Fannie and Freddie Fail To Meet Low Income Lending Goals
All I can say is Thank God that Fannie Mae and Freddie Mac failed to meet their low income lending goals. Now you can call me a heartless bastard, but I really do not mind. Hear me out.
We have heard how evil lenders have been writing loans to families that could not pay it back and causing the housing crisis. But if you read the following you will see that Fannie and Freddie encouraged this behavior. Heck, by admitting they have failed to hit their quota are telling us that even they think the mandates that Congress gave them are nuts!
Both companies missed their 2008 goal to set aside 56 percent of their loan purchases and mortgage guarantees for low-and moderate-income borrowers, Federal Housing Finance Agency Director James Lockhart said today at a real estate industry event in Washington. He didn’t say what the new target would be.
“One of the ways Fannie and Freddie made their goals in previous years was to buy those subprime mortgages in private- label securities and that wasn’t a safe and sound practice,” Lockhart told the Asian Real Estate Association of America and National Association of Hispanic Real Estate Professionals. via Bloomberg.com.
What really gets me is that Fannie and Freddie are saying they were buying up subprime loans to hit their quota of low income loans. Even if you have been hiding under a rock the past couple of years you know subprime loans have been a big cause of the foreclosure crisis.
Now we have the quasi national lenders who have to fulfill mandates from the federal government that they can not. These mandates they are just as dangerous as they were 5 years ago. So here is my question:
How can Congress and the Federal Government have not changed the mission of Fannie Mae and Freddie Mac to work in todays environment?
By insisting they 56 percent of loan purchases be made to low income borrowers in a housing decline you are essentially saying that you want to exasperate the present mess we are in now.
Who out there can truthfully say that the Federal Government did not play a large role in the housing crisis with a straight face?
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Comment by Steve on 10 June 2009:
I agree with your comments. I am now going through foreclosure, I am low-income on social security. I had a fixed rate of 6.375 with GMAC/INVESTOR FREDDIE MAX. I tried working with them on a workout months before we went into default, they would not work with us, even though we had good credit and a modest income. They promised us a deed-in-lieu if we would short-sale, which we did try, we go a offer, I asked them to send me something in writing giving me permission to do a short-sale, the rep told me they could send me nothing in writing, so our realtor was left holding the bag, so our file was closed, and we was refused a deed-in-lieu. GMAC is a nasty company they really treat their customer like crap, and could care less about what happens. They tricked us into moving by promiseing us a deed-in-lieu, same day we got a good offer, we recieved a civil summons of foreclosure proceedings. There is no plan out there to help low-income homeowners. Even with President Obama’s plan low income fold don’t have ten percent to pay for refinance through FHA, I voted for him, but I think he is living in a dream world of some kind of mortgage relief fairy tale. I hope they come up with something to keep low income folks in their home. If they don’t America will look like a slum town due to all the boarded up homes.