Replies to post #533940 on Fannie Mae-No Politics (FNMA)

[skeptic7]

Translation: Nothing gonna happen anytime soon.

[Donotunderstand]

amazing

and the wall street did a reasonable reporting job - even if they left out that F and F have fully repaid and all profits are being swept

but how REPS hate F and F

but how Brown and the big four DEM Liberals feel

and how a consensus may build on common sense

all reported

along with encouragement that Calabria works with congress by "maybe" doing things and suggesting things and "doing things" and then also says what HE (as I read it -- "his proposals") will be consistent with a separate treasury blue print (my words)

and WSJ suggests that many believe - congress (I assume explicit guarantee after big capital) is needed to keep rates for Americans down and … all my read --- Calabria will push congress into that corner

this is 3.50 if he follows up in real time

[955]

***The companies got into trouble ahead of the financial crisis because they took on more risk without building more of a financial cushion to cover possible losses.*** Fannie and Freddie amassed huge investment portfolios to profit from the difference between their lower cost of funding mortgages -- a benefit of an implied federal guarantee because Congress created the firms -- and the rates they could earn on mortgages. They were bailed out after loans went sour during the housing market's free fall; the George W. Bush administration put them in government conservatorship, where they remain today.

The first statement above is DECEPTIVELY INACCURATE and has been propagated by MSM AND GOV since the outset. Correctly stated, it SHOULD READ as follows:

The companies got into trouble ahead of the financial crisis because they WERE FORCED TO TAKE on more risk BY MEETING HUD MANDATED QUOTAS AS HIGH AS 56% FOR SUBPRIME, ALT-A, NO-DOC LOANS without building more of a financial cushion to cover possible losses.

SOURCE: 2008 FINANCIAL CRISIS INQUIRY COMMISSION REPORT, p. 453-454
https://www.govinfo.gov/content/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf

The GSE Act, however, created a new “mission” for Fannie Mae and Freddie Mac — a responsibility to support affordable housing—and authorized HUD to establish and administer what was in effect a mortgage quota system in which a certain percentage of all Fannie and Freddie mortgage purchases had to be loans to low-and- moderate income (LMI) borrowers—defined as persons with income at or below the median income in a particular area or to borrowers living in certain low income communities. The AH goals put Fannie and Freddie into direct competition with the FHA, which was then and is today an agency within HUD that functions as the federal government’s principal subprime lender.

Over the next 15 years, HUD consistently enhanced and enlarged the AH goals. In the GSE Act, Congress had initially specified that 30 percent of the GSEs’ mortgage purchases meet the AH goals. This was increased to 42 percent in 1995, and 50 percent in 2000. By 2008, the main LMI goal was 56 percent, and a special affordable subgoal had been added requiring that 27 percent of the loans acquired by the GSEs be made to borrowers who were at or below 80 percent of area median income (AMI). Table 10, page 510, shows that Fannie and Freddie met the goals in almost every year between 1996 and 2008.