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Discussion: (7 comments)

  1. Max Planck

    3……..

    2………

    1………

    There you go again!

  2. maxie boy is never one to be influenced by the well known realities

  3. Late on Christmas Eve, 2009, the Obama Administration made US taxpayers the “Secret Santa” for Fannie Mae and Freddie Mac.
    http://soquelbythecreek.blogspot.com/2010/02/fannie-freddie-and-you-as-secret-santa.html

    Christmas is coming!

  4. Todd Mason

    My first mortgage in 1974 was a low-downpayment VA loan insured by the FHA. (5 percent down? Less?) So Pinto could have given us claims-paid data for the 30 years ended 2003, and covering what would be, in fact, your dad’s FHA as opposed to your grandfather’s. And why didn’t he? Because home prices rose steadily in that period. In a matter of a year or two, the home I financed back then went from 95 percent loan-to-equity to 80-20 and then much lower still. People still got divorced in the 1970s, fell ill or lost jobs, but FHA was off the hook.

    Home prices today have FALLEN substantially, meaning there is no cushion in the case of divorce, illness, job loss. And the grand lesson here would be Duh!

  5. Todd Mason

    And to Soquel up the creek, without a Fannie or Freddie bailout, there would not have been a housing market because mortgages would have been as rare as diamonds. Actually it took a nationalized Fannie & Freddie, plus the Fed as buyer of last (only) resort of agency bonds. IIRC, the Fed bought over $1 trillion in agency debt, and it’s still doing it today because private MBS investors have not come back. And to state the government intervention correctly, taxpayers bailed out bondholders who reached for higher yields in the oughts confident that the govt would not let Fannie and Freddie fail.

  6. Todd Mason, I have no problem with Fannie and Freddie or the FHA as entities. However, there is ample evidence that members of both parties in Congress were not performing their oversight duties.

    The blog post I provided provides a nearly decade-long time-line showing that many knew in advance of the high potential for catastrophic failure.
    http://soquelbythecreek.blogspot.com/2010/02/fannie-freddie-and-you-as-secret-santa.html

    In a September 1999 article, the New York Times warned …

    “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.”

    Yet, a mere two months before the crash, the Chairman of the House Financial Services Committee and future author of Dodd-Frank said, “I don’t think that Fannie and Freddie are financially insolvent. I don’t think they need large bailouts.”

    Obviously, the oversight system had a catastrophic failure. It is either corrupt, incompetent, or incapable of performing its duty. We need a significantly more robust oversight mechanism.

  7. Todd Mason

    Life is too short to spend it correcting wingnut fairy tales, but …. Consider the charts here showing how many mortgaged homes have negative equity: http://www.zillow.com/blog/research/2012/11/14/negative-equity-falls-in-the-third-quarter-but-fiscal-cliff-could-derail-momentum/

    Then ask yourself, does the fact that 50 percent of all mortgaged homes in Atlanta are underwater reflect the number of subprime bums there that that rascal Clinton forced Fannie and Freddie to underwrite? Or is that the lenders doing cash-out refis for people in all economic strata did not anticipate home prices falling sharply and broadly? Zillow’s analysis of delinquencies shows a 50-25-25 split among starter homes, midscale and upscale, which probably reflects levels of financial resources rather than mortgage status.

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