Fannie Mae Under Pressure

Report:

In a move that could help increase home ownership rates among minorities and low-income consumers, Fannie Mae is easing the credit requirements on loans that it will purchase from banks and other lenders…

Fannie Mae has been under increasing pressure from the Clinton Administration to expand mortgage loans among low income people…

“Fannie Mae has expanded home ownership for millions of families in the 1990s by reducing down payment requirements,” said Franklin Raines, chairman. “Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.”

By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit rating….They add that the move is intended in part to increase the number of minority and low income home owners… In July, the Department of Housing and Urban Development proposed that by the year 2001, 50% of Fannie Mae’s and Freddie Mac’s portfolio be made up of loans to low and moderate-income borrowers.

In moving 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 1980s.”

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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