My Broker/owner, Randy McKinney shared some information with me. I had forgotten this, and perhaps many people don't even know this. The information was from a New York Times article dated September 30, 1999. This is when the regulations were changed to increase home ownership to low income consumers. This was to encourage banks to extend home mortgages whose credit is generally not good enought to qualify for conventional loans - all while pressuring stock holders to maintain its phenominal growth in profits. The article went on to say that Fannie Mae would be 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 goverment rescue similar to the savings and loan industry in the 1980's. I quote from the article, "If they fail, the government will have to step up and bail them out the way it bailed out the thrift industry."
"The Fannie Mae and Freddie Mac crisis has its roots in the Community Redevelopment Act signed into law during the Carter Administration. President Clinton, influenced by multiculturalism, encouraged it further by dictating where mortgage lenders could lend. Tough new regulations required that lenders increase their lending in high-risk areas where they had no choice but to lower lending standards to make loans that sound business practices had previously rejected. And again, Freddie Mae and Freddie Mac bought these loans, which means taxpayers were ultimately responsible if these loans failed." This from the New York Times - Sept. 11, 2003