Should the Fed Help Fannie & Freddie?

[KYYX4ever]

Thanks coop. The "answer" or "knowledge" isn't easily apparent, but we were wondering what was your take. My dad was positing that other institutions, such as the airline and car industries, might be next. I dunno, but that doesn't seem too far of a stretch, and fits with what you were saying about how this goes deeper and further than people think.

[Frau_Blucher]

It's getting scary!!!!!!!!!!!!!!!!!!!!!!!!!

[abacab66]

The Greater Depression!!!!!![xx(]

[phillyidol]

The house defeated the bill. It did not go through. What will happen next?




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[glokstadt]

[quote][i]Originally posted by phillyidol[/i]
<br>The house defeated the bill. It did not go through. What will happen next?

Worlds GREATEST Photographer!
[/quote]

The stock market will fall, and the Rothschields will buy, buy, BUY! As their philisophy is to buy when "the blood in running in the streets," and they have the monet to storm it out, OTOH, does the small guy investor/401(k)-er have the same mind-set?

650 point drop is what, a 2.5% to 3% drop in the market...

Folks who left the market, or moved to conservative positions, missed the next run up on the market, where holding the position increased their holdings 20 fold; however, what will the future hold?

Stock market will continue todecline until D.C. passes a plan IMHO.


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[Spit]

The only good news that I could see today was the fact that crude oil had a 10% trading price drop.

[glokstadt]

[quote][i]Originally posted by Spit[/i]
<br>The only good news that I could see today was the fact that crude oil had a 10% trading price drop.
[/quote]

Ecept when you think about it... Our economy is in worse shap if the price of oil/crude drops because that means supply is up, and demand is down--we are not spending money to drive anywhere...


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[Spit]

[quote][i]Originally posted by glokstadt[/i]
<br>[quote][i]Originally posted by Spit[/i]
<br>The only good news that I could see today was the fact that crude oil had a 10% trading price drop.
[/quote]

Ecept when you think about it... Our economy is in worse shap if the price of oil/crude drops because that means supply is up, and demand is down--we are not spending money to drive anywhere...


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[/quote]
I understand what you're saying about supply and demand glok but we still have to drive.I wouldn't mind seeing a price break at the pumps.Also,don't forget about heating oil. Many of us in the North East will rely on heating oil this winter.A break there will also be helpful and in some cases,needed.
On a day like today , I'm just trying to see SOME water in the glass.

[glokstadt]

[quote][i]Originally posted by Spit[/i]
<br>[quote][i]Originally posted by glokstadt[/i]
<br>[quote][i]Originally posted by Spit[/i]
<br>The only good news that I could see today was the fact that crude oil had a 10% trading price drop.
[/quote]

Except when you think about it... Our economy is in worse shap if the price of oil/crude drops because that means supply is up, and demand is down--we are not spending money to drive anywhere...


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[/quote]
I understand what you're saying about supply and demand glok but we still have to drive.I wouldn't mind seeing a price break at the pumps.Also,don't forget about heating oil. Many of us in the North East will rely on heating oil this winter.A break there will also be helpful and in some cases,needed.
On a day like today , I'm just trying to see SOME water in the glass.
[/quote]

Sorry, I didn't mean to 'knock' you on the fact that prices do need to come down, and speculation on the price of a barrel of oil is in some ways like the speculation of rising home prices to cover the hedge bets.

I know folks, myself included--we don't drive anywhere anymore, unless we have to... And I feel for you on the heating oil prices to fill those tanks, so feel free to move to California this winter, or visit me [:)] at least, if that will work out...[;)]

I'm at $3.57 9/10ths today, a little bit lowerevery few days, but no significant drops in the price so far...

[Spit]

[quote][i]Originally posted by glokstadt[/i]
<br>[quote][i]Originally posted by Spit[/i]
<br>[quote][i]Originally posted by glokstadt[/i]
<br>[quote][i]Originally posted by Spit[/i]
<br>The only good news that I could see today was the fact that crude oil had a 10% trading price drop.
[/quote]

Except when you think about it... Our economy is in worse shap if the price of oil/crude drops because that means supply is up, and demand is down--we are not spending money to drive anywhere...


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[/quote]
I understand what you're saying about supply and demand glok but we still have to drive.I wouldn't mind seeing a price break at the pumps.Also,don't forget about heating oil. Many of us in the North East will rely on heating oil this winter.A break there will also be helpful and in some cases,needed.
On a day like today , I'm just trying to see SOME water in the glass.
[/quote]

Sorry, I didn't mean to 'knock' you on the fact that prices do need to come down, and speculation on the price of a barrel of oil is in some ways like the speculation of rising home prices to cover the hedge bets.

I know folks, myself included--we don't drive anywhere anymore, unless we have to... And I feel for you on the heating oil prices to fill those tanks, so feel free to move to California this winter, or visit me [:)] at least, if that will work out...[;)]



[/quote]
California in the wintertime ? I wouldn't know what to do with all that warm sunshine. [:o)]

[coop41]

Here's a great article from nearly a decade ago you may find interesting:

http://query.nytimes.com/gst/fullpage.h ... gewanted=1

Fannie Mae Eases Credit To Aid Mortgage Lending

By STEVEN A. HOLMES
Published: September 30, 1999

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.

[phillyidol]

Those BASTARDS!




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[Frau_Blucher]

Coop, do you think that stuff in and of itself could fuel the immense magnitude of the problem? Yeah, the sub-primes are the actual debt vehicle that hedge funds and other mortgage-backed securities investors have used to further leverage everything from buyouts to speculation. We were all happy when this activity pushed up the value of equities, even though it was all financed by bad debt which was inturn underwritten by our banks. It feels like nobody was minding the store at either the government or corporate levels to say that this could really be fucked in any kind of economic downturn where housing prices and liquidity is going down and can't then keep feeding the beast. I just wonder how we strayed so far from fundamentals.

[coop41]

[quote][i]Originally posted by Blir[/i]
<br>Coop, do you think that stuff in and of itself could fuel the immense magnitude of the problem? Yeah, the sub-primes are the actual debt vehicle that hedge funds and other mortgage-backed securities investors have used to further leverage everything from buyouts to speculation. We were all happy when this activity pushed up the value of equities, even though it was all financed by bad debt which was inturn underwritten by our banks. It feels like nobody was minding the store at either the government or corporate levels to say that this could really be fucked in any kind of economic downturn where housing prices and liquidity is going down and can't then keep feeding the beast. I just wonder how we strayed so far from fundamentals.
[/quote]

I don't think so, however it was a serious turning point. Everyone wants to point a finger at the Democrats because they were in office when this started rolling, or the Republicans because they controlled Congress or Mortgage Companies or Sub prime lending or whoever else they can think of. No government or corporate controls, and heck, why did they need to? It was just money making money making money and you are exactly right: no fundamentals. I'd love to say "I told you so" but was just as much caught up in it as anyone else. There were definitely times where I said to anyone that wanted to listen "This is just crazy". The mortgage business hasn't been any fun for 5 or 6 years. Anyone could get a loan and DEMANDED to, regardless of their credit, cash savings, etc. and guess what? There was a long line of people willing to give it to them.
Some of these failings have been going on for much longer than the 90's and it's silly to try to pinpoint when, the pressure to get FNMA and FHLMC to lend more aggressively is a fundamental mishap of epic proportions.
You'll notice Franklin Raines quoted in the article, he's who McCain was trying to tie together with Obama : (http://en.wikipedia.org/wiki/Franklin_Raines )
He seems to be one of many of the culprits who got away clean with huge sums of money.



Remeber that thread we had on here where everyone was just bragging about the wild wealth they had accumulated in their homes and how much equity they were gaining?????

[SwampThing]

Didn't the low interest rates also play a part. I know several people who were habitual at re-financing everytime the rates went down a quarter of a percent (and took equity out of their home each time).


Also I received no less then 2-3 offers to re-fi in the mail daily during a 5 year period. They almost always included the option to take lots of cash out. I don't believe these were Freddie or Fanny offerings.

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