And you wonder where the problem is....

[Community Development Banking List]

Original message from: chris@jumbocdi.com

Here is an article from 1999 that was published in the NYT. I think it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''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.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

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.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary 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 ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

[Community Development Banking List]

Original message from: georgey10@hotmail.com


What "problem" are you talking about in particular Mr. Duncan? The current credit crisis? And is this article suppose to sum it up? I don't think so.

There is something called asset valuation. Wall Street is responsible for that part.

Yes the spigot was open and running, but it was the market's responsibility to price these mortgage assets accordingly......it did not. It overpriced them, and people, top level people, ran away with billions of dollars.

We are bailing out Wall Street here. The taxpayer will get nothing, despite all the "sugar-coated" stuff we hear. Many Americans have already lost their homes and their savings. The stories are endless, as I have mentioned before. We can go around the country, and we will find millions that were duped out of millions.

This article only brings to light a small part of the problem, not the major force behind it.

George




From: chris@jumbocdi.comTo: communitydevelopmentbanking-l@cornell.eduCC: gina@uarkfcu.com; debbie@dakotalandfcu.comSubject: And you wonder where the problem is....Date: Fri, 3 Oct 2008 06:39:22 -0700



Here is an article from 1999 that was published in the NYT. I think it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

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 addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''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.'' Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. 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. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped. Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary 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 ratings. Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites. Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent. In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent. Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings. In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups. The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.Dixon, CA1-800-234-4605www.jumbocdinvestments.comwww.jumbocdinvestmen ts.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc. Member: FINRA - SIPC

Life is not measured by the number of breaths we take but by the moments that take our breath away. CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
__________________________________________________ _______________
Get more out of the Web. Learn 10 hidden secrets of Windows Live.
http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cns!550F681DAD532637!5295.entry?ocid=TXT_TAGLM_WL_ domore_092008 ('http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cns!550F681DAD532637!5295.entry?ocid=TXT_TAGLM_WL_ domore_092008')

[Community Development Banking List]

Original message from: roseviola@earthlink.net

It is important to point out here that the problem's origin had
nothing or extraordinarily little to do with the low and moderate
income pressures put on Fannie Mae. It had a lot to do with Wall
Street's discovery of a whole new animal--the subprime mortgage
(usually a refi). This way of thinking (blaming it on minority
lending or low mod lending) has been bogus from the beginning. As one
of the former most outspoken critics of the subprime mortgage business
(and left my wonderful job over it), and as one of the first to
spearhead the use of the community homebuyer program of Fannie Mae, I
feel sad indeed to read this on a web site full of community
development professionals.

Phyllis Rosenblum (former head of Community Development at HSBC Bank
USA).


On Oct 4, 2008, at 7:46 PM, George Samuels wrote:

What "problem" are you talking about in particular Mr. Duncan? The
current credit crisis?

And is this article suppose to sum it up? I don't think so.

There is something called asset valuation. Wall Street is
responsible for that part.

Yes the spigot was open and running, but it was the market's
responsibility to price these mortgage assets accordingly......it
did not. It overpriced them, and people, top level people, ran away
with billions of dollars.

We are bailing out Wall Street here. The taxpayer will get nothing,
despite all the "sugar-coated" stuff we hear. Many Americans have
already lost their homes and their savings. The stories are endless,
as I have mentioned before. We can go around the country, and we
will find millions that were duped out of millions.

This article only brings to light a small part of the problem, not
the major force behind it.

George







From: chris@jumbocdi.com
To: communitydevelopmentbanking-l@cornell.edu
CC: gina@uarkfcu.com; debbie@dakotalandfcu.com
Subject: And you wonder where the problem is....
Date: Fri, 3 Oct 2008 06:39:22 -0700

Here is an article from 1999 that was published in the NYT. I think
it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage companies have
been pressing Fannie Mae to help them make more loans to so-called
subprime borrowers. These borrowers whose incomes, credit ratings
and savings are not good enough to qualify for conventional loans,
can only get loans from finance companies that charge much higher
interest rates -- anywhere from three to four percentage points
higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in
the 1990's by reducing down payment requirements,'' said Franklin D.
Raines, Fannie Mae's chairman and chief executive officer. ''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.''
Demographic information on these borrowers is sketchy. But at least
one study indicates that 18 percent of the loans in the subprime
market went to black borrowers, compared to 5 per cent of loans in
the conventional loan market.
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.
''From the perspective of many people, including me, this is another
thrift industry growing up around us,'' said Peter Wallison a
resident fellow at the American Enterprise Institute. ''If they
fail, the government will have to step up and bail them out the way
it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a
mortgage with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -- a
rate that currently averages about 7.76 per cent. If the borrower
makes his or her monthly payments on time for two years, the one
percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does
not lend money directly to consumers. Instead, it purchases loans
that banks make on what is called the secondary 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
ratings.
Fannie Mae officials stress that the new mortgages will be extended
to all potential borrowers who can qualify for a mortgage. But they
add that the move is intended in part to increase the number of
minority and low income home owners who tend to have worse credit
ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the
economic boom of the 1990's. The number of mortgages extended to
Hispanic applicants jumped by 87.2 per cent from 1993 to 1998,
according to Harvard University's Joint Center for Housing Studies.
During that same period the number of African Americans who got
mortgages to buy a home increased by 71.9 per cent and the number of
Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans
for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to
lag behind non-Hispanic whites, in part because blacks and Hispanics
in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed
that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's
portfolio be made up of loans to low and moderate-income borrowers.
Last year, 44 percent of the loans Fannie Mae purchased were from
these groups.
The change in policy also comes at the same time that HUD is
investigating allegations of racial discrimination in the automated
underwriting systems used by Fannie Mae and Freddie Mac to determine
the credit-worthiness of credit applicants.
***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')

Get more out of the Web. Learn 10 hidden secrets of Windows Live.
Learn Now
CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')

[Community Development Banking List]

Original message from: prozhkova@insightbb.com

I wonder why when looking at wall street and banking we never ask about how they pay those on the front lines. I believe that being paid on commission puts pressure on the sales force to rationalize putting food on the table for their families as a reason sell to those who should not be buying. If the stock brokers and mortage brokers were paid a salary instead of a commission I am sure that they would be more compelled to advise their clientele appropriately.

Does anyone know if this has ever been explored as a solution?

----- Original Message -----
From: George Samuels <georgey10@hotmail.com>
Date: Saturday, October 4, 2008 10:49 pm
Subject: RE: And you wonder where the problem is....
To: Chris Duncan <chris@jumbocdi.com>, Community Banking <communitydevelopmentbanking-l@cornell.edu>
Cc: Gina Williams <gina@uarkfcu.com>, Debbie Lehmen <debbie@dakotalandfcu.com>


What "problem" are you talking about in particular Mr. Duncan?
The current credit crisis? And is this article suppose to sum it
up? I don't think so.

There is something called asset valuation. Wall Street is
responsible for that part.

Yes the spigot was open and running, but it was the market's
responsibility to price these mortgage assets
accordingly......it did not. It overpriced them, and people, top
level people, ran away with billions of dollars.

We are bailing out Wall Street here. The taxpayer will get
nothing, despite all the "sugar-coated" stuff we hear. Many
Americans have already lost their homes and their savings. The
stories are endless, as I have mentioned before. We can go
around the country, and we will find millions that were duped
out of millions.

This article only brings to light a small part of the problem,
not the major force behind it.

George




From: chris@jumbocdi.comTo: communitydevelopmentbanking-
l@cornell.eduCC: gina@uarkfcu.com;
debbie@dakotalandfcu.comSubject: And you wonder where the
problem is....Date: Fri, 3 Oct 2008 06:39:22 -0700



Here is an article from 1999 that was published in the
NYT. I think it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

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 addition, banks, thrift
institutions and mortgage companies have been pressing Fannie
Mae to help them make more loans to so-called subprime
borrowers. These borrowers whose incomes, credit ratings and
savings are not good enough to qualify for conventional loans,
can only get loans from finance companies that charge much
higher interest rates -- anywhere from three to four percentage
points higher than conventional loans. ''Fannie Mae has expanded
home ownership for millions of families in the 1990's by
reducing down payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer. ''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.'' Demographic information on these borrowers is
sketchy. But at least one study indicates that 18 percent of the
loans in the subprime market went to black borrowers, compared
to 5 per cent of loans in the conventional loan market. 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. ''From the perspective
of many people, including me, this is another thrift industry
growing up around us,'' said Peter Wallison a resident fellow at
the American Enterprise Institute. ''If they fail, the
government will have to step up and bail them out the way it
stepped up and bailed out the thrift industry.'' Under Fannie
Mae's pilot program, consumers who qualify can secure a mortgage
with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -
- a rate that currently averages about 7.76 per cent. If the
borrower makes his or her monthly payments on time for two
years, the one percentage point premium is dropped. Fannie Mae,
the nation's biggest underwriter of home mortgages, does not
lend money directly to consumers. Instead, it purchases loans
that banks make on what is called the secondary 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 ratings. Fannie Mae officials stress that the new
mortgages will be extended to all potential borrowers who can
qualify for a mortgage. But they add that the move is intended
in part to increase the number of minority and low income home
owners who tend to have worse credit ratings than non-Hispanic
whites. Home ownership has, in fact, exploded among minorities
during the economic boom of the 1990's. The number of mortgages
extended to Hispanic applicants jumped by 87.2 per cent from
1993 to 1998, according to Harvard University's Joint Center for
Housing Studies. During that same period the number of African
Americans who got mortgages to buy a home increased by 71.9 per
cent and the number of Asian Americans by 46.3 per cent. In
contrast, the number of non-Hispanic whites who received loans
for homes increased by 31.2 per cent. Despite these gains, home
ownership rates for minorities continue to lag behind non-
Hispanic whites, in part because blacks and Hispanics in
particular tend to have on average worse credit ratings. In
July, the Department of Housing and Urban Development proposed
that by the year 2001, 50 percent of Fannie Mae's and Freddie
Mac's portfolio be made up of loans to low and moderate-income
borrowers. Last year, 44 percent of the loans Fannie Mae
purchased were from these groups. The change in policy also
comes at the same time that HUD is investigating allegations of
racial discrimination in the automated underwriting systems used
by Fannie Mae and Freddie Mac to determine the credit-worthiness
of credit applicants.
***********************************
Here is the link to the article.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')
Chris Duncan

Jumbo C.D. Investments, Inc.Dixon, CA1-800-234-
4605www.jumbocdinvestments.comwww.jumbocdinvestmen ts.com/cd_rates_blog
Securities offered through Gill Capital Partners, Inc. Member:
FINRA - SIPC

Life is not measured by the number of breaths we take but by the
moments that take our breath away. CDB list instructions
http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
__________________________________________________ _______________
Get more out of the Web. Learn 10 hidden secrets of Windows Live.
http://windowslive.com/connect/post/jamiethomson.spaces.live.com- ('http://windowslive.com/connect/post/jamiethomson.spaces.live.com-')
Blog-cns!550F681DAD532637!5295.entry?ocid=TXT_TAGLM_WL_ domore_092008

Penelope Rozhkova
236 Meadow Trail Drive
Highland Heights, KY 41076
505-217-1931 or 513-898-9441 home
513-652-7418 cell

[Community Development Banking List]

Original message from: jsilver@ncrc.org


Another issue is that one should read carefully the subprime product described in the article. As described, the new Fannie Mae product was one percentage point above conventional, 30 year mortgage rate. After two years, the one percentage point premium is dropped. This is hardly an abusive subprime loan with rates 3 or 4 or 5 percentage points above conventional rates. Moreover, Fannie Mae and Freddie Mac had agreed to a series of reforms such as not purchasing loans with fee gouging (fees five percent or more of the loan amount) and no loans with mandatory arbitration.

I agree with the other commentary that Fannie and Freddie did not cause the problem. Instead, it was a mixture of perverse compensation systems for brokers and an avoidance of negative externalities...brokers and lenders could quickly selll their loans to hundreds of investors and avoid significant losses for making loans beyond borrower repayment ability. The surge in the most problematic lending occured far after 1999....when Wall Street turned on the spigot of financing and MBS vehicles. The worst lending occured between 2004 and 2007 when the option ARM, 2/28 and 3/27 ARMs were seized upon as a vehicle.

And again, neither was CRA behind the mess. Check http://www.ncrc.org. ('http://www.ncrc.org.') It is perverse to assert that a statute which requires meeting credit needs with safe and sound lending pressured problematic lending. Proponents of that view don't know how CRA exams work; banks are penalized for making illegal and abusive lending. Banks receive points for foreclosure prevention activities including counseling and modifying loans in a a safe and sound manner.

The political heat will not enable us to see the real causes of the problem...the root of which was deregulation. The Federal Reserve belatedly acknowledged the imperfection of lending markets when they updated HOEPA, their regulation against unsafe and unsound lending this summer. Too little and too late. Ultimately the most effective solution will be to cover all parts of the financial industry with a strong anti-predatory law along the lines of S. 2452 and make the financial industry internalize negative externalities (in other words, you make a problematic loan, you will pay financiallly for it).

Yours,

Josh Silver
Vice President of Research and Policy
National Community Reinvestment Coalition

____________
NCRC


Josh Silver
Vice President of Research & Policy

National Community Reinvestment Coalition (NCRC)
727 15th Street, NW, Suite 900 | Washington, DC 2000
TEL:(202) 464-2708 | www.ncrc.org

Combined Federal Campaign #12361


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From: bounce-3137056-4989749@list.cornell.edu on behalf of George Samuels
Sent: Sat 10/4/2008 7:46 PM
To: Chris Duncan; Community Banking
Cc: Gina Williams; Debbie Lehmen
Subject: RE: And you wonder where the problem is....


What "problem" are you talking about in particular Mr. Duncan? The current credit crisis?

And is this article suppose to sum it up? I don't think so.

There is something called asset valuation. Wall Street is responsible for that part.

Yes the spigot was open and running, but it was the market's responsibility to price these mortgage assets accordingly......it did not. It overpriced them, and people, top level people, ran away with billions of dollars.

We are bailing out Wall Street here. The taxpayer will get nothing, despite all the "sugar-coated" stuff we hear. Many Americans have already lost their homes and their savings. The stories are endless, as I have mentioned before. We can go around the country, and we will find millions that were duped out of millions.

This article only brings to light a small part of the problem, not the major force behind it.

George








________________________________

From: chris@jumbocdi.com
To: communitydevelopmentbanking-l@cornell.edu
CC: gina@uarkfcu.com; debbie@dakotalandfcu.com
Subject: And you wonder where the problem is....
Date: Fri, 3 Oct 2008 06:39:22 -0700


Here is an article from 1999 that was published in the NYT. I think it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''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.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
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.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary 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 ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com <http://www.jumbocdinvestments.com/> ('http://www.jumbocdinvestments.com/>')
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.


CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')


________________________________

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[Community Development Banking List]

Original message from: tbostelmann@gmail.com

This is a good point, George. And I don't think Chris was necessarily
pointing all the blame towards the Clinton administration.

I do like this article, though, because it does point out that this has been
growing for a while and isn't necessarily systemic of the current
administration. I'm a democrat and I've been mailing this around to all of
my friends in an attempt to reign in on all the finger pointing.

The last election was full of two-sided animosity and look what happened? I
don't think we can afford more accusations - nobody listens to them anyway.


Plus, this list is probably better served if we leave the political spin out
;)

Tom

On Sat, Oct 4, 2008 at 4:46 PM, George Samuels <georgey10@hotmail.com>wrote:

What "problem" are you talking about in particular Mr. Duncan? The current
credit crisis?

And is this article suppose to sum it up? I don't think so.

There is something called asset valuation. Wall Street is responsible for
that part.

Yes the spigot was open and running, but it was the market's responsibility
to price these mortgage assets accordingly......it did not. It overpriced
them, and people, top level people, ran away with billions of dollars.

We are bailing out Wall Street here. The taxpayer will get nothing, despite
all the "sugar-coated" stuff we hear. Many Americans have already lost their
homes and their savings. The stories are endless, as I have mentioned
before. We can go around the country, and we will find millions that were
duped out of millions.

This article only brings to light a small part of the problem, not the
major force behind it.

George







------------------------------
From: chris@jumbocdi.com
To: communitydevelopmentbanking-l@cornell.edu
CC: gina@uarkfcu.com; debbie@dakotalandfcu.com
Subject: And you wonder where the problem is....
Date: Fri, 3 Oct 2008 06:39:22 -0700


Here is an article from 1999 that was published in the NYT. I think it
almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage companies have been
pressing Fannie Mae to help them make more loans to so-called subprime
borrowers. These borrowers whose incomes, credit ratings and savings are not
good enough to qualify for conventional loans, can only get loans from
finance companies that charge much higher interest rates -- anywhere from
three to four percentage points higher than conventional loans.
*''Fannie Mae has expanded home ownership for millions of families in the
1990's by reducing down payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer. ''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*.''
Demographic information on these borrowers is sketchy. But at least one
study indicates that 18 percent of the loans in the subprime market went to
black borrowers, compared to 5 per cent of loans in the conventional loan
market.
*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. *
*''From the perspective of many people, including me, this is another
thrift industry growing up around us,'' said Peter Wallison a resident
fellow at the American Enterprise Institute. ''If they fail, the government
will have to step up and bail them out the way it stepped up and bailed out
the thrift industry*.''
Under Fannie Mae's pilot program, consumers who qualify can secure a
mortgage with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate
that currently averages about 7.76 per cent. If the borrower makes his or
her monthly payments on time for two years, the one percentage point premium
is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not
lend money directly to consumers. Instead, it purchases loans that banks
make on what is called the secondary 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 ratings.
*Fannie Mae officials stress that the new mortgages will be extended to
all potential borrowers who can qualify for a mortgage. But they add that
the move is intended in part to increase the number of minority and low
income home owners who tend to have worse credit ratings than non-Hispanic
whites*.
Home ownership has, in fact, exploded among minorities during the economic
boom of the 1990's. The number of mortgages extended to Hispanic applicants
jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's
Joint Center for Housing Studies. During that same period the number of
African Americans who got mortgages to buy a home increased by 71.9 per cent
and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes
increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag
behind non-Hispanic whites, in part because blacks and Hispanics in
particular tend to have on average worse credit ratings.
*In July, the Department of Housing and Urban Development proposed that by
the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be
made up of loans to low and moderate-income borrowers. Last year, 44 percent
of the loans Fannie Mae purchased were from these groups. *
The change in policy also comes at the same time that HUD is investigating
allegations of racial discrimination in the automated underwriting systems
used by Fannie Mae and Freddie Mac to determine the credit-worthiness of
credit applicants.
***********************************
Here is the link to the article.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')

------------------------------
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[Community Development Banking List]

Original message from: ksmith@cuexceed.com

[Community Development Banking List]

Original message from: tbostelmann@gmail.com

I like this conversation. There's some really interesting observations.
Help me if I'm not portraying this correctly as I'm, admittedly, not as
experienced financially as you all are (thanks in advance for being
patient).

1.) Wall Street's system of trade was being used in order to maintain
capital liquidity?
2.) Mortgage brokers were used as a supplier for this market?
3.) Loans begin asserting risk on the borrower in order to meet the demand
(i.e. ARM type mortgages)?

Wall Street was a "tried and true" system that kept capital flowing (I'm
obviously simplifying here). Brokers became a means for fulfilling demand
for the investment instrument. This is a somewhat oversimplified view of
the Wall Street market system but I think it points out the important facts.

What's compelling, though, is I wonder if the 'ARM' - and other such loan
types - were the first type of mortgage where borrowers were taking on some
of the lender's risk? Is this true? Is it possible that this was what
broke the system? Banks were lending to borrowers that they observed as
below the level of risk that they could take on. So, in order to compensate
for that, they created mortgages that allowed the borrower to take on some
of the risk in order to get a mortgage.

The problem, though, would have been that many borrowers were ill equipped
to understand this risk. I remember when I purchased my first home how much
I depended on people who didn't necessarily have my best interests in mind
to help me make the right decision on a mortgage.

You could say that the brokers could have seen this and it sounds like many
did and weren't comfortable about it. Imagine being faced with the decision
where you can continue to make a good living or, basically, quit because you
didn't think it was a good lending practice. I'm not sure what I would do
in this situation and I'm not sure how well a salaried (as apposed to
commissioned-based pay) brokers would have worked in the Wall Street
system. So I don't know if it's fair to put blame on the mortgage brokers.

But I wonder if mortgage terms should be regulated more closely - taking
care that the borrower does not end up sharing in the lender's scope of
risk. And in order to meet demand, we look to a micro-lending system....?

Tom

On Sat, Oct 4, 2008 at 8:02 PM, Myron Rosenblum <roseviola@earthlink.net>wrote:

It is important to point out here that the problem's origin had nothing or
extraordinarily little to do with the low and moderate income pressures put
on Fannie Mae. It had a lot to do with Wall Street's discovery of a whole
new animal--the subprime mortgage (usually a refi). This way of thinking
(blaming it on minority lending or low mod lending) has been bogus from the
beginning. As one of the former most outspoken critics of the subprime
mortgage business (and left my wonderful job over it), and as one of the
first to spearhead the use of the community homebuyer program of Fannie Mae,
I feel sad indeed to read this on a web site full of community development
professionals.
Phyllis Rosenblum (former head of Community Development at HSBC Bank USA).



On Oct 4, 2008, at 7:46 PM, George Samuels wrote:

What "problem" are you talking about in particular Mr. Duncan? The current
credit crisis?

And is this article suppose to sum it up? I don't think so.

There is something called asset valuation. Wall Street is responsible for
that part.

Yes the spigot was open and running, but it was the market's responsibility
to price these mortgage assets accordingly......it did not. It overpriced
them, and people, top level people, ran away with billions of dollars.

We are bailing out Wall Street here. The taxpayer will get nothing, despite
all the "sugar-coated" stuff we hear. Many Americans have already lost their
homes and their savings. The stories are endless, as I have mentioned
before. We can go around the country, and we will find millions that were
duped out of millions.

This article only brings to light a small part of the problem, not the
major force behind it.

George







------------------------------
From: chris@jumbocdi.com
To: communitydevelopmentbanking-l@cornell.edu
CC: gina@uarkfcu.com; debbie@dakotalandfcu.com
Subject: And you wonder where the problem is....
Date: Fri, 3 Oct 2008 06:39:22 -0700

Here is an article from 1999 that was published in the NYT. I think it
almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage companies have been
pressing Fannie Mae to help them make more loans to so-called subprime
borrowers. These borrowers whose incomes, credit ratings and savings are not
good enough to qualify for conventional loans, can only get loans from
finance companies that charge much higher interest rates -- anywhere from
three to four percentage points higher than conventional loans.
*''Fannie Mae has expanded home ownership for millions of families in the
1990's by reducing down payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer. ''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*.''
Demographic information on these borrowers is sketchy. But at least one
study indicates that 18 percent of the loans in the subprime market went to
black borrowers, compared to 5 per cent of loans in the conventional loan
market.
*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. *
*''From the perspective of many people, including me, this is another
thrift industry growing up around us,'' said Peter Wallison a resident
fellow at the American Enterprise Institute. ''If they fail, the government
will have to step up and bail them out the way it stepped up and bailed out
the thrift industry*.''
Under Fannie Mae's pilot program, consumers who qualify can secure a
mortgage with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate
that currently averages about 7.76 per cent. If the borrower makes his or
her monthly payments on time for two years, the one percentage point premium
is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not
lend money directly to consumers. Instead, it purchases loans that banks
make on what is called the secondary 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 ratings.
*Fannie Mae officials stress that the new mortgages will be extended to
all potential borrowers who can qualify for a mortgage. But they add that
the move is intended in part to increase the number of minority and low
income home owners who tend to have worse credit ratings than non-Hispanic
whites*.
Home ownership has, in fact, exploded among minorities during the economic
boom of the 1990's. The number of mortgages extended to Hispanic applicants
jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's
Joint Center for Housing Studies. During that same period the number of
African Americans who got mortgages to buy a home increased by 71.9 per cent
and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes
increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag
behind non-Hispanic whites, in part because blacks and Hispanics in
particular tend to have on average worse credit ratings.
*In July, the Department of Housing and Urban Development proposed that by
the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be
made up of loans to low and moderate-income borrowers. Last year, 44 percent
of the loans Fannie Mae purchased were from these groups. *
The change in policy also comes at the same time that HUD is investigating
allegations of racial discrimination in the automated underwriting systems
used by Fannie Mae and Freddie Mac to determine the credit-worthiness of
credit applicants.
***********************************
Here is the link to the article.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')

------------------------------
Get more out of the Web. Learn 10 hidden secrets of Windows Live. Learn
Now<http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cns%21550F681DAD532637%215295.entry?ocid=TXT_TAGLM _WL_getmore_092008> ('http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cns%21550F681DAD532637%215295.entry?ocid=TXT_TAGLM _WL_getmore_092008>')
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[Community Development Banking List]

Original message from: ajones@co.pinellas.fl.us

I know where you're going, but there is no evidence that loans to minorities have anything to do with the GSE's problem. In fact, the MyCommunity Mortgage program is one of the best performing sectors of Fannie's portfolio. That's not where the no-doc, adjustable, interest-only,subprime loans happened. And that is also not where the foreclosures are occurring.

As I said, I know where you are going. But you can't get there from here.



Out of the office. Sent from my wireless handheld.
This message thumb-typed and not spell checked.

----- Original Message -----
From: bounce-3137232-4991389@list.cornell.edu <bounce-3137232-4991389@list.cornell.edu>
To: communitydevelopmentbanking-l digest recipients <communitydevelopmentbanking-l@list.cornell.edu>
Sent: Sun Oct 05 02:03:38 2008
Subject: communitydevelopmentbanking-l digest: October 04, 2008

COMMUNITYDEVELOPMENTBANKING-L Digest for Saturday, October 04, 2008.

1. And you wonder where the problem is....
2. RE: And you wonder where the problem is....

----------------------------------------------------------------------

Subject: And you wonder where the problem is....
From: "Chris Duncan" <chris@jumbocdi.com>
Date: Fri, 3 Oct 2008 06:39:22 -0700
X-Message-Number: 1

Here is an article from 1999 that was published in the NYT. I think it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''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.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

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.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary 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 ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

----------------------------------------------------------------------

Subject: RE: And you wonder where the problem is....
From: George Samuels <georgey10@hotmail.com>
Date: Sat, 4 Oct 2008 19:46:05 -0400
X-Message-Number: 2


What "problem" are you talking about in particular Mr. Duncan? The current credit crisis? And is this article suppose to sum it up? I don't think so.

There is something called asset valuation. Wall Street is responsible for that part.

Yes the spigot was open and running, but it was the market's responsibility to price these mortgage assets accordingly......it did not. It overpriced them, and people, top level people, ran away with billions of dollars.

We are bailing out Wall Street here. The taxpayer will get nothing, despite all the "sugar-coated" stuff we hear. Many Americans have already lost their homes and their savings. The stories are endless, as I have mentioned before. We can go around the country, and we will find millions that were duped out of millions.

This article only brings to light a small part of the problem, not the major force behind it.

George




From: chris@jumbocdi.comTo: communitydevelopmentbanking-l@cornell.eduCC: gina@uarkfcu.com; debbie@dakotalandfcu.comSubject: And you wonder where the problem is....Date: Fri, 3 Oct 2008 06:39:22 -0700



Here is an article from 1999 that was published in the NYT. I think it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

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 addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called s
ubprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''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.'' Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. In moving, even tentatively, into this new area of len
d
ing, 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. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary 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 ratings. Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites. Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a h
o
me increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent. In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent. Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings. In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups. The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.Dixon, CA1-800-234-4605www.jumbocdinvestments.comwww.jumbocdinvestmen ts.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc. Member: FINRA - SIPC

Life is not measured by the number of breaths we take but by the moments that take our breath away. CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
__________________________________________________ _______________
Get more out of the Web. Learn 10 hidden secrets of Windows Live.
http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cns!550F681DAD532637!5295.entry?ocid=TXT_TAGLM_WL_ domore_092008 ('http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cns!550F681DAD532637!5295.entry?ocid=TXT_TAGLM_WL_ domore_092008')


---

END OF DIGEST

[Community Development Banking List]

Original message from: ksmith@cuexceed.com

[Community Development Banking List]

Original message from: kentrpipes@aol.com

Statistics don't lie, but liars can usually make statistics say
anything they want. The real problem is greed. Many local lenders,
secondary sources and those in Washington and Wall Street thought,
wrongly, that the upward momentum would not end, contrary to clear
evidence that verifiable income supports housing costs, and the
statistical evidence is that the less one puts down (their own money
at risk) and the greater percentage of one's monthly income that is
committed or needs to be committed to pay the front-end costs for
housing, the riskier the loan. Housing prices can only be supported
by income. To be rent burdened or mortgage burdened is a predictor
of eviction and foreclosure. We all know what it takes to make good
loans and to prepare buyers for signing mortgage loan documents that
they can support on a 30/38 basis (FE/BE).

Many on Wall street and brokers on Main Street laughed all the way to
the bank. Those of us who labor day in and day out to help lower
income people become homeowners have not been fooled. DON'T MAKE THIS
A RACIAL ISSUE. MINORITY BORROWERS ARE NOT TO BLAME. IT IS THE
RACIAL MAJORITY (WHITE FOLKS FOR THOSE WHO DON'T OR CAN'T INTERPRET)
WHO MADE OUT LIKE BANDITS. We'll all have to pay to keep from
experiencing a system-wide meltdown, but it is unfair. We did not
benefit from it. We should sue those who benefited from the wealth
skimming to recover the millions/billions that were taken from the
system. They should give back their homes in the Hamptons and
Greenwich, they should sell their yachts and Beemers and return the
wealth they did not deserve.

Those of us who labor day in and day out still earn meager salaries
and don't have sizeable retirement account, if any at all. We know
what happened and we are MAD AS HELL.

I can sleep at night. Can you? It is my children and grandchildren
that will have to pay for this for generations.

Kent R. Pipes, President
The Affordable Homes Group, Inc.
PO Box 249 (96 Rancocas Rd.)
Mt. Holly, NJ 08060
(609) 261-4571 or cell (609) 284-8893

www.affordablehomesgroup.com
kentrpipes@aol.com


On Oct 5, 2008, at 4:49 PM, Jones, Anthony M wrote:

I know where you're going, but there is no evidence that loans to
minorities have anything to do with the GSE's problem. In fact, the
MyCommunity Mortgage program is one of the best performing sectors
of Fannie's portfolio. That's not where the no-doc, adjustable,
interest-only,subprime loans happened. And that is also not where
the foreclosures are occurring.

As I said, I know where you are going. But you can't get there from
here.



Out of the office. Sent from my wireless handheld.
This message thumb-typed and not spell checked.

----- Original Message -----
From: bounce-3137232-4991389@list.cornell.edu <bounce-3137232-4991389@list.cornell.edu
>
To: communitydevelopmentbanking-l digest recipients <communitydevelopmentbanking-l@list.cornell.edu
>
Sent: Sun Oct 05 02:03:38 2008
Subject: communitydevelopmentbanking-l digest: October 04, 2008

COMMUNITYDEVELOPMENTBANKING-L Digest for Saturday, October 04, 2008.

1. And you wonder where the problem is....
2. RE: And you wonder where the problem is....

----------------------------------------------------------------------

Subject: And you wonder where the problem is....
From: "Chris Duncan" <chris@jumbocdi.com>
Date: Fri, 3 Oct 2008 06:39:22 -0700
X-Message-Number: 1

Here is an article from 1999 that was published in the NYT. I think
it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage companies have
been pressing Fannie Mae to help them make more loans to so-called
subprime borrowers. These borrowers whose incomes, credit ratings
and savings are not good enough to qualify for conventional loans,
can only get loans from finance companies that charge much higher
interest rates -- anywhere from three to four percentage points
higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in
the 1990's by reducing down payment requirements,'' said Franklin D.
Raines, Fannie Mae's chairman and chief executive officer. ''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.''

Demographic information on these borrowers is sketchy. But at least
one study indicates that 18 percent of the loans in the subprime
market went to black borrowers, compared to 5 per cent of loans in
the conventional loan market.

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.

''From the perspective of many people, including me, this is another
thrift industry growing up around us,'' said Peter Wallison a
resident fellow at the American Enterprise Institute. ''If they
fail, the government will have to step up and bail them out the way
it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a
mortgage with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -- a
rate that currently averages about 7.76 per cent. If the borrower
makes his or her monthly payments on time for two years, the one
percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does
not lend money directly to consumers. Instead, it purchases loans
that banks make on what is called the secondary 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
ratings.

Fannie Mae officials stress that the new mortgages will be extended
to all potential borrowers who can qualify for a mortgage. But they
add that the move is intended in part to increase the number of
minority and low income home owners who tend to have worse credit
ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the
economic boom of the 1990's. The number of mortgages extended to
Hispanic applicants jumped by 87.2 per cent from 1993 to 1998,
according to Harvard University's Joint Center for Housing Studies.
During that same period the number of African Americans who got
mortgages to buy a home increased by 71.9 per cent and the number of
Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans
for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to
lag behind non-Hispanic whites, in part because blacks and Hispanics
in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed
that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's
portfolio be made up of loans to low and moderate-income borrowers.
Last year, 44 percent of the loans Fannie Mae purchased were from
these groups.

The change in policy also comes at the same time that HUD is
investigating allegations of racial discrimination in the automated
underwriting systems used by Fannie Mae and Freddie Mac to determine
the credit-worthiness of credit applicants.

***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

----------------------------------------------------------------------

Subject: RE: And you wonder where the problem is....
From: George Samuels <georgey10@hotmail.com>
Date: Sat, 4 Oct 2008 19:46:05 -0400
X-Message-Number: 2


What "problem" are you talking about in particular Mr. Duncan? The
current credit crisis? And is this article suppose to sum it up? I
don't think so.

There is something called asset valuation. Wall Street is
responsible for that part.

Yes the spigot was open and running, but it was the market's
responsibility to price these mortgage assets accordingly......it
did not. It overpriced them, and people, top level people, ran away
with billions of dollars.

We are bailing out Wall Street here. The taxpayer will get nothing,
despite all the "sugar-coated" stuff we hear. Many Americans have
already lost their homes and their savings. The stories are endless,
as I have mentioned before. We can go around the country, and we
will find millions that were duped out of millions.

This article only brings to light a small part of the problem, not
the major force behind it.

George




From: chris@jumbocdi.comTo: communitydevelopmentbanking-l@cornell.eduCC
: gina@uarkfcu.com; debbie@dakotalandfcu.comSubject: And you wonder
where the problem is....Date: Fri, 3 Oct 2008 06:39:22 -0700



Here is an article from 1999 that was published in the NYT. I think
it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

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 addition, banks, thrift institutions and mortgage
companies have been pressing Fannie Mae to help them make more loans
to so-called s
ubprime borrowers. These borrowers whose incomes, credit ratings
and savings are not good enough to qualify for conventional loans,
can only get loans from finance companies that charge much higher
interest rates -- anywhere from three to four percentage points
higher than conventional loans. ''Fannie Mae has expanded home
ownership for millions of families in the 1990's by reducing down
payment requirements,'' said Franklin D. Raines, Fannie Mae's
chairman and chief executive officer. ''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.'' Demographic
information on these borrowers is sketchy. But at least one study
indicates that 18 percent of the loans in the subprime market went
to black borrowers, compared to 5 per cent of loans in the
conventional loan market. In moving, even tentatively, into this new
area of len
d
ing, 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. ''From the perspective
of many people, including me, this is another thrift industry
growing up around us,'' said Peter Wallison a resident fellow at the
American Enterprise Institute. ''If they fail, the government will
have to step up and bail them out the way it stepped up and bailed
out the thrift industry.'' Under Fannie Mae's pilot program,
consumers who qualify can secure a mortgage with an interest rate
one percentage point above that of a conventional, 30-year fixed
rate mortgage of less than $240,000 -- a rate that currently
averages about 7.76 per cent. If the borrower makes his or her
monthly payments on time for two years, the one percentage point
premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages,
does not lend money directly to consumers. Instead, it purchases
loans that banks make on what is called the secondary 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 ratings. Fannie Mae officials stress that the new mortgages
will be extended to all potential borrowers who can qualify for a
mortgage. But they add that the move is intended in part to increase
the number of minority and low income home owners who tend to have
worse credit ratings than non-Hispanic whites. Home ownership has,
in fact, exploded among minorities during the economic boom of the
1990's. The number of mortgages extended to Hispanic applicants
jumped by 87.2 per cent from 1993 to 1998, according to Harvard
University's Joint Center for Housing Studies. During that same
period the number of African Americans who got mortgages to buy a h
o
me increased by 71.9 per cent and the number of Asian Americans by
46.3 per cent. In contrast, the number of non-Hispanic whites who
received loans for homes increased by 31.2 per cent. Despite these
gains, home ownership rates for minorities continue to lag behind
non-Hispanic whites, in part because blacks and Hispanics in
particular tend to have on average worse credit ratings. In July,
the Department of Housing and Urban Development proposed that by the
year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be
made up of loans to low and moderate-income borrowers. Last year, 44
percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is
investigating allegations of racial discrimination in the automated
underwriting systems used by Fannie Mae and Freddie Mac to determine
the credit-worthiness of credit applicants.
***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.Dixon,
CA1-800-234-4605www.jumbocdinvestments.comwww.jumbocdinvestmen ts.com/
cd_rates_blog

Securities offered through Gill Capital Partners, Inc. Member: FINRA
- SIPC

Life is not measured by the number of breaths we take but by the
moments that take our breath away. CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
__________________________________________________ _______________
Get more out of the Web. Learn 10 hidden secrets of Windows Live.
http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cns!550F681DAD532637!5295.entry?ocid=TXT_TAGLM_WL_ domore_092008 ('http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cns!550F681DAD532637!5295.entry?ocid=TXT_TAGLM_WL_ domore_092008')


---

END OF DIGEST



CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')

[Community Development Banking List]

Original message from: iwachsler@rcn.com

Actually, the Feds knew that the subprime assets were "junk" back as early as 2007 when the Federal Reserve Bank, the European Union Central Bank and other central banks pumped $350 billion into the money markets in AUGUST 2007.

At least $150 billion of the loss was due to the U.S. subprime mortgage assets.

http://www.billdoll.com/bl/n/2007/08/us-subprime-woes-cost-150-billion.html ('http://www.billdoll.com/bl/n/2007/08/us-subprime-woes-cost-150-billion.html')

Irene

---- Original message ----
Date: Fri, 3 Oct 2008 06:39:22 -0700
From: "Chris Duncan" <chris@jumbocdi.com>
Subject: And you wonder where the problem is....
To: "Community Banking" <communitydevelopmentbanking-l@cornell.edu>
Cc: "Gina Williams" <gina@uarkfcu.com>,"Debbie Lehmen" <debbie@dakotalandfcu.com>

Here is an article from 1999 that was published in
the NYT. I think it almost says it all. Bolding is
mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

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 addition, banks, thrift institutions and mortgage
companies have been pressing Fannie Mae to help them
make more loans to so-called subprime borrowers.
These borrowers whose incomes, credit ratings and
savings are not good enough to qualify for
conventional loans, can only get loans from finance
companies that charge much higher interest rates --
anywhere from three to four percentage points higher
than conventional loans.

''Fannie Mae has expanded home ownership for
millions of families in the 1990's by reducing down
payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer.
''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.''

Demographic information on these borrowers is
sketchy. But at least one study indicates that 18
percent of the loans in the subprime market went to
black borrowers, compared to 5 per cent of loans in
the conventional loan market.

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.

''From the perspective of many people, including me,
this is another thrift industry growing up around
us,'' said Peter Wallison a resident fellow at the
American Enterprise Institute. ''If they fail, the
government will have to step up and bail them out
the way it stepped up and bailed out the thrift
industry.''

Under Fannie Mae's pilot program, consumers who
qualify can secure a mortgage with an interest rate
one percentage point above that of a conventional,
30-year fixed rate mortgage of less than $240,000 --
a rate that currently averages about 7.76 per cent.
If the borrower makes his or her monthly payments on
time for two years, the one percentage point premium
is dropped.

Fannie Mae, the nation's biggest underwriter of home
mortgages, does not lend money directly to
consumers. Instead, it purchases loans that banks
make on what is called the secondary 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 ratings.

Fannie Mae officials stress that the new mortgages
will be extended to all potential borrowers who can
qualify for a mortgage. But they add that the move
is intended in part to increase the number of
minority and low income home owners who tend to have
worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among
minorities during the economic boom of the 1990's.
The number of mortgages extended to Hispanic
applicants jumped by 87.2 per cent from 1993 to
1998, according to Harvard University's Joint Center
for Housing Studies. During that same period the
number of African Americans who got mortgages to buy
a home increased by 71.9 per cent and the number of
Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who
received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for
minorities continue to lag behind non-Hispanic
whites, in part because blacks and Hispanics in
particular tend to have on average worse credit
ratings.

In July, the Department of Housing and Urban
Development proposed that by the year 2001, 50
percent of Fannie Mae's and Freddie Mac's portfolio
be made up of loans to low and moderate-income
borrowers. Last year, 44 percent of the loans Fannie
Mae purchased were from these groups.

The change in policy also comes at the same time
that HUD is investigating allegations of racial
discrimination in the automated underwriting systems
used by Fannie Mae and Freddie Mac to determine the
credit-worthiness of credit applicants.

***********************************
Here is the link to the article.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners,
Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

CDB list instructions
http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
Contact:

Cell: 781.883.3174
Email: iwachsler@rcn.com

"Life is not meaningful to us unless serving an end beyond itself, unless it is of value to someone else."
- Abraham J. Heschel

[Community Development Banking List]

Original message from: iwachsler@rcn.com

I suspect that Fannie Mae / Freddie Mac share the blame (with others) in the current financial meltdown otherwise why would the government have had to bail them out? However, I don't know this for certain.

Both companies were forced to restate their financial earnings. W/respect to Fannie Mae, in reading the testimony presented by Christopher Cox, US SEC Chairman, on June 15, 2006, the organization lacked internal controls, misstated its financials from 1998-2004, and misstated its costs associated with loans. (http://www.sec.gov/news/testimony/2006/ts061506cc.htm) ('http://www.sec.gov/news/testimony/2006/ts061506cc.htm)')

The big question that I have is what type of accounting practices continued onward since 2004? As the restatements were finished in 2006, what about the financials for 2005 & 2006? Based on one article that I read, Fannie Mae estimated that it would take them an additional 2 years to get caught up on reporting these financials - which means that 2005 & 2--6 financials would be reported sometime in 2008 (and then they're still back 2 years!)

(http://archive.newsmax.com/money/archives/articles/2006/12/7/102409.cfm) ('http://archive.newsmax.com/money/archives/articles/2006/12/7/102409.cfm)')

Irene
---- Original message ----
Date: Sun, 5 Oct 2008 09:39:58 -0400
From: "Josh Silver" <jsilver@ncrc.org>
Subject: RE: And you wonder where the problem is....
To: "Community Banking" <communitydevelopmentbanking-l@cornell.edu>


Another issue is that one should read carefully the
subprime product described in the article. As
described, the new Fannie Mae product was one
percentage point above conventional, 30 year
mortgage rate. After two years, the one percentage
point premium is dropped. This is hardly an abusive
subprime loan with rates 3 or 4 or 5 percentage
points above conventional rates. Moreover, Fannie
Mae and Freddie Mac had agreed to a series of
reforms such as not purchasing loans with fee
gouging (fees five percent or more of the loan
amount) and no loans with mandatory arbitration.

I agree with the other commentary that Fannie and
Freddie did not cause the problem. Instead, it was
a mixture of perverse compensation systems for
brokers and an avoidance of negative
externalities...brokers and lenders could quickly
selll their loans to hundreds of investors and avoid
significant losses for making loans beyond borrower
repayment ability. The surge in the most
problematic lending occured far after 1999....when
Wall Street turned on the spigot of financing and
MBS vehicles. The worst lending occured between
2004 and 2007 when the option ARM, 2/28 and 3/27
ARMs were seized upon as a vehicle.

And again, neither was CRA behind the mess. Check
http://www.ncrc.org. ('http://www.ncrc.org.') It is perverse to assert that
a statute which requires meeting credit needs
with safe and sound lending pressured problematic
lending. Proponents of that view don't know how CRA
exams work; banks are penalized for making illegal
and abusive lending. Banks receive points for
foreclosure prevention activities including
counseling and modifying loans in a a safe and sound
manner.

The political heat will not enable us to see the
real causes of the problem...the root of which was
deregulation. The Federal Reserve belatedly
acknowledged the imperfection of lending markets
when they updated HOEPA, their regulation against
unsafe and unsound lending this summer. Too little
and too late. Ultimately the most effective
solution will be to cover all parts of the financial
industry with a strong anti-predatory law along the
lines of S. 2452 and make the financial industry
internalize negative externalities (in other words,
you make a problematic loan, you will pay
financiallly for it).

Yours,

Josh Silver
Vice President of Research and Policy
National Community Reinvestment Coalition

------------------------------------------------

NCRC

Josh Silver
Vice President of Research & Policy

National Community Reinvestment Coalition (NCRC)
727 15th Street, NW, Suite 900 | Washington, DC
20005
TEL: (202) 464-2708 | www.ncrc.org

Combined Federal Campaign #12361



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From: bounce-3137056-4989749@list.cornell.edu on
behalf of George Samuels
Sent: Sat 10/4/2008 7:46 PM
To: Chris Duncan; Community Banking
Cc: Gina Williams; Debbie Lehmen
Subject: RE: And you wonder where the problem is....
What "problem" are you talking about in particular
Mr. Duncan? The current credit crisis?

And is this article suppose to sum it up? I don't
think so.

There is something called asset valuation. Wall
Street is responsible for that part.

Yes the spigot was open and running, but it was the
market's responsibility to price these mortgage
assets accordingly......it did not. It overpriced
them, and people, top level people, ran away
with billions of dollars.

We are bailing out Wall Street here. The taxpayer
will get nothing, despite all the "sugar-coated"
stuff we hear. Many Americans have already lost
their homes and their savings. The stories are
endless, as I have mentioned before. We can go
around the country, and we will find millions that
were duped out of millions.

This article only brings to light a small part of
the problem, not the major force behind it.

George




------------------------------------------------

From: chris@jumbocdi.com
To: communitydevelopmentbanking-l@cornell.edu
CC: gina@uarkfcu.com; debbie@dakotalandfcu.com
Subject: And you wonder where the problem is....
Date: Fri, 3 Oct 2008 06:39:22 -0700

Here is an article from 1999 that was published in
the NYT. I think it almost says it all. Bolding is
mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage
companies have been pressing Fannie Mae to help them
make more loans to so-called subprime borrowers.
These borrowers whose incomes, credit ratings and
savings are not good enough to qualify for
conventional loans, can only get loans from finance
companies that charge much higher interest rates --
anywhere from three to four percentage points higher
than conventional loans.
''Fannie Mae has expanded home ownership for
millions of families in the 1990's by reducing down
payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer.
''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.''
Demographic information on these borrowers is
sketchy. But at least one study indicates that 18
percent of the loans in the subprime market went to
black borrowers, compared to 5 per cent of loans in
the conventional loan market.
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.
''From the perspective of many people, including me,
this is another thrift industry growing up around
us,'' said Peter Wallison a resident fellow at the
American Enterprise Institute. ''If they fail, the
government will have to step up and bail them out
the way it stepped up and bailed out the thrift
industry.''
Under Fannie Mae's pilot program, consumers who
qualify can secure a mortgage with an interest rate
one percentage point above that of a conventional,
30-year fixed rate mortgage of less than $240,000 --
a rate that currently averages about 7.76 per cent.
If the borrower makes his or her monthly payments on
time for two years, the one percentage point premium
is dropped.
Fannie Mae, the nation's biggest underwriter of home
mortgages, does not lend money directly to
consumers. Instead, it purchases loans that banks
make on what is called the secondary 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 ratings.
Fannie Mae officials stress that the new mortgages
will be extended to all potential borrowers who can
qualify for a mortgage. But they add that the move
is intended in part to increase the number of
minority and low income home owners who tend to have
worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among
minorities during the economic boom of the 1990's.
The number of mortgages extended to Hispanic
applicants jumped by 87.2 per cent from 1993 to
1998, according to Harvard University's Joint Center
for Housing Studies. During that same period the
number of African Americans who got mortgages to buy
a home increased by 71.9 per cent and the number of
Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who
received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for
minorities continue to lag behind non-Hispanic
whites, in part because blacks and Hispanics in
particular tend to have on average worse credit
ratings.
In July, the Department of Housing and Urban
Development proposed that by the year 2001, 50
percent of Fannie Mae's and Freddie Mac's portfolio
be made up of loans to low and moderate-income
borrowers. Last year, 44 percent of the loans Fannie
Mae purchased were from these groups.
The change in policy also comes at the same time
that HUD is investigating allegations of racial
discrimination in the automated underwriting systems
used by Fannie Mae and Freddie Mac to determine the
credit-worthiness of credit applicants.
***********************************
Here is the link to the article.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners,
Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.
CDB list instructions
http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')

------------------------------------------------

Get more out of the Web. Learn 10 hidden secrets of
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CDB list instructions
http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
Contact:

Cell: 781.883.3174
Email: iwachsler@rcn.com

"Life is not meaningful to us unless serving an end beyond itself, unless it is of value to someone else."
- Abraham J. Heschel

[Community Development Banking List]

Original message from: melisebrown@yahoo.com


The problem*lies in many places, which includes: (1)*mortgage brokers who lied to consumers and put them into loans that the broker knew that the homeowners could not afford, (2) lenders who failed to do even the minimum due diligence in reviewing loan applications, (3) regulators who permitted high-risk products like stated income loans and Option adjustable rate mortgages to be marketed widely (and the regulators knew for years that they were being marketed widely), (4) appraisers who inflated the "value" of homes falsely which not only cheated local homeowners and homebuyers but had a ripple effect across the market, cheating investors as well, (5) speculators who tried to use the greediness of brokers, lenders and other players in the market to their own advantage, .* It lies with lenders who know that, (6) unsophisticated mom and pop real estate investors who thought buying a small home and renting it out would be a safe investment for their
retirement, (7) unsafe and largely unregulated investment vehicles.
*
And I go back to the regulators, one more time, for failing to do their job and, consequently, contributing to the unprecedented financial and emotional losses of people in this country that will take us years to recover from.*
*
Maeve Elise
--- On Fri, 10/3/08, Chris Duncan <chris@jumbocdi.com> wrote:

From: Chris Duncan <chris@jumbocdi.com>
Subject: And you wonder where the problem is....
To: "Community Banking" <communitydevelopmentbanking-l@cornell.edu>
Cc: "Gina Williams" <gina@uarkfcu.com>, "Debbie Lehmen" <debbie@dakotalandfcu.com>
Date: Friday, October 3, 2008, 6:39 AM





Here is an article from 1999 that was published in the NYT.* I think it almost says it all.* Bolding is mine.
*
Chris Duncan :O)
*
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999


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 addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''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.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
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.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary 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 ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
***********************************
Here is the link to the article.* http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')
*
Chris Duncan
*
Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog
*
Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC
*
Life is not measured by the number of
breaths we take but by the moments that
take our breath away.


CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')

[Community Development Banking List]

Original message from: tloc@centuryhousing.org

Today's NYTimes has a pretty good summary

http://www.nytimes.com/2008/10/05/business/05fannie.html?ref=business ('http://www.nytimes.com/2008/10/05/business/05fannie.html?ref=business')

And, if you missed it, This American Life on NPR had a couple of good
articles recently. One full show
http://www.thislife.org/Radio_Episode.aspx?sched=1263 ('http://www.thislife.org/Radio_Episode.aspx?sched=1263') and part of
another one, specifically about why Chris Cox should be fired, act 2 of
http://www.thislife.org/Radio_Episode.aspx?sched=1260, ('http://www.thislife.org/Radio_Episode.aspx?sched=1260,') (also available
on Planet Money http://www.npr.org/blogs/money/) ('http://www.npr.org/blogs/money/)')

-----Original Message-----
From: bounce-3138911-5282651@list.cornell.edu
[mailto:bounce-3138911-5282651@list.cornell.edu] On Behalf Of Irene
Wachsler
Sent: Sunday, October 05, 2008 2:11 PM
To: Chris Duncan; Community Banking
Cc: Gina Williams; Debbie Lehmen
Subject: Re: And you wonder where the problem is....

Actually, the Feds knew that the subprime assets were "junk" back as
early as 2007 when the Federal Reserve Bank, the European Union Central
Bank and other central banks pumped $350 billion into the money markets
in AUGUST 2007.

At least $150 billion of the loss was due to the U.S. subprime mortgage
assets.

http://www.billdoll.com/bl/n/2007/08/us-subprime-woes-cost-150-billion.h ('http://www.billdoll.com/bl/n/2007/08/us-subprime-woes-cost-150-billion.h')
tml

Irene

---- Original message ----
Date: Fri, 3 Oct 2008 06:39:22 -0700
From: "Chris Duncan" <chris@jumbocdi.com>
Subject: And you wonder where the problem is....
To: "Community Banking" <communitydevelopmentbanking-l@cornell.edu>
Cc: "Gina Williams" <gina@uarkfcu.com>,"Debbie Lehmen"
<debbie@dakotalandfcu.com>

Here is an article from 1999 that was published in
the NYT. I think it almost says it all. Bolding is
mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

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 addition, banks, thrift institutions and mortgage
companies have been pressing Fannie Mae to help them
make more loans to so-called subprime borrowers.
These borrowers whose incomes, credit ratings and
savings are not good enough to qualify for
conventional loans, can only get loans from finance
companies that charge much higher interest rates --
anywhere from three to four percentage points higher
than conventional loans.

''Fannie Mae has expanded home ownership for
millions of families in the 1990's by reducing down
payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer.
''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.''

Demographic information on these borrowers is
sketchy. But at least one study indicates that 18
percent of the loans in the subprime market went to
black borrowers, compared to 5 per cent of loans in
the conventional loan market.

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.

''From the perspective of many people, including me,
this is another thrift industry growing up around
us,'' said Peter Wallison a resident fellow at the
American Enterprise Institute. ''If they fail, the
government will have to step up and bail them out
the way it stepped up and bailed out the thrift
industry.''

Under Fannie Mae's pilot program, consumers who
qualify can secure a mortgage with an interest rate
one percentage point above that of a conventional,
30-year fixed rate mortgage of less than $240,000 --
a rate that currently averages about 7.76 per cent.
If the borrower makes his or her monthly payments on
time for two years, the one percentage point premium
is dropped.

Fannie Mae, the nation's biggest underwriter of home
mortgages, does not lend money directly to
consumers. Instead, it purchases loans that banks
make on what is called the secondary 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 ratings.

Fannie Mae officials stress that the new mortgages
will be extended to all potential borrowers who can
qualify for a mortgage. But they add that the move
is intended in part to increase the number of
minority and low income home owners who tend to have
worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among
minorities during the economic boom of the 1990's.
The number of mortgages extended to Hispanic
applicants jumped by 87.2 per cent from 1993 to
1998, according to Harvard University's Joint Center
for Housing Studies. During that same period the
number of African Americans who got mortgages to buy
a home increased by 71.9 per cent and the number of
Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who
received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for
minorities continue to lag behind non-Hispanic
whites, in part because blacks and Hispanics in
particular tend to have on average worse credit
ratings.

In July, the Department of Housing and Urban
Development proposed that by the year 2001, 50
percent of Fannie Mae's and Freddie Mac's portfolio
be made up of loans to low and moderate-income
borrowers. Last year, 44 percent of the loans Fannie
Mae purchased were from these groups.

The change in policy also comes at the same time
that HUD is investigating allegations of racial
discrimination in the automated underwriting systems
used by Fannie Mae and Freddie Mac to determine the
credit-worthiness of credit applicants.

***********************************
Here is the link to the article.

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC')
0A96F958260&sec=&spon=&pagewanted=1

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners,
Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

CDB list instructions
http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
Contact:

Cell: 781.883.3174
Email: iwachsler@rcn.com

"Life is not meaningful to us unless serving an end beyond itself,
unless it is of value to someone else."
- Abraham J. Heschel

[Community Development Banking List]

Original message from: jtroesh@servicepluscu.org

I personally don't think the point of the article being mentioned was to
suggest that Minority Borrowers were to blame. I think the point was
that in order to achieve a desired goal (greater home-ownership amongst
minorities), we placed pressure on institutions to loosen lending
standards to get low income people of all races into homes they couldn't
afford. I take it as a warning of the specter of unintended
consequences.



This is an example of when one tries to fix a societal problem with
reactive programs rather than proactive social change. We saw that some
minority groups weren't qualifying for homes in as great a number as
whites and Asians. As a result, we assumed that the qualifying
standards must be racially biased, so we altered the standards to allow
more minority home-ownership. This was a reactive program.



What we should have done is looked at the underlying causes of minority
poverty (less focus on education, few positive inner-city role models,
higher crime rates, etc) and worked to change those issues so that
minority poverty became less of a societal issue.



Josh Troesh



VP Marketing and Business Development

Service Plus Credit Union

951.680.1998 x1112

951.787.6699 (fax)

________________________________

From: bounce-3138390-5474748@list.cornell.edu
[mailto:bounce-3138390-5474748@list.cornell.edu] On Behalf Of Jones,
Anthony M
Sent: Sunday, October 05, 2008 1:49 PM
To: communitydevelopmentbanking-l@list.cornell.edu
Subject: Re: communitydevelopmentbanking-l digest: October 04, 2008



I know where you're going, but there is no evidence that loans to
minorities have anything to do with the GSE's problem. In fact, the
MyCommunity Mortgage program is one of the best performing sectors of
Fannie's portfolio. That's not where the no-doc, adjustable,
interest-only,subprime loans happened. And that is also not where the
foreclosures are occurring.

As I said, I know where you are going. But you can't get there from
here.



Out of the office. Sent from my wireless handheld.
This message thumb-typed and not spell checked.

----- Original Message -----
From: bounce-3137232-4991389@list.cornell.edu
<bounce-3137232-4991389@list.cornell.edu>
To: communitydevelopmentbanking-l digest recipients
<communitydevelopmentbanking-l@list.cornell.edu>
Sent: Sun Oct 05 02:03:38 2008
Subject: communitydevelopmentbanking-l digest: October 04, 2008

COMMUNITYDEVELOPMENTBANKING-L Digest for Saturday, October 04, 2008.

1. And you wonder where the problem is....
2. RE: And you wonder where the problem is....

----------------------------------------------------------------------

Subject: And you wonder where the problem is....
From: "Chris Duncan" <chris@jumbocdi.com>
Date: Fri, 3 Oct 2008 06:39:22 -0700
X-Message-Number: 1

Here is an article from 1999 that was published in the NYT. I think it
almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999
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 addition, banks, thrift institutions and mortgage companies have been
pressing Fannie Mae to help them make more loans to so-called subprime
borrowers. These borrowers whose incomes, credit ratings and savings are
not good enough to qualify for conventional loans, can only get loans
from finance companies that charge much higher interest rates --
anywhere from three to four percentage points higher than conventional
loans.

''Fannie Mae has expanded home ownership for millions of families in the
1990's by reducing down payment requirements,'' said Franklin D. Raines,
Fannie Mae's chairman and chief executive officer. ''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.''

Demographic information on these borrowers is sketchy. But at least one
study indicates that 18 percent of the loans in the subprime market went
to black borrowers, compared to 5 per cent of loans in the conventional
loan market.

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.

''From the perspective of many people, including me, this is another
thrift industry growing up around us,'' said Peter Wallison a resident
fellow at the American Enterprise Institute. ''If they fail, the
government will have to step up and bail them out the way it stepped up
and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a
mortgage with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -- a
rate that currently averages about 7.76 per cent. If the borrower makes
his or her monthly payments on time for two years, the one percentage
point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not
lend money directly to consumers. Instead, it purchases loans that banks
make on what is called the secondary 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 ratings.

Fannie Mae officials stress that the new mortgages will be extended to
all potential borrowers who can qualify for a mortgage. But they add
that the move is intended in part to increase the number of minority and
low income home owners who tend to have worse credit ratings than
non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the
economic boom of the 1990's. The number of mortgages extended to
Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according
to Harvard University's Joint Center for Housing Studies. During that
same period the number of African Americans who got mortgages to buy a
home increased by 71.9 per cent and the number of Asian Americans by
46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for
homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag
behind non-Hispanic whites, in part because blacks and Hispanics in
particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that
by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio
be made up of loans to low and moderate-income borrowers. Last year, 44
percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is
investigating allegations of racial discrimination in the automated
underwriting systems used by Fannie Mae and Freddie Mac to determine the
credit-worthiness of credit applicants.

***********************************
Here is the link to the article.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A')
96F958260&sec=&spon=&pagewanted=1

Chris Duncan

Jumbo C.D. Investments, Inc.
Dixon, CA
1-800-234-4605
www.jumbocdinvestments.com
www.jumbocdinvestments.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc.
Member: FINRA - SIPC

Life is not measured by the number of
breaths we take but by the moments that
take our breath away.

----------------------------------------------------------------------

Subject: RE: And you wonder where the problem is....
From: George Samuels <georgey10@hotmail.com>
Date: Sat, 4 Oct 2008 19:46:05 -0400
X-Message-Number: 2


What "problem" are you talking about in particular Mr. Duncan? The
current credit crisis? And is this article suppose to sum it up? I don't
think so.

There is something called asset valuation. Wall Street is responsible
for that part.

Yes the spigot was open and running, but it was the market's
responsibility to price these mortgage assets accordingly......it did
not. It overpriced them, and people, top level people, ran away with
billions of dollars.

We are bailing out Wall Street here. The taxpayer will get nothing,
despite all the "sugar-coated" stuff we hear. Many Americans have
already lost their homes and their savings. The stories are endless, as
I have mentioned before. We can go around the country, and we will find
millions that were duped out of millions.

This article only brings to light a small part of the problem, not the
major force behind it.

George




From: chris@jumbocdi.comTo: communitydevelopmentbanking-l@cornell.eduCC:
gina@uarkfcu.com; debbie@dakotalandfcu.comSubject: And you wonder where
the problem is....Date: Fri, 3 Oct 2008 06:39:22 -0700



Here is an article from 1999 that was published in the NYT. I think it
almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

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 addition, banks, thrift institutions and mortgage
companies have been pressing Fannie Mae to help them make more loans to
so-called s
ubprime borrowers. These borrowers whose incomes, credit ratings and
savings are not good enough to qualify for conventional loans, can only
get loans from finance companies that charge much higher interest rates
-- anywhere from three to four percentage points higher than
conventional loans. ''Fannie Mae has expanded home ownership for
millions of families in the 1990's by reducing down payment
requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief
executive officer. ''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.'' Demographic information on these borrowers is
sketchy. But at least one study indicates that 18 percent of the loans
in the subprime market went to black borrowers, compared to 5 per cent
of loans in the conventional loan market. In moving, even tentatively,
into this new area of len
d
ing, 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. ''From the perspective of many people,
including me, this is another thrift industry growing up around us,''
said Peter Wallison a resident fellow at the American Enterprise
Institute. ''If they fail, the government will have to step up and bail
them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a
mortgage with an interest rate one percentage point above that of a
conventional, 30-year fixed rate mortgage of less than $240,000 -- a
rate that currently averages about 7.76 per cent. If the borrower makes
his or her monthly payments on time for two years, the one percentage
point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does
not lend money directly to consumers. Instead, it purchases loans that
banks make on what is called the secondary 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 ratings. Fannie Mae
officials stress that the new mortgages will be extended to all
potential borrowers who can qualify for a mortgage. But they add that
the move is intended in part to increase the number of minority and low
income home owners who tend to have worse credit ratings than
non-Hispanic whites. Home ownership has, in fact, exploded among
minorities during the economic boom of the 1990's. The number of
mortgages extended to Hispanic applicants jumped by 87.2 per cent from
1993 to 1998, according to Harvard University's Joint Center for Housing
Studies. During that same period the number of African Americans who got
mortgages to buy a h
o
me increased by 71.9 per cent and the number of Asian Americans by 46.3
per cent. In contrast, the number of non-Hispanic whites who received
loans for homes increased by 31.2 per cent. Despite these gains, home
ownership rates for minorities continue to lag behind non-Hispanic
whites, in part because blacks and Hispanics in particular tend to have
on average worse credit ratings. In July, the Department of Housing and
Urban Development proposed that by the year 2001, 50 percent of Fannie
Mae's and Freddie Mac's portfolio be made up of loans to low and
moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae
purchased were from these groups. The change in policy also comes at the
same time that HUD is investigating allegations of racial discrimination
in the automated underwriting systems used by Fannie Mae and Freddie Mac
to determine the credit-worthiness of credit applicants.
***********************************
Here is the link to the article.
http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A')
96F958260&sec=&spon=&pagewanted=1

Chris Duncan

Jumbo C.D. Investments, Inc.Dixon,
CA1-800-234-4605www.jumbocdinvestments.comwww.jumbocdinvestmen ts.com/cd_
rates_blog

Securities offered through Gill Capital Partners, Inc. Member: FINRA -
SIPC

Life is not measured by the number of breaths we take but by the moments
that take our breath away. CDB list instructions
http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')
__________________________________________________ _______________
Get more out of the Web. Learn 10 hidden secrets of Windows Live.
http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cn ('http://windowslive.com/connect/post/jamiethomson.spaces.live.com-Blog-cn')
s!550F681DAD532637!5295.entry?ocid=TXT_TAGLM_WL_do more_092008


---

END OF DIGEST



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[Community Development Banking List]

Original message from: georgey10@hotmail.com


Chris,

My response to your initial post said nothing about political blame. I could care less about who is at fault politically. We need to come together to deal with the fallout.

Also, the quotes on personal responsibility make sense in theory, but are flawed.

Civil rights didn't come about because people took personal responsibility for themselves. It came about because people came together to stop the injustice. Tricking someone into taking out a loan is an injustice. Taking advantage of elderly folks, by forcing them to refinance their homes, is an injustice. Preying on low-income and other folks with subprime schemes and payday loans is an injustice.

There is all this talk about people taking out loans they could not afford. Well, why would a lender give a bad loan to someone unless there were other motives? The lender had to know it was a bad loan. Come on.

If you abide by the laws of this country, then that's personal responsibility. Many Wall Street brokers, mortgage brokers, and others broke the law. They are the ones that need personal responsibility. To fight their injustice we need collective power and regulation. I am not convinced that we'll get either. In 10 years, we'll be talking about the same thing. It will be another industry then, probably health care.

George



From: chris@jumbocdi.comTo: tbostelmann@gmail.com; georgey10@hotmail.comCC: communitydevelopmentbanking-l@cornell.edu; gina@uarkfcu.com; debbie@dakotalandfcu.comSubject: Re: And you wonder where the problem is....Date: Mon, 6 Oct 2008 07:16:55 -0700



George,

First, the NYT has never been accused of being a friend of conservatives. However, I was not trying to point political blame.

Second, yes the current crisis has roots that go way back. The article even warned that in an economic down turn the loan portfolio that Freddie/Fannie were building could prove problematic. I would say that it did. And as we now know, it has gone far beyond those two companies.

Next, I think the most important point is Gov't pressure and stock holder pressure don't fair well together. The Gov't wanted more loans, but the stock holders didn't want to make less money. Although, I do feel that many CEOs are making excessive salaries, should the Gov't be in the business of telling people how much they can make? I don't think so. Bill Gates has made billions of dollars , but he also set up a foundation give back large sums of money. The board of directors sets compensation based on the rewards they expect the leaders of those companies to be able produce. I would say, boards should be evaluatiing the current and future packages, long and hard.

You said Wall Street was responsible for the asset valuation part of the equation. Certainly, they were. Although, who could have predicted that 1% to 2% of loans could prove so toxic? Loans to sub-prime borrowers used to be valued at 3% to 4% above folks with good credit. It would appear that, that spread more accurately reflects the risk that is being taken for those loans.

For the record, and I have written before, I was not and am not a fan of the bail-out. Although, you speak of people losing homes and their life savings. I heard many small to medium business owners express that they would lose their businesses and more without the bail-out and the credit market returning to normalacy.

Finally, I leave you with a comment from someone that opted to be annonymous and a quote.

"Maeve left out one very important responsible party………. THE PEOPLE who took out mortgages in an effort to ‘Jones’ and live beyond their means. I am a big proponent of personal responsibility. I’m sorry but bad offers don’t make bad decisions; just because there out there doesn’t mean you have to take them! Maybe Maeve was referring to this with # 5 a little bit. But I think we have to say it more clearly and louder! Take responsibility for yourself!!!!!"

"To be free, to soar, we must be accountable for our lives."--Unknown
Chris Duncan
Jumbo C.D. Investments, Inc.Dixon, CA1-800-234-4605www.jumbocdinvestments.comwww.jumbocdinvestmen ts.com/cd_rates_blog
Securities offered through Gill Capital Partners, Inc. Member: FINRA - SIPC
Life is not measured by the number of breaths we take but by the moments that take our breath away.
----- Original Message -----

From: Tom Bostelmann
To: George Samuels
Cc: Chris Duncan ; Community Banking ; Gina Williams ; Debbie Lehmen
Sent: Saturday, October 04, 2008 8:19 PM
Subject: Re: And you wonder where the problem is....

This is a good point, George. And I don't think Chris was necessarily pointing all the blame towards the Clinton administration.I do like this article, though, because it does point out that this has been growing for a while and isn't necessarily systemic of the current administration. I'm a democrat and I've been mailing this around to all of my friends in an attempt to reign in on all the finger pointing. The last election was full of two-sided animosity and look what happened? I don't think we can afford more accusations - nobody listens to them anyway. Plus, this list is probably better served if we leave the political spin out ;)Tom
On Sat, Oct 4, 2008 at 4:46 PM, George Samuels <georgey10@hotmail.com> wrote:

What "problem" are you talking about in particular Mr. Duncan? The current credit crisis? And is this article suppose to sum it up? I don't think so. There is something called asset valuation. Wall Street is responsible for that part. Yes the spigot was open and running, but it was the market's responsibility to price these mortgage assets accordingly......it did not. It overpriced them, and people, top level people, ran away with billions of dollars. We are bailing out Wall Street here. The taxpayer will get nothing, despite all the "sugar-coated" stuff we hear. Many Americans have already lost their homes and their savings. The stories are endless, as I have mentioned before. We can go around the country, and we will find millions that were duped out of millions. This article only brings to light a small part of the problem, not the major force behind it. George



From: chris@jumbocdi.comTo: communitydevelopmentbanking-l@cornell.eduCC: gina@uarkfcu.com; debbie@dakotalandfcu.com
Subject: And you wonder where the problem is....Date: Fri, 3 Oct 2008 06:39:22 -0700



Here is an article from 1999 that was published in the NYT. I think it almost says it all. Bolding is mine.

Chris Duncan :O)

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

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 addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''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.'' Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. 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. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped. Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary 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 ratings. Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites. Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent. In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent. Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings. In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups. The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
***********************************
Here is the link to the article. http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1 ('http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F9582 60&sec=&spon=&pagewanted=1')

Chris Duncan

Jumbo C.D. Investments, Inc.Dixon, CA1-800-234-4605www.jumbocdinvestments.comwww.jumbocdinvestmen ts.com/cd_rates_blog

Securities offered through Gill Capital Partners, Inc. Member: FINRA - SIPC

Life is not measured by the number of breaths we take but by the moments that take our breath away. CDB list instructions http://www.runonthebank.net/cdblist.htm ('http://www.runonthebank.net/cdblist.htm')

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