Mortgage Blog

"Fannie Mae Eases Credit To Aid Mortgage Lending"

 By STEVEN A. HOLMES 

The article points out "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." (My underlining etc) 

While this seemed to be a good cause, it eventually put us into this mess--9 years later!  Apparently Fannie Mae (FNMA) reduced down payment requirements and lowered its credit standards allowing people to buy homes they weren't otherwise able to.  I understand that this is not NEWS, but for me, at least, I know when and how it all started. Fannie Mae took on significantly more risk and eventually led to severe problems for our economy,.

It seems that at least one person predicted this, Peter Wallison a resident fellow at the American Enterprise Institute, said ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

As Paul Harvey says, "Now we know the rest of the story."

What are your thoughts?

Blessings to all,

John