Affordable Lending

[Nabludatel']

Fair Housing & Equal Opportunity

"HUD is an avid supporter of increased minority homeownership. The Office of Fair Housing and Equal Opportunity carefully monitors the programs of other HUD offices, as well as the work of GSEs (government sponsored enterprises) to ensure that policies are being followed to progress toward an increase in numbers of minority homeowners. Policies and procedures are examined to be sure they do not discriminate or bring about a negative impact against minorities in pursuit of homeownership

Serving as the mission regulator for government-sponsored enterprises (GSEs) in the secondary mortgage market, HUD continues to promote efforts to increase the number of minority and low to moderate-income families working to achieve homeownership Fannie Mae and Freddie Mac, the two largest sources of housing finance in the United States, have been subject to a number of goals associated with mortgage lending to low income families"


"Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) in the secondary mortgage market, are the two largest sources of housing finance in the United States. They fund these mortgages by purchasing loans directly from primary market mortgage originators and holding these loans in portfolio, or by acting as a conduit and issuing mortgage-backed securities, which are then sold in the capital markets. HUD is the mission regulator for the GSEs, and a major aspect of this regulation involves setting minimum percentage-of-business goals for their mortgage purchases. These goals deal with the enterprises' support for low-income lending and lending in underserved geographic areas, and they have played an important role in encouraging mortgage originators to undertake more affordable lending for lower-income and minority families in recent years. This issue brief discusses the significant increases in these lending goals for the years 2001-03, which should encourage the GSEs to further step up their support for affordable lending. " (c)

http://www.hud.gov/offices/fheo/lending/minorityhome.cfm

[Akela]

Я думаю, что уместно упомянуть и про redlining.

Redlining - The unethical practice whereby financial institutions make it extremely difficult or impossible for residents of poor inner-city neighborhoods to borrow money, gain approval for a mortgage, take out insurance or gain access to other financial services because of high default rates. In this case, the rejection does not take the individual's qualifications and creditworthiness into account.

In some cases of redlining, financial institutions would literally draw a red line on a map around the neighborhoods in which they did not want to offer financial services, giving the term its name.

[Буржуй]

что тут обсуждать?

[смешно]

спекулянтов на мыло!

[edik]

Я думаю, что уместно упомянуть и про редлининг.

Редлининг - Тхе унетхицал працтице щхеребы финанциал институтионс маке ит ехтремелы диффицулт ор импоссибле фор ресидентс оф поор иннер-циты неигхборхоодс то боррощ монеы, гаин аппровал фор а мортгаге, таке оут инсуранце ор гаин аццесс то отхер финанциал сервицес бецаусе оф хигх дефаулт ратес. Ин тхис цасе, тхе рейецтион доес нот таке тхе индивидуальс эуалифицатионс анд цредитщортхинесс инто аццоунт.

Ин соме цасес оф редлининг, финанциал институтионс щоулд литераллы дращ а ред лине он а мап ароунд тхе неигхборхоодс ин щхич тхеы дид нот щант то оффер финанциал сервицес, гивинг тхе терм итс наме.
Да, очень неэтично со стороны банков отказывать в ссуде людям, которые, вероятнее всего, не отдадут одолженное.

[Akela]

Да, очень неэтично со стороны банков отказывать в ссуде людям, которые, вероятнее всего, не отдадут одолженное.
Кстати Барак Обама прославился в Чикаго тем, что был активистом, выступающим за отмену практики [redlining]...

[Nabludatel']

current chairman of the House Financial Services Committee- Barney Frank .


Barney Frank on Fannie Mae and Freddie Mac in 2003



"Hearing from September 2003 on an administration proposal to alter the regulation of GSEs like Fannie Mae and Freddie Mac. See Congressman Barney Frank's opening statement, which begins at 4:40. It's rather amusing. Here's an excerpt of his opening statement:

I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two government sponsored enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. We have recently had an accounting problem with Freddie Mac that has led to people being dismissed, as appears to be appropriate. I do not think at this point there is a problem with a threat to the Treasury.

I must say we have an interesting example of self-fulfilling prophecy. Some of the critics of Fannie Mae and Freddie Mac say that the problem is that the Federal Government is obligated to bail out people who might lose money in connection with them. I do not believe that we have any such obligation. And as I said, it is a self-fulfilling prophecy by some people.

So let me make it clear, I am a strong supporter of the role that Fannie Mae and Freddie Mac play in housing, but nobody who invests in them should come looking to me for a nickel--nor anybody else in the Federal Government. And if investors take some comfort and want to lend them a little money and less interest rates, because they like this set of affiliations, good, because housing will benefit. But there is no guarantee, there is no explicit guarantee, there is no implicit guarantee, there is no wink-and-nod guarantee. Invest, and you are on your own.

Now, we have got a system that I think has worked very well to help housing. The high cost of housing is one of the great social bombs of this country. I would rank it second to the inadequacy of our health delivery system as a problem that afflicts many, many Americans. We have gotten recent reports about the difficulty here.

Fannie Mae and Freddie Mac have played a very useful role in helping make housing more affordable, both in general through leveraging the mortgage market, and in particular, they have a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing, and that is what I am concerned about here. I believe that we, as the Federal Government, have probably done too little rather than too much to push them to meet the goals of affordable housing and to set reasonable goals. I worry frankly that there is a tension here.

The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disastrous scenarios. And even if there were a problem, the Federal Government doesn't bail them out. But the more pressure there is there, then the less I think we see in terms of affordable housing."

[Nabludatel']

ACORN - Who we are:

National non-profit ACORN Housing has been providing free housing counseling to low and moderate income homebuyers since 1987. We have opened HUD-certified, Fannie Mae-approved housing counseling offices across the US, helping over 50,000 families to achieve homeownership.

ACORN Housing provides one-on-one mortgage loan counseling, first-time homebuyer classes, and helps clients obtain affordable mortgages through our unique lending partnerships.

We look at your savings and credit history to see if you qualify for a mortgage. We can help you with credit problems and to create a downpayment savings plan.

When you qualify, we can help arrange a mortgage with lower interest rates, lower down payments and lower settlement costs than what banks usually offer




"ACORN Housing thanked Charmaine Brown, Senior Business Manager in Fannie Mae's Office of Corporate Giving by honoring her with its "Affordable Housing Warrior" Award at the ACORN Housing's 2007 mid-year managers meeting at the Cenacle Conference Center in Chicago Illinois. With Fannie Mae's assistance, ACORN Housing is able to achieve many of its business objectives aimed at providing low- and moderate-income families with homes. During the award presentation, Charmaine Brown thanked ACORN Housing for its excellent work. ACORN Housing is currently partnering with Fannie Mae to expand its nationwide housing counseling operation and foreclosure prevention center, to create a non-profit mortgage broker, and to develop affordable housing for residents that were displaced by Hurricane Katrina. Pictured with Ms. Brown (in the center with the plaque) are ACORN housing's office directors, regional managers, and senior management staff." (c)

[Nabludatel']

Кто-нибудь смотрел вчерашнее (10/02/2008) интервью О'Райли - Берни Франка?

[Nabludatel']

REP. BARNEY FRANK, D-MASS. July 14, 2008:
"I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They're not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward.

They're in a housing market. I do think their prospects going forward are very solid. And in fact, we're going to do some things that are going to improve them." (c)

[Nabludatel']

Sept. 22 (Bloomberg) -- "The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''
Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess. "
(c (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0))