[StBernard] Whose fault is it?

[Westley Annis]

This story is from the New York Times archives from the late 1990's.  Now,
let there be no mistake as to what caused the mortgage crisis we're in.
This confirms what you've heard me and others say in the past.
 
John

________________________________

THE DATE OF THE ARTICLE IN THE ATTACHMENT IS IMPORTANT,
WHY................NO ONE WANTS TO ACKNOWLEDGE THE HANDWRITING ON THE WALL,
NO ACCOUNTABILITY, THANKS BARNEY FRANK, CHRIS DODD......................YOU
AREN'T IN CONGRESSMEN BUT CROOKS
 
 
Subject: Whose fault is it?

 

 
 Did you know Clinton had a code for the mortages. It was nija------"no
income just approve"
thought you might enjoy this.  I think he was trying to sweeten the path for
a Gore presidency.
__._,_.___ 

-----------------
http://tinyurl.com/6qnall

September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending 
By STEVEN A. HOLMES 
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.