The current Mortgage Crisis, and so forth...

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SWA

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I'm still working my way through my attempts of catching up on my emails, as I came across this one from last week... (yes, I know it's "just an email", but still, I feel it's content warrants a call for concern).

My question is... is this true? If so, your thoughts?

Here is the email:

****************************************************************

Date: Wed, Oct 1, 2008

Subject: Fw: September 1999...... NY Times

Who was president in 1999?

*Fannie Mae Eases Credit To Aid Mortgage Lending*

*By STEVEN A. HOLMES*

*Published:** **September 30, 1999* in the "New York Times" ( http://www.nytimes.com )

*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.*

****************************************************************

Again, my question is... is this true? If so, your thoughts?
 
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That is basically what I've heard.

My thoughts are...why in the heck would they encourage people to get a loan that the bank itself knew they would not be able to afford in the long run?...they (us govt.) set alot of people up for failure.

Of course, I also believe in some instances, not all of course, the borrowerer is at fault as well. It doesn't take a rocket scientiest to figure out that you can't afford a $300,000 mortgage on a $30,000 salary. But when you dangle filet mignon in front of someone whose been eating nothing but oodles of noodles, they are bound to jump on it. It was their chance at the American dream, unfortunately when push came to shove, it was all an illusion.
 
My thoughts are...why in the heck would they encourage people to get a loan that the bank itself knew they would not be able to afford in the long run?...they (us govt.) set alot of people up for failure.
Exactly.
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My thoughts? This was all a part of the "master plan" to make who ever was in office (as a Republican), when this all came to head, knowing full well...IT WOULD...and who ever was in office when it came to the point that it has, be the "fall guy". Effectively shaking America's confidence, and subsequently globally as well, in our government...should it be headed up by a Republican through it all.

Those who ask...well what if a Democrat had made it into office last election...well, I think there too, they knew full well, that wasn't gonna happen....and there you have it. Destroy America at all costs...just so "we the Democrats" can "look" good enough to say "I told ya so". Gloaters are a'glutton!!!!
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{{{Majorheavysighs}}}
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I bet they are gloating with the pretext of "Next time, VOTE DEMOCRAT" or see our wrath beyond THIS!

This is what I like MOST about McCain! No matter his "party", he is working to RISE ABOVE such antics and STRIVES TO MOVE FORWARD BIPARTISANLY, for THE COMMON GOOD OF AMERICA...and subsecquently GLOBALLY.

How can ANYONE NOT SEE THIS??????
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Seems I heard something not terribly long ago about the Ruler of one of the far eastern countries saying they would destroy America financially not by war. Makes ya wonder doesn't it?
 
If you really check facts and dates, while YES Clinton was in office when this was asked for, it did start in '72. Was this done on purpose? No, I dont think so, not for one instance. For one, because in '00 Gore won the popular vote, but lost the electoral college. They did 'know' who would be in next just as we dont know now.

What made this all happen? GREED. Pure and simple. People wanting to live like those on 'Cribs' and trickle down economics. Banks etc have stated, time and again, that they make more money off of those who are delinquent, than those that pay on time, fees etc. There were even statements not long ago from those CEOs etc who stated they hoped that this all came to its head after they retired. They knew it was going to hit, just not when. What about the AIG idiots who just got $38B but made sure they went on that $500k retreat? Anyone here that they had another one planned for next month that they JUST decided to cancel due to the public outrage??

There isnt a political party that doesnt stand knee deep in this mess. BOTH either asked for deregulation or signed off on it. NEITHER side can even think about blaming the other, solely, for this.
 
It does make you wonder what the real motive to all this was 9 years ago...they had to know that eventually this would all fall apart....and I'm not surprised if it wasn't calculated.
 
And the Bush government didn't see it coming for the last eight years.. Lets get real here.. Pepipony is right on this one..

My take on this is this was to get people into their own homes. The economy was good at this time.. The government wanted

it to be even better.. Now if the poorer people bought starter homes the middle class would buy more expensive homes and

sell their starter homes.. Who expected the darn banks to loan the poorer people 300,000. Greed on the big banks part is

right... A chicken in every pot may well have turned into oatmeal in most pots.. Thanks to the big banks..
 
There isnt a political party that doesnt stand knee deep in this mess. BOTH either asked for deregulation or signed off on it. NEITHER side can even think about blaming the other, solely, for this.

I disagree! There IS a political party that has not had a thing to do with this and would never.

However as this is ignored, I will agree that both parties are "party" to this mess which you are only beginning to see. As this IS true why are you voting for either party?

Insanity anyone?
 
Some of the problem did start in 1972, and the final nail in the coffin was enacted in 1999, and yes, that was under Clinton's watch.

Do you know the name of the act, though? It was the Gramm-Leach-Bliley Act. In short, the Gramm-Leach-Bliley Act repealed part of the Glass-Steagall Act of 1933, which was set up, basically, to help keep another Great Depression from happening.

Gramm might be familiar to you. That would be Phil Gramm.

"He was John McCain’s presidential campaign co-chair[8] and his most senior economic adviser[9] from summer 2007[10] to July 18, 2008.[8]

In a July 9, 2008 interview explaining McCain's plans in reforming the U.S. economy, Gramm explained the nation was not in a recession, stating, "You've heard of mental depression; this is a mental recession," and "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline."[11]

Gramm's comments immediately became a campaign issue. McCain's opponent, Senator Barack Obama, said, "America already has one Dr. Phil. We don't need another one when it comes to the economy. ... This economic downturn is not in your head."[12] McCain strongly denounced Gramm's comments.[13] Gramm later attempted to spin his comment, explaining that he had used the word "whiners" to describe the nation's politicians rather than the public, stating "the whiners are the leaders."[14] In the same interview, Gramm stated, "I'm not going to retract any of it. Every word I said was true."[15]

On July 18, 2008 Gramm stepped down from his position with the McCain campaign. However, he often accompanies McCain during the campaign, and continues to be an unofficial adviser on economic and financial matters.[16]"
 
We had a good thread on this earlier.... and it was a combination of things that lead to this mess. This is what I said in that thread:

Here is a good article on who is to blame... they discuss Clinton signing the Gramm-Leach-Bliley Act as well. http://www.factcheck.org/elections-2008/wh...mic_crisis.html

Here is the closing section....

So who is to blame? There's plenty of blame to go around, and it doesn't fasten only on one party or even mainly on what Washington did or didn't do. As The Economist magazine noted recently, the problem is one of "layered irresponsibility ... with hard-working homeowners and billionaire villains each playing a role."
Here's a partial list of those alleged to be at fault:

The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.

Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.

Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.

Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.

The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.

Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.

Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.

Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.

The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.

An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.

Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis. But these sorts of partisan caricatures can only make the task more difficult.
Bolding mine... I like the screwing it up takes a great deal of cooperation part...
 

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