Just in case you're wondering what started the financial mess our country is in right now, read from this article, published in the New York Times, Sept. 30, 1999, by Steven A. Holmes.
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.
Did you catch those phrases? "Extend home mortgages to individuals whose credit is generally not good enough to qualify?" "Under increasing pressure from the Clinton Administration?" Read on.
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.
"Significantly more risk." Ya think?
Remember, this piece was written in 1999.
The Clinton Administration demanded the mortgage industry offer home loans to under-qualified borrowers, then they demanded Fannie Mae and Freddie Mac buy those loans, further weakening their balance sheets. Is it any wonder they're in dire need of rescue now?
Our current situation should not be a surprise to anyone. A New York Times journalist predicted it nine years ago.
And who will pay the price? Those of us who have good credit, who work and pay taxes, and who pay our mortgages on time every month.
Makes me sick.
Having trouble being thankful for THIS ~