Fannie Mae-No Politics (FNMA)

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Has socialism already failed in the United States?

?BY JOHN M. DEMAGGIO, OPINION CONTRIBUTORThe views expressed by contributors are their own and not the view of The HillTWEET SHARE EMAIL

How many nations have already embraced socialism's promise of paradise but instead experienced the effects of socialism's disastrous reality?
CNN's "Venezuela: How a rich country collapsed" details how Venezuela, considered the "richest country in Latin America," in only 20 years became the current poster child of socialism's disastrous reality. But is there an example in recent memory on your own doorstep?
There is little doubt that the 2008 housing market collapse was precipitated by extensive subprime loans. Subprime loans take the form of interest-only loans, option adjustable rate mortgage loans, ultra-long fixed-rate loans, balloon loans, and no-money-down loans. Such loans have a higher risk of default. According to the Federal Deposit Insurance Corporation, "These borrowers have been delinquent, bankrupt, or have low credit scores and/or low income. Specifically, they've been delinquent on their payment with two or more 30-day delinquencies in the past year."
In 1977, the Community Reinvestment Act (CRA) was passed, encouraging banks to lend to low- and moderate-income borrowers. 

Sue Kirchhoff and Judy Keen reported in "Minorities hit hard by rising costs of subprime loans" that subprime lending surged because lenders have been supported by politicians and community leaders eager to promote minority homeownership, which remains about 25 percentage points below that of white non-Hispanics, subjecting these borrowers to "debt servitude."
Under Andrew Cuomo in 2000, the Department of Housing and Urban Development announced the historic federal regulations that raised the required percentage of mortgage loans for low- and moderate-income families that finance companies Fannie Mae and Freddie Mac had to buy "from the current 42 percent of their total purchases to a new high of 50 percent - a 19 percent increase."
In "Yes, the CRA Is Toxic," Edward Pinto reported that "50 percent of CRA loans for single-family residences were nevertheless made to borrowers who made down payments of 5 percent or less or had low credit scores - characteristics that indicated high credit risk." Some lending institutions reported 19 to 35 percent delinquency rates on CRA-mandated loans versus 2 percent on non-CRA loans. And Pinto reported that "Bank of America said in 2008 that while its CRA loans constituted 7 percent of its owned residential-mortgage portfolio, they represented 29 percent of that portfolio's net losses." This lead him to conclude the following: "Whatever the precise magnitude of the CRA's role, there is no question that as the government pursued affordable-housing goals - with the CRA providing approximately half of Fannie's and Freddie's affordable-housing purchases - trillions of dollars in high-risk lending flooded the real-estate market, with disastrous consequences."

https://thehill.com/opinion/finance/453913-has-socialism-already-failed-in-the-united-states?amp