The Obama administration says it wants to “reform” Fannie and Freddie. But it won’t propose legislation to revamp the mortgage companies until next year, if even then. And in testimony last week, HUD Secretary Shaun Donovan circled the wagons around the “affordable housing mandates” that pushed Fannie and Freddie into the risky subprime market.
“As we work to reform our housing finance system, it is essential to keep in mind our broader housing policy goals,” he said. “A reformed housing finance system should ensure broad access to mortgage credit for minorities.” Here we go again.
Fannie and Freddie over the decades have facilitated “an important democratization of credit,” Donovan said. Yes, and they’re now hit hardest by foreclosures from this failed social experiment.
Never mind that. Donovan asserted that “ensuring that homeownership opportunities are available to members of these communities should remain a priority.”
aka “poor” and “minority” (aka Democrats)
It’s plain that Donovan, like other housing-rights activists, has not learned any lessons from the subprime scandal. He’s also in denial about HUD’s role in it, arguing that the affordable housing goals it foisted on Fannie and Freddie were not the cause of their collapse.
Rather, he claims, the mortgage giants underwrote risky subprime loans and securities simply to increase profits.
But officials with both firms swear their hands were forced by HUD. They testified they had to lower their underwriting standards and absorb substantial costs to meet HUD’s political mandates. That, of course, is no way to make a profit.
In fact, HUD in 2000 required Fannie and Freddie to underwrite fully half of their mortgages for lower-income, higher-risk borrowers — a quota that remained in effect for the rest of the decade.
Starting in 1997, Fannie began offering a 97% loan-to-value mortgage — well above the standard 80% LTV. And by 2001, it was offering mortgages with no down payment at all, along with other deficiencies.
The promised reforms of these failed government-sponsored enterprises are a farce. Democrats are not going to relinquish control of Fannie and Freddie. They’ll remain wholly owned subsidiaries of the Democratic Party.
The federal government — which shouldn’t be involved in the mortgage business at all — now controls virtually 100% of the secondary mortgage market. This is outrageous considering the government caused the failure of Fannie and Freddie, not the market.
If the government owns Fannie and Freddie, politicians will run it for their political clients, not shareholders, like their own personal piggy banks.
You mean like the IOU’s in Social Security?
Nah, they’d never do that… 🙂
And use control of this industry for their own gain, nah, Democrats would never ever do that… 🙂
There motives are as pure as the driven snow… 🙂
The government own car companies GM and Chrysler.
It owns an Insurance giant AIG.
It owns the secondary Mortgage Market.
It wants to own Health Insurance through it’s slow acting poison of a Health Care Reform Bill.
But their not socialists…. 🙂
Next Up, Wall Street and Energy…
But their not socialists….
The government used the congressionally chartered mortgage giants — who together control over half of all mortgages — for political purposes, such as helping questionable low-income borrowers and boosting minority homeownership.
As a result, they made bad economic decisions that sank the entire mortgage industry, destroyed homeowner equity and cost taxpayers $400 billion (and counting). (IBD)
The damage from the politically motivate Health Care may not be known for years. Just like the manipulations of the Mortgage market started in the 1990s and took over 10 years to crash.
But remember, according to them it wasn’t their fault. They regulated it into failure, but it wasn’t their fault.
It was Wall Street . Those damn evil capitalist and their derivatives.
And just when Obama and Co want to pass sweeping new reforms.
Funny how that worked out.
“Never let a serious crisis go to waste…it’s an opportunity to do things you couldn’t do before.” – Chief of Staff Rahm Emmanuel
Even if you have to lay it on your opponent first. Then claim it’s a crisis.
It’s their fault!
Boo Hiss! Boo!! 🙂
Alinsky Rule 11: Pick the target, freeze it, personalize it, polarize it. Don’t try to attack abstract corporations or bureaucracies. Identify a responsible individual. Ignore attempts to shift or spread the blame.
Hmmm…Like, to you for instance…