We have all spent time discussing and cussing the mortgage meltdown, and wanting to find those people who started all this! Right!!? After all do we not believe that those in charge are experienced and well educated in such matters. Where did this mess start and how did it come about? Well take a look at this article that appeared in the New York Times back in 1999. A lender friend sent this to me. Interesting....
In an article written by Steven a Holmes of the New York Times and appearing on September 30,1999
Fannie Mae Eases Credit To Aid Mortgage Lending
"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.
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."
There was a bit more to the article such as demographic information but this was by far the heart of the article. Kind of a numbing warning of what could go wrong. Too bad he turned out to be correct.