Sub prime slime

Steven Holmes wrote the article below on September 30, 1999. His name should be Sherlock Holmes; this man is a brilliant reporter. World Net Daily should hire Mr. Holmes when his newspaper folds up its tent. Oh, I am sorry, I forgot failing newspapers are going to get bailouts also and then go bankrupt.

My comments are in red.

Fannie Mae Eases Credit To Aid Mortgage Lending

In a move that could help increase home ownership rates among minorities and low-income consumers, (they mean consumers with absolutely no dough) 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 Hum, I am beginning to see why the Clintons moved to New York. -- will encourage they meant extort those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Hell, some of these people couldn’t buy chewing gum on credit. 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 I guess Bill threatened to cut their salaries and bonuses if they did not cooperate. to expand mortgage loans among low and moderate income people and felt pressure from stockholders to maintain its phenomenal growth in profits. We need a scapegoat here; we can blame the pressure on Bernie Madoff. He needed a better return as a Freddie and Fannie stockholder! Oops, I forgot, he had bogus stock certificates but the boys at Fannie and Freddie didn’t catch Bernie’s little trick but then again neither did the SEC.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called sub prime 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. Now, I we know why they were paying three to four percentage points higher.

''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 sub prime market.'' Translation -there were too many borrowers whose credit sucked, and as today’s commercial shows they were living in their parents basement with their wife and working at a Renaissance Fair; so we, the American taxpayer had to help these poor people.

Demographic information on these borrowers is sketchy. Sketchy, hell someone at Fannie or Freddie lost the paperwork! But at least one study indicates that 18 percent of the loans in the sub prime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. Remember, Bill Clinton said he was the first African American President.

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. Significantly more risk was an under statement. 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. Steve Holmes should get the Pulitzer Prize for writing this article. He was nine years ahead of his peers and financial institutions. Wow, and he used the term rescue in this piece! Glen Beck needs to interview Mr. Holmes.

''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. Why would Fannie and Freddie care? They were not lending their money directly. 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. Yeah, the boys at Fannie and Freddie sure spurred them on. P.T. Barnum said a sucker was born every day, that includes conservative, stodgy bankers. My father-in-law told me banks are institutions that loan money to people when they don’t need it. Well, my depression era, World War II vet, father-in-law sure was wrong.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. Everybody show up at 11:00 A.M. for free money. You got no credit – no problem! You got no car or truck – no problem! You got no job – no problem! You can’t find your wife – no problem! You got a prison record – no problem! You can’t fill out the application because you are illiterate – no problem! You been bankrupt four times – no problem! You’re on welfare – no problem! You got no co-signer – no problem! But they add that the move is intended in part to increase the number of minority and low-income homeowners who tend to have worse credit ratings than non-Hispanic whites. One story circulating says that a convict bought seven homes his first week out of the slammer! Now, that is what I call rehab!

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. Wow, from the statistics above, it seems to me our economy was humming along just fine; the 1990s economic boom was creating more income for African Americans, poor people and Hispanics, consequently they were buying better houses. Well, Clinton, Barney Frank, Chris Dodd, and the cronies at Fannie and Freddie had to gum up the works!

Apparently trickle down wasn’t trickling down fast enough for Bill, Barney, Chris and the government boys.

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. Unfortunately, this is where socialist Utopian policies made by socialist Utopian politicians eventually lead to huge socialist Utopian failures. Keep in mind, it took approximately eight years for this policy to lead to absolute failure. It seems to me it was like a snowball rolling down hill and gaining size and momentum with each passing year. Hey, by the way, why haven’t the boys at Fannie and Freddie returned their bonuses? 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. Hey, one has to keep one’s racial sword hanging like the sword of Damocles, just in case one doesn’t get a Fannie or Freddie loan. Government bureaucrats hate to be accused of racism, that can get them fired from the government in a New York minute!

By the way, have you noticed how your neighborhood mortgage lending company has disappeared? The owner of the one in my neighborhood disappeared over night, hum I wonder why?

The public, the media, ordinary Democrats and the Democratic politicians blame all of this on George Bush. Wow, it seems to me Bill Clinton was the Teflon and the Sham Wow President.