create "fairness".

[jtyangel]

Have I not been saying this? 

Interesting White House Memo under Clinton about getting CRA pushed through too. Although I've always stood by the notion that Clinton was just a fallible human being and not a monster, his policies lead to what will probably be seen as one of the worst decades in a while when you consider 9/11 and the current economic situation. When attempts were made to restrict the credit policies again in 2003, dems voted that down too in the interest of, you guessed it, fairness and equality. Again, you can not equalize someone who is constantly behaving in a manner that makes them more and more disparate among the more responsible public and quite frankly I think it is 'unfair' to bring people up to the level of responsible citizen when they have not earned the right to be called that and all the benefits that go along with it. It's unfair to the people who did keep their nose clean. Look at what's happening now to the people who have paid their mortgages, delayed gratification on purchases, etc. they also have to function in a so-so economy now, they have to deal with home values falling and vacant homes in their neighborhoods, and they get to fork over money for the 'bailout' too.