Monday, August 12, 2013

Votes for Mortgages: If you liked the subprime crisis, you'll love what the feds are cooking up now!

American Thinker ^ | 08/12/2013 | Joe Dantone

Fannie and Freddie have been in operation for decades without problems until recently. Fannie began in 1938 as a quasi-governmental agency making affordable homes available to people by making the financing easier and funds more readily available by establishing a secondary market for mortgages.
Previously banks had held onto their mortgages in a system called portfolio mortgages and were made mostly to their own account holders. With the homes as collateral, the banks then lent out that same money again to other local borrowers. If you remember the scene from It's a Wonderful Life when there is a run on the bank, you can visualize how that works when confidence in the system disappears.
With a secondary market for mortgages, banks could recoup their money rather than keeping it tied up. The result was that banks could loan out the same funds 5-6 times.
If there were a run, they could cover it. That stabilized the whole banking system in the eyes of the public. It also led to mortgage loans being more readily available, and the ability to do business with banks across the country and lenders whom borrowers never saw. Millions of people bought homes that way.
SNIP
The president thinks that the government will be able to dictate terms in that market without actually having a stake in it.
Maybe, but this won't do anything but create a venue for new kinds of interference.
In the wake of Obama's announcement, the FHA revealed that it is going to dictate the racial makeup of neighborhoods in the future. Neighborhoods will have to be in compliance with affirmative action dictates despite the Supreme Court's hinting that the days of affirmative action are near their end.
(Excerpt) Read more at americanthinker.com ...

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