WASHINGTON, March 04, 2009
Mary Trupo 202/383-1007 mtrupo@realtors.org
The following is a statement by National Association of Realtors® President Charles McMillan:
“NAR’s 1.2 million members are eager to help make President Obama’s Making Home Affordable plan a reality. We are pleased that the president released the guidelines today for refinancing and mortgage loan modifications and that the guidelines will be implemented immediately to help struggling homeowners as well as millions of eligible homeowners who have stayed current in their mortgage payments.
“Housing stabilization must be the key component of any federal recovery plan. Helping families keep their homes is critical to this effort and for the health of our economy and communities across the country.
“NAR has long called for a multipronged approach to address the housing and economic crisis. Allowing eligible homeowners to refinance or modify their loans will help millions of families avoid foreclosure. This in turn will support the housing recovery by slowing the growth in inventory due to foreclosures. Lowering unsold inventory will help stabilize home prices and values. We believe that the incentives the loan modification plan offers to borrowers and loan servicers will encourage additional loan modifications, reducing the default rate.
“Moving forward, we must not only work to prevent foreclosures, but also bring financially healthy home buyers to the market to further reduce unsold inventory. Toward this end, we hope that the president and his administration will continue to look for new and creative approaches that will lower interest rates for all homeowners and buyers.”
Review the Plan's Guidelines
For more detailed information on the Making Home Affordable plan, visit www.financialstability.gov.
Friday, March 13, 2009
Wednesday, March 4, 2009
Tampa Bay Business Journal
John Williams March 3, 2009 4:48PM EST
Mandy, let's get it straight. It wasn't 8 yrs. of Bush policies that lead to this mess. It mostly started with President Clinton.While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was Clinton who supercharged the process.
After entering office in 1993, he extensively rewrote Fannie's and Freddie's rules.In so doing, he turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocs and handed favors, jobs and money to political allies. This potent mix led inevitably to corruption and the Fannie-Freddie collapse.Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton unveiled his National Homeownership Strategy, which broadened the CRA in ways Congress never intended.
Addressing the National Association of Realtors that year, Clinton bluntly told the group that "more Americans should own their own homes." He meant it.Clinton saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, Clinton ordered Robert Rubin's Treasury Department to rewrite the rules in 1995.The rewrite, as City Journal noted back in 2000, "made getting a satisfactory CRA rating harder."
Banks were given strict new numerical quotas and measures for the level of "diversity" in their loan portfolios. Getting a good CRA rating was key for a bank that wanted to expand or merge with another.Loans started being made on the basis of race, and often little else."Bank examiners would use federal home-loan data, broken down by neighborhood, income group and race, to rate banks on performance," wrote Howard Husock, a scholar at the Manhattan Institute.But those rules weren't enough.Clinton got the Department of Housing and Urban Development to double-team the issue. That would later prove disastrous.Clinton's HUD secretary, Andrew Cuomo, "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis," the liberal Village Voice noted.
Among those decisions were changes that let Fannie and Freddie get into subprime loan markets in a big way.Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks.Since they could borrow at lower rates than banks due to implicit government guarantees for their debt, the government-sponsored enterprises boomed.With incentives in place, banks poured billions of dollars of loans into poor communities, often "no doc" and "no income" loans that required no money down and no verification of income.By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market — a staggering exposure.Worse still was the cronyism.Fannie and Freddie became home to out-of-work politicians, mostly Clinton Democrats.
An informal survey of their top officials shows a roughly 2-to-1 dominance of Democrats over Republicans. Then there were the campaign donations. From 1989 to 2008, some 384 politicians got their tip jars filled by Fannie and Freddie.Over that time, the two GSEs spent $200 million on lobbying and political activities. Their charitable foundations dropped millions more on think tanks and radical community groups.Did it work? Well, if measured by the goal of putting more poor people into homes, the answer would have to be yes. From 1995 to 2005, a Harvard study shows, minorities made up 49% of the 12.5 million new homeowners.
The problem is that many of those loans have now gone bad, and minority homeownership rates are shrinking fast. Fannie and Freddie, with their massive loan portfolios stuffed with securitized mortgage-backed paper created from subprime loans, are a failed legacy of the Clinton era.Thus the collapse of the economy.Now it is "fare economic politics" running the economy besides intelligent economics.
Mandy, let's get it straight. It wasn't 8 yrs. of Bush policies that lead to this mess. It mostly started with President Clinton.While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was Clinton who supercharged the process.
After entering office in 1993, he extensively rewrote Fannie's and Freddie's rules.In so doing, he turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocs and handed favors, jobs and money to political allies. This potent mix led inevitably to corruption and the Fannie-Freddie collapse.Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton unveiled his National Homeownership Strategy, which broadened the CRA in ways Congress never intended.
Addressing the National Association of Realtors that year, Clinton bluntly told the group that "more Americans should own their own homes." He meant it.Clinton saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, Clinton ordered Robert Rubin's Treasury Department to rewrite the rules in 1995.The rewrite, as City Journal noted back in 2000, "made getting a satisfactory CRA rating harder."
Banks were given strict new numerical quotas and measures for the level of "diversity" in their loan portfolios. Getting a good CRA rating was key for a bank that wanted to expand or merge with another.Loans started being made on the basis of race, and often little else."Bank examiners would use federal home-loan data, broken down by neighborhood, income group and race, to rate banks on performance," wrote Howard Husock, a scholar at the Manhattan Institute.But those rules weren't enough.Clinton got the Department of Housing and Urban Development to double-team the issue. That would later prove disastrous.Clinton's HUD secretary, Andrew Cuomo, "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis," the liberal Village Voice noted.
Among those decisions were changes that let Fannie and Freddie get into subprime loan markets in a big way.Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks.Since they could borrow at lower rates than banks due to implicit government guarantees for their debt, the government-sponsored enterprises boomed.With incentives in place, banks poured billions of dollars of loans into poor communities, often "no doc" and "no income" loans that required no money down and no verification of income.By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market — a staggering exposure.Worse still was the cronyism.Fannie and Freddie became home to out-of-work politicians, mostly Clinton Democrats.
An informal survey of their top officials shows a roughly 2-to-1 dominance of Democrats over Republicans. Then there were the campaign donations. From 1989 to 2008, some 384 politicians got their tip jars filled by Fannie and Freddie.Over that time, the two GSEs spent $200 million on lobbying and political activities. Their charitable foundations dropped millions more on think tanks and radical community groups.Did it work? Well, if measured by the goal of putting more poor people into homes, the answer would have to be yes. From 1995 to 2005, a Harvard study shows, minorities made up 49% of the 12.5 million new homeowners.
The problem is that many of those loans have now gone bad, and minority homeownership rates are shrinking fast. Fannie and Freddie, with their massive loan portfolios stuffed with securitized mortgage-backed paper created from subprime loans, are a failed legacy of the Clinton era.Thus the collapse of the economy.Now it is "fare economic politics" running the economy besides intelligent economics.
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