This article shows that Fannie Mae and Freddie Mac were a small player in the subprime mortgage lending frenzy. Investment houses and mortgage companies, which fell outside credit regulators, ignited the bubble that eventually burst.
And lets say that Fannie and Freddie, and the mission they served — encouraging home loans to lower income and minority residents traditionally left out of home ownership — were part of the problem. That basically makes the argument that lack of standards and backstops for providing credit was the core problem.
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Really? Who designed the First Time home buyers loans!
With no up front money and the all the closing costs included in the loan! (over 100% financing -
I even heard as high as 117%-120%)
Then with an adjustable rate where the payment increased over time!
No skin in the game - everything financed and just make your payments! (Oh and sign your name)
When they couldn't make their payments they simply walked away!
Then don't forget the ones who refinanced as ATMs. (Upside down to the MAX)
Everyone except Government knew what was GOING ON! (Oh yeah Govt. knew too)
I like the WE DIDN"T SEE IT COMING!
Now
On its heels is the Commercial Loan Meltdown! (Something like 40%
current default rate.) Thats is mostly the Mid Sized banks!
Btw: I liked Bill Clinton - we need to keep them in their homes!
Yet, I didn't see him offerring to make their payments with money from his foundation!
More over, who designed redlining practices that created blighted neighborhoods and high crime areas.
Who came up with higher interest loans for certain areas and for disadvantaged buyers.
Who designed tiered interest rates that exploited ethnic borrowers and left them predisposed for loan/mortgage default.
Who designed the practice of making it easier for disadvantaged buyers to finance a $30,000 car than to invest in a $40,000 home (when $40,000 could buy a decent home).
The first time home buyers program had been in practice for two decades. It was only since the Clinton Administration that they started applying metrics so that people who really needed help could get it.
Before that, middle and upper middle income folks were raping that federal money to move up into upscale housing and to cavitate urban areas by moving into suburban developments.
The predators and the thugs simply positioned themselves to exploit the most vulnerable home buyer prospcts. All the time, they were playing the game with Other People's Money as collateral. When the notes finally came due on the fed money used to back home owner loans, the investors cashed out and left the tax-payer to pick up the tab.
Let's don't analyze the problem without looking at who got rich and is still rich behind the so called failed housing industry. We vreated a new roster of multi-millionaires throgh this fiasco and they walked away and are still multi-millionaires just keeping their mouths shut and watching us point fingers.
Actually, I agree! My point was that not only did they set up the people/loans for failure. They did it with the awareness and the approval of Government!
But, what's worse is it made a mockery of homeownership as a long term investment!
Something that many of the older generation did as a form of savings. For some ther life savings and wealth was in 30yrs. of paying on a house!
Long term growth and investing has given way to FAST MONEY!
AND
The Government's role is to protect its citizens from predatory businesses and/or (de)-regulations.
But, who protects the Citizens from the Government or even worse a Government/Business partnership?
Thiefs who are now CEO'S and High ranking Public Officials!
@ February 12, 2010 1:40 PM
@Thanks. It is good to have someome to agree with once in a while even thogh we have unique perspectives.
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