Fannie Mae-No Politics (FNMA)

[955]

Under the GSE Act, the HUD Secretary was authorized to establish affordable
housing goals for Fannie and Freddie. Congress required that these goals include a
low and moderate income goal and a special affordable goal (discussed below), both
of which could be adjusted in the future. Among the factors the secretary was to
consider in establishing the goals were national housing needs and “the ability of
the enterprises [Fannie and Freddie] to lead the industry in making mortgage credit
available for low-and moderate-income families.” The Act also established an interim
affordable housing goal of 30 percent for the two-year period beginning January 1,
1993. Under this requirement, 30 percent of the GSEs’ mortgage purchases had to
be affordable housing loans, defined as loans to borrowers at or below the AMI [Area Median Income].

Further, the Act established a “special affordable” goal to meet the
“unaddressed needs of, and affordable to, low-income families in low-income
areas and very low-income families.” This category was defined as follows: “(i) 45
percent shall be mortgages of low-income families who live in census tracts in which
the median income does not exceed 80 percent of the area median income; and
(ii) 55 percent shall be mortgages of very low income families,” which were later
defined as 60 percent of AMI. Although the GSE Act initially required that the
GSEs spend on special affordable mortgages “not less than 1 percent of the dollar
amount of the mortgage purchases by the [GSEs] for the previous year,” HUD raised
this requirement substantially in later years. Ultimately, it became the most difficult
affordable housing AH burden for Fannie and Freddie to meet.

SOURCE: p. 490, FCIC Report, http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf

Oh, I see.

Don't forget that HUD also increased F&F's requirement to buy sub-prime loans in 2004 because "they were falling behind the private lenders" (paraphrasing). I don't think that hurt F&F much, comparatively, because even the sub-prime loans F&F backed looked like AAA prime compared to the stinking liar loans coming from the likes of WaMu.

Quote:
HUD, under collusion between government and banks to take down F&F, places FHA & F&F in direct competition with each other, banks with assistance of credit rating agencies (Moody's et al) flood housing market with bad NTM's,