Here we go:

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. Real Estate Examiner

Now don’t panic, this insane merry go round is not going to happen again in the near term. This is a reprint of an article written in September, 1999, back in the final days of the Clinton Administration.

But we have to remember how the government intentionally forced banks to lower their lending standards and creating the mess we are digging ourselves out of.

Related posts:

1. Why The Chrysler and GM Deals Will Raise Mortgage Rates
2. What is In The Homeowner Affordability and Stability Plan
3. Fed Says 4.5% Mortgage Rates Coming Soon, Others Say It is A Pipe Dream
4. Mortgage Bankers Association Propose Dismantling of Freddie, Fannie
5. New Congress Looks To Add Mortgage Debt To Bankruptcies – BIG MISTAKE