This is the same type of noodleling by democrats that got us in the current housing crisis and has been going on since the Carter administration with the "Community Reinvestment Act". Don't these idoits learn anyting from their mistakes or is their egos that big? Fannie, Freddie asked to relax condo loan rules: report (Reuters) - Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said. In March, Fannie Mae (FNM.N)(FNM.P) said it would no longer guarantee mortgages on condos in buildings where fewer than 70 percent of the units have been sold, up from 51 percent, the paper said. Freddie Mac (FRE.P)(FRE.N) is due to implement similar policies next month, the paper said. In a letter to the CEO's of both companies, Representatives Barney Frank, the chairman of the House Financial Services Committee, and Anthony Weiner warned that a 70 percent sales threshold "may be too onerous" and could lead condo buyers to shun new developments, according to the paper. The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos, the paper added. In an interview with the paper, Weiner said the rules have "had a real chill on the ability to get these condos sold," at a time when prices of condos have fallen enough to attract potential buyers. In addition to the 70 percent sales threshold, Fannie Mae will also not purchase mortgages in buildings where 15 percent of owners are delinquent on condo association dues or where one owner has more than 10 percent of units, as the firm sees these as signals that a building could run into financial trouble, the paper added. Both Fannie and Freddie are preparing a response to the lawmakers, according to the paper. Fannie Mae and Freddie Mac could not be immediately reached for comment by Reuters. (Reporting by Chakradhar Adusumilli in Bangalore; editing by Simon Jessop)
The CRA did not lead to the housing crisis. Sub Prime Mortgages and Low income lending initiatives are two different things. So while you may be correct that this is a mistake, it has nothing to do with the community reinvestment act, two totally different issues
Well I would have to say that you are wrong here. If you lend money to low income individuals who do not meet lending criteria then you have a sub prime mortage don't you? And if the senators and congressmen ask the lenders to lighten up their restricitons you now have created a problem. The lenders are forced by the government to make risky loans to people who are at a higher risk for failing to make payments. This by defnition is a "sub prime" loan.
two things, the low income individuals do meet credit standards, the gov't doesn't force any bank to relax their regulations, secondly, the subprime market that is at the heart of the housing crisis has more to do with middle class people buying homes they can't afford. no one forced banks to make these loans and these loans have absolutely zero to do with the CRA
You cannot be that nieve? The two are interweived....when the government bullies financial institutions into lowering its lending standards it affects all borrowers. The banks cannot discriminate against anyone who meets the standards.
please provide proof of this bullying from wiki The Community Reinvestment Act of 1977 seeks to address discrimination in loans made to individuals and businesses from low and moderate-income neighborhoods.[7] The Act mandates that all banking institutions that receive FDIC insurance be evaluated by Federal banking agencies to determine if the bank offers credit (in a manner consistent with safe and sound operations) in all communities in which the bank takes deposits.[3] The law does not list specific criteria for evaluating the performance of financial institutions. Rather, it directs that the evaluation process should accommodate the situation and context of each individual institution. Federal regulations dictate agency conduct in evaluating a bank's compliance in five performance areas, comprising twelve assessment factors. This examination culminates in a rating and a written report that becomes part of the supervisory record for that bank.[8] law, however, emphasizes that an institution's CRA activities should be undertaken in a safe and sound manner, and does not require institutions to make high-risk loans that may bring losses to the institution.[3][4] An institution's CRA compliance record is taken into account by the banking regulatory agencies when the institution seeks to expand through merger, acquisition or branching. The law does not mandate any other penalties for non-compliance with the CRA.[6][9]
Unfortunately, the facts suggest otherwise. Lenders that focused on CRA loans actually did much better than other banks during the crisis. And the defaults that started the snowball begin primarily in speculative housing areas - the coastal states, high end condos, etc - completely uncorrelated to CRA loan areas. Certainly those homes default at a higher rate than other loans, but that's expected and built into the interest rates. There is zero evidence to suggest that the CRA precipitated the housing or economic crisis.
Those who don't learn from history... are doomed to repeat it... Barney Frank is just a total abomination.
I know right, it only took 9 years after repealing that act to have a likely dooms day senario. the freemarkteers have been trying to repeal Glass Steagall since it was signed into law.
I love the implications of blaming the collapse of massive financial institutions on poor minorities who couldn't pay for their houses
Who said anything about Minorities? There are way more poor white people in this country than there are of other ethnic groups.
