Thread: Fannie Mae foreclosures

[quote name='Bourne' date='18 October 2009 - 04:43 PM' timestamp='1255880614' post='40419']

What has changed is that we've gotten rid of Bush who had 8 years to stop this and instead just let the crash occur.

[/quote]



Immaterial.



Stay on subject for once.



The point of this thread is that the laws that encouraged the bad lending in the first place are still there.

[quote name='justoneman' date='18 October 2009 - 10:25 AM' timestamp='1255875953' post='40390']

Here we sit almost a year after the stock market crash precipitated by banks bad loans to high risk borrowers. What has changed in the laws that created this? Nothing. We have had in place for over a decade now, lending laws in Fannie Mae that encouraged and backed loans made to people not qualified to recieve those loans. Fannie Mae is responsible for backing 5.1 million of these sub prime loans. Statistics are out that 36% of these loans are in foreclosure. that is almost 2 million foreclosures based solely on these loans made to non qualified borrowers. Statistics show that loans not made to these high risk borrowers or prime loans, are foreclosing at a measly .089%. It is obviouse what has presipitated the stock market crash. Bad loans made by Fannie Mae.



So what has been changed to stop this practice?



Nothing!!

[/quote]



Fannie Mae did not ORIGINATE a single subprimne loan.



Yes, Fannie Mae stupidly bought some on the open market from Wall Street. But those loans were all originated by wall Street. After all, this what happens when corporate executive compensation is tied to short term revenue................not long term profit.



btw - do you know the difference between a prime, ALT-A and subprime loan?

[quote name='justoneman' date='18 October 2009 - 10:37 AM' timestamp='1255876664' post='40395']

In the USA there are about 50 million homes with morgages. Of those 50 million, 5.1 million are Fannie Mae sub prime loans. So 10% of homes financed in America are done so with Fannie Mae sub prime loans to people not qualified to have a loan. More than a third of these homes are now in foreclosure. When you put 10% of loans at risk like this it is very very stupid. If Fannie Mae was not backing such loans banks would not make them. It is entirely by the backing of these loans by the government that they are made. These regulations to make these high risk loans are very bad and need to be changed.

[/quote]





Once again, the loans were originated by wall Street. thus the banks made the loans first. It had nothing to do with Fannie backing. And as said before, yes, fannie stupidly bought the garbage Wall Street peddled. If we just had reasonable limitations on executive compensation it is doubtful much of this would have happened.

[quote name='justoneman' date='18 October 2009 - 11:54 AM' timestamp='1255881294' post='40427']

Bush warned and warned about the need for reform. The Dems blcoked every attempt at reform.



Now that the crash has happened it should be painfully obvious to all that these Fannie Mae practices must be stopped.

[/quote]



The only reform Bush tried to put forward was to limit Fannie so that Wall Street executives at Goldman, Lehman, etc.......could get more profits and thus compensation.



How could reform at the market writing prime, good credit, 80% LTV loans (Fannie wrote higher LTV's but only with private market mortgage insurance covering the portion above 80%) without addressing the markets writing 95% and 100% LTV NINA, NIVA to people with poor credit.



As you appear to be a master of mortgage "practices", please detail the Bush regulatory efforts of subprime loan originations.

[quote name='justoneman' date='18 October 2009 - 12:18 PM' timestamp='1255882715' post='40449']

You are mistaken. Clinton lowered the bar.

[/quote]



Clinton did lower the bar somewhat, then under Bush it was lowered significantly more. Interest only, neg-am stated income were all products that only came around during the Bush term



if i am incorrect, please detail the credit scores, DTI's, products, etc......that were involved under both administrations. Since I am quite familiar with the declining credit standards, I will be anxiously awaiting your reply.

[quote name='justoneman' date='18 October 2009 - 12:25 PM' timestamp='1255883113' post='40452']

We need to stop the practice of the government creating bad loans. We need to stop the bleeding. This is ridiculous.

[/quote]



While you mostly wrong about Fannie, you are correct on this. Since Wall Street shut down their financing/securitization by the end of 2007, the FHA has become the new "subprime" market.

[quote name='justoneman' date='18 October 2009 - 12:53 PM' timestamp='1255884824' post='40463']

You are talking about states rights of preditory lending laws. What does that have to do with the Fannie Mae laws? Nothing. you think state laws were going to supercede Fannie Maes lending practice? Hardly.



Show me evidence of Bush lowering the standards of Fannie Mae lending. You can't because he did not. It was Clinton.

[/quote]



Actually, states rights has a lot to do with it. Because the OCC had much more lienient guidelines then did state banking departments uch as New York, etc......many lenders reorganized as federal banks to avoid the oversight and capital requirements that some states had.

[quote name='Forplay' date='18 October 2009 - 02:05 PM' timestamp='1255889130' post='40488']

I totally agree, this is madness, one has to remember the democrats controlled congress for the last two years of Bush's presidency. Dode and Frank was standing behind Fanny and Mac urging them to make these sub prime loans. In the old days you had to have 20% down, a real job with real income, and good credit, and based on your income there was a formula the banks used to figure how much of a loan you could repay. What happened to those standards????

[/quote]



What happened to those standards? Wall Street and securitization happened, thats what. And sinec neither fannie nor Freddie ORIGINATED subprime loans, your only problem should have been that they were allowed to buy them on the open market from wall Street.



btw - as the credit markets froze in late August 2007, that means the democrats only controlled the process from january 2007 until August. the rest of the time we were riding the wave of deregulation and the moronic concept that "free markets" are always efficient.

[quote name='Feslin' date='19 October 2009 - 03:39 AM' timestamp='1255937967' post='40859']

Immaterial.



Stay on subject for once.



The point of this thread is that the laws that encouraged the bad lending in the first place are still there.

[/quote]



Yes, they are still there. Fortunately, few trust Wall Street to buy the garbage. But if the buyers come back, I am sure Wall Street will be there to once again lead the pack in short term profits (can you say executive compensation) always trump long term profitability.



And since Obama has not increased financial institution capital requirements that were lowered under Bush, all bank profit immediately accrues to bonuses and dividends. After all, Joe taxpayer is always there to bail out the wealthy.