"Shot In The Fannie Mae"

[Sandi Moses]

Facts you don't get told on the evening news.

This came in an e-mail. Feel free to pass it on.
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SHOT IN THE FANNIE MAE

The History of a Financial Disaster
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1997

ĆFannie Mae is a GSE (Govt. Sponsored Entity) regulated by Congress.

ĆFannie Mae buys mortgages from other companies.

ĆIt is backed by the taxpayers for all losses, but keeps all profits.

ĆPresident Clinton loosens Home LoanRequirements.
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1998

ƒÜBanks begin making thousands of bad loans,0 down, no documentation, for 120%! (1998 ¡V 2008).

ĆExecutives at Fannie receive hugebonuses if loan targets are met.

ĆFranklin Raines and Jamie Garelick from the Clinton Administration are appointed to run Fannie Mae.
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2003

ĆPresident Bush proposes a new oversight committee to clean up Fannie Mae, but Democrats derail the effort.

ƒÜRep. Melvyn Watt, (D-NC) Committee onFinancial Institutions & Consumer Credit. stated, ¡§I don¡¦t see much other than weakening the bargaining power poorer families to get affordablehousing.¡¨
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1999 - 2004

ĆRaines earns $100 million in bonuses.

ĆGarelick earns $75 million in bonuses.

ĆIn 2004, Enron collapses, congress investigates, Executives Skilling & Lay go to jail, for fraudulent bookkeeping.

ĆCongress responds with the Sorbanes-Oxley Act, more heavy regulation of corporations.
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2004

ĆAn OMB investigation finds massive fraudulent bookkeeping at Fannie Mae.

ĆFalse numbers triggered executive bonuses every year.

ĆCongress holds no hearings, no one goes to jail, or is punished.

ĆWHY NOT?
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1999 -2005

ĆFannie Mae gives millions to Democratic causes, examples: Jesse Jackson & ACORN.

ĆFannie Mae pays millions to 354 congressmen and senators, from both parties.

ĆWho got the most money?
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Top 4 Recipients

#1 Sen. Christopher Dodd, (D-CT)Chairman of the Banking, Housing, & Urban Affairs Committee

#2 Sen. Barack Obama, (D-IL) Federal Financial Management Committee
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Top 4 Recipients

#3 Sen. Chuck Schumer, (D-NY)Chairman of the FinanceCommittee

#4 Rep. Barney Frank, (D-MA)Chairman of the House Financial Services Committe
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2005

ĆFranklin Raines & top execs are forced to resign from Fannie Mae.

ĆThey do not go to jail.

ƒÜThere is no media ¡§perp. walk.¡¨

ĆThey keeps all of their bonuses

ĆThey finally pay $31.4 million in civil fines.
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2005

ƒÜThe Federal Housing Enterprise Regulatory Reform Act is sponsored by:#325 Sen. John McCain, (R-AZ)Armed Services, & Commerce, Science, & Transportation¡§If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Maeand Freddie Mac pose to the housingmarket, the overall financial system, and the economy as a whole.¡¨
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2005

ĆNone of the top 4 recipients support thelegislation.

ĆThe reform act is blocked by Democrats, never even making it out of committee.

ĆNone of the politicians return any of the money, tainted by fraud.
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2008

ĆFannie Mae & Freddie Mac go bankruptand the govt. takes them over completely.

ĆLehman Brothers, goes bankrupt from investing in bad mortgages.

ĆAIG get $85 million in loan guarantees, after insuring bad loans & projects.

ĆTaxpayers will ultimately pay BILLIONS.
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2008

ĆFranklin Raines is now an advisor to the Obama Campaign which wants the govt. totake over more of the economy.

ĆDid government involvement in the mortgage market work out?

ĆHow will even MORE government involvement make it better? Do you want to be Sweden?

ĆMcCain favors revising regulations & loanstandards, selling off Fannie & Freddie.
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SOURCES

ĆCongressional Record, 5/25/06

ƒÜ¡§Hannity & Colmes,¡¨ Fox News, 9/16-9/17/08

ĆHerald Tribune, 4/18/08

ĆNew York Times, 9/13/03Ćwww. govtrack.com, 9/17/08

Prof. Dennis Jantz, 2008

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Sandi

[Sandi Moses]

Here's more - from a New York Times article dated September 30, 1999!

Fannie Mae Eases Credit To Aid Mortgage Lending

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.


Sandi

[Erich]

Sandi

This is the kind of information the liberal mainstream media will not report because it exposes where the problem really originated from. Bill Clinton't philosophy that every American who wants too, should own a home regardless of whether or not they can afford it. This is what got us into this mess.

This also opened the door for greedy mortgage brokers who get their enormous commissions [for a 30 year loan] up front... they could care less whether the buyer could afford it... and the mortgage company knew Fannie and Freddie would guarantee their money. Even if it wasn't a Freddie or Fannie loan... the mortgage company still approved these bad loans because they had a backup mortgage company they could sell the loan too. Everybody gets rich and the taxpayer gets stuck with the bad mortgage.

The Bush Administration and Republican led Congress totally ignored this and now they are going to pay by watching the most liberal senator in Washington become president.

If the american people think we are in trouble now... wait till the socialist democrats take over leadership of this country. We haven't seen nothing yet. I believe it is just a matter of time before the stock market goes into a dive similar to 1929 and unemployment shoots up to 20%+. I have pulled every dollar I have out of stocks and mutual funds and so will many others once they see this "bailout' is not going to work. This is a bandaid if I've ever seen one.

Here is what will happen when congress approves the latest version of the Bailout... The stock market will probably go up somewhere between 800-1500 points so the fat cats can sell off the majority of their stock portfolios at a favorable price. Then we will see the bandaid come off and the market go where it is suppose to be with all these devalued companies.

That is one scenario. The other would be that the bailout will have no significant effect on Wall Street or the economy... and the market will continue it's decline the point where panic sets in for all those who are heavily invested. They will sell along the same lines as the Rich did in 1929.

I hope I'm wrong but this is what I feel.... and fear will happen.

America is still the best and strongest country in the world and that won't change unless some unforseen things happen in China or Russa.... which we wouldn't expect to happen. So our long-term prognosis is good. Within 5-10 years we will get our energy problems under control and come back to be the great country we have always been.

The only americans who will not be significantly affected during this period are those who the politicians depend on to stay in power. That would be the ultra rich, those on disability or welfare, and govt employees.

One thing for sure... it is going to be a rocky road ahead and it will be interesting to watch the politicians and power brokers make their moves.

Erich

[raejones]

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