Taxpayers bail out Freddie Mac and Fannie Mae

[04 Venom]

Well it is official. The taxpayers are on the hook for billions to bail out the those two organizations to prevent a total collapse of the mortgage markets. Thank the mortgage brokers and banks that gave mortgages to anyone with a pulse. Blame the appraisers that inflated the value of the property to make the loan good on paper. Same thing happened in the 80s when the taxpayers got stuck with several hundred billion dollars to bail out the savings and loan industry because of financial fraud.

For all of you zealots that believe that the free market can do no wrong and the best thing the government can do is to get out of the way of the free flow of capital, here's the example of an irrational market. It seems to happen every 10-15 years or so.

Watch your 401(k) take a big hit, because the financial wake from this one will be felt by everyone.

[IWRBB]

Actually the government created Fannie Mae and Fannie Mac. The federal government guaranteed all of those loans, not the private sector. Both agencies issue loans to those who are typically rejected by private lenders. That was the whole point of both programs from the get go, to get people into loans that would normally be rejected by private lenders. It WAS a good program when it started, and got honest people into homes they otherwise could never get, but they let it run wild (fully encouraging it the whole time)since the mid 90's and it finally imploded.

[04 Venom]

Actually the government created Fannie Mae and Fannie Mac. The federal government guaranteed all of those loans, not the private sector. Both agencies issue loans to those who are typically rejected by private lenders. That was the whole point of both programs from the get go, to get people into loans that would normally be rejected by private lenders. It WAS a good program when it started, and got honest people into homes they otherwise could never get, but they let it run wild (fully encouraging it the whole time)since the mid 90's and it finally imploded.

I agree, both were set up to purchase mortgages on the secondary market to make sure there is a consistent flow of funds for new mortgages. Although both are now non-governmental agencies with stockholders. I believe you are wrong about guaranteeing the original mortgages. The fault still lies with greedy mortgage brokers and banks that took a quick profit and sold the mortgages, while misrepresenting the value, on the secondary market.

[fst 5pto]

No he is correct. Fannie and Freddie were created by the government and designed to cover the mortgage if a borrower were to default.

[04 Venom]

No he is correct. Fannie and Freddie were created by the government and designed to cover the mortgage if a borrower were to default.

My bad.

[fst 5pto]

I meant no disrespect of any sort by that, just setting the facts straight. You are right though, the tax payers will end up paying for it like we do everything else.

[BigBadStang]

Don't forget to put some of the blame on Bill Clinton for urging lenders to issue mortgages (when he was in office)to people who otherwise would not qualify.
Let us all not forget that the government has NO money, it's all taxpayer money. They only make the decisions on how to spend YOUR hard earned money they FORCE you to pay in taxes.

[04 Venom]

Don't forget to put some of the blame on Bill Clinton for urging lenders to issue mortgages (when he was in office)to people who otherwise would not qualify.


Where did that come from?

[Mista Bone]

I believe he means that the borrowing standards were lowered to allow more people to qualify while Clintion was president.


Federal Government Programs: FHA, VA

A centerpiece of federal housing efforts has been the FHA loan program run by the Department of Housing and Urban Development (HUD). This mortgage program has helped numerous first-time home buyers overcome obstacles that would have been insurmountable under conventional mortgage programs. With lower down payment requirements, lower asset requirements and looser credit standards.

In 1996, President Clinton signed the fiscal 1997 VA/HUD appropriations bill which contained four FHA streamlining amendments. The most important clause for home buyers included a provision to reduce the cost of FHA mortgage insurance from 2.25% to 2.0% of the loan amount for buyers who complete home ownership counseling. The other three amendments streamline processing of the loans, which can now be completed directly by private mortgage lenders offering the FHA program. For Veterans Administra-tion loans, the bill will result in a slight decrease in interest rates on VA loans.

In 1997, it is possible that FHA may consider privatizing the loan program and developing it into a company such as Fannie Mae. Most special interest lobbyists are against this plan, however, fearing that program requirements would be tightened and many first-time home buyers would be unable to obtain financing anywhere. While the FHA program does serve a specific sector of the market, many private lenders have developed their own programs in conjunction with non-profit housing agencies that are often more liberal than the FHA program. As a result, home buyers should still have ample programs available no matter what the future status of the FHA program.



All I found on a quick search, some other Clinton skews the seach engine, damn bitch :)

[BigBadStang]

I believe he means that the borrowing standards were lowered to allow more people to qualify while Clintion was president.


Yes, Mista, thats what I was eluding to.
Thanks. :)

[02mingryGT]

For all of you zealots that believe that the free market can do no wrong and the best thing the government can do is to get out of the way of the free flow of capital, here's the example of an irrational market.

Sounds like you prefer Socialism?

[04 Venom]

Sounds like you prefer Socialism?

Get serious, idiot.