Guess Again Whos To Blame For US Mortgage Meltdown

Guess Again Who's To Blame For U.S. Mortgage Meltdown
QUOTE
Guess again who’s to blame for U.S. mortgage meltdown
Analysts point not to greed, but to social activist politics

Stan Liebowitz
While many pundits are pointing to corporate greed and a lack of government regulation as the cause for the American mortgage and financial crisis, some analysts are saying it wasn’t too little government intervention that cased the mortgage meltdown, but too much, in the form of activists compelling the government to pressure Freddie Mac and Fannie Mae into unsound – though politically correct – lending practices........ Liebowitz puts forward an explanation that he admits is “not consistent with the nasty-subprime-lender hypothesis currently considered to be the cause of the mortgage meltdown.”

In a nutshell, Liebowitz contends that the federal government over the last 20 years pushed the mortgage industry so hard to get minority [ i.e. black ] homeownership up, that it undermined the country’s financial foundation to achieve its goal.

“In an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s,” Liebowitz writes. “The decline in mortgage underwriting standards was universally praised as ‘innovation’ in mortgage lending by regulators, academic specialists, (government-sponsored enterprises) and housing activists.”.......

Liebowitz’ contention that lenders were under pressure to loosen their standards for racial and political goals was confirmed years ago by the companies at the heart of today’s crisis: Fannie Mae and Freddie Mac.........

The Washington Post reported that the company conducted a study in which it was found that far more black people have bad credit than white people, even when both have the same incomes. In fact, the study showed a higher percentage of African Americans with incomes of $65,000 to $75,000 had bad credit than white Americans with incomes of below $25,000. Such data demonstrated that when federal regulators demanded parity between racial groups in lending, the only way to achieve a quota would be to begin making intentionally bad lending decisions. The study, however, came under brutal attack in the U.S. Congress and was ridiculed with charges of racism.
UNQUOTE
A Jew tells the truth about the Financial Crisis which surfaced in 2008.

If you thought that applying for a home mortgage was a "color blind" process, you are WRONG! Fannie Mae and federal regulators REQUIRE racial profiling of home mortgage applicants!

(2) Mortgages, Fannie Mae
News Stories and Background

Mortgages (National): Mortgage Lenders to Step Up Pursuit of Minorities (10/13/99)
BOSTON, Oct. 13, 1999 (Reuters) - "The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership in underserved groups.

"'We need to push into these underserved markets as much as we can,' said David Glenn, president and chief operating officer of Freddie Mac. Glenn made his remarks at the annual convention of the U.S. Mortgage Banker Association of America (MBA) this week.

"Freddie Mac, like its sister agency Fannie Mae, is a government-chartered corporation that buys mortgages from banks and packages them into securities for investors.

"In September, Freddie Mac launched a new lending program, based on research done in collaboration with five black colleges, to bring more African-Americans into the market.

"The call for greater efforts to broaden minority home ownership comes at a time when interest rates are pinching mortgages. A record $1.5 trillion mortgages were granted in 1998 in a refinancing boom fueled by the lowest interest rates in nearly three decades.

"The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories.

"Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development to commit half its business to low-and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets." Disturbingly, neither Fannie Mae nor Freddie Mac have instituted programs to enable disadvantaged non-minorities (European Americans) to qualify for a home mortgage. (Based on Reuters, via Builders On-Line 10/13/99, by Richard Leong)
[link http://builder.hw.net/news/1999/oct/13/mort13.htx ]

Mortgages (National): Bad Credit by Minorities is Inherently Racist! (10/05/99 - dead link)
Like Fannie Mae, Freddie Mac is a federally chartered agency that provides loans and capital for home mortgages.

"A Freddie Mac study concluding that far more black people have bad credit than white people, even when both have the same incomes, has come under attack in Congress, and some experts have questioned whether it oversimplifies a complex [racial] issue.

"The study's [Freddie Mac] authors defended their conclusions but said they probably should have chosen language other than "bad credit" or "good credit" because they were trying to say whether people had trouble paying their bills.

"The study of 12,000 Americans with incomes up to $75,000 received wide media coverage when it was released last month by Freddie Mac ..."

"[The Freddie Mac study] is one part of a new program to teach minorities how to improve their credit, in partnership with the NAACP, the National Urban League and five historically black colleges, including Howard University." [No such programs are offered by Freddie Mac for the benefit of "white" mortgage applicants.]

"The [Freddie Mac] researchers, relying on data from credit reports, designated people as having "bad credit" if they had two bills overdue more than 30 days in the past two years, one bill more than 90 days late, a lien, a judgment or a bankruptcy. Their data showed that a higher percentage of African Americans with incomes of $65,000 to $75,000 had "bad credit" than whites with incomes below $25,000.

U.S. Rep. Maxine Waters (D-Calif.), who strongly supports preferential credit and mortgage policies for designated minorities, said: "In other words we [minorities] are a credit risk because no matter how much money we make, we are also too stupid and undisciplined to know how to spend, plan and save." (Washington Post 10/05/99 by D'Vera Cohn)
[former link **http://www.washingtonpost.com/wp-srv/WPlate/1999-10/05/089l-100599-idx.html]

Michigan (Detroit): Lenders offer advice on improving credit rating (04/20/99 - dead)
"MT. CLEMENS -- Many African Americans say they are wary of discrimination among home mortgage lenders, but lenders at a mortgage fair sponsored by The Detroit News said a bigger problem is poor credit.

"The fair at the Mt. Clemens Public Library was the fourth such event since Feb. 7, when The News published an in-depth story that found upper income blacks in Metro Detroit were denied home loans at nearly twice the rate of whites with similar incomes.

"James Jefferson of Mt. Clemens said he attended the fair because his family is looking for their first house, he had heard stories about lending discrimination and wanted to head off problems before starting the process. "I wanted to make sure I knew what I needed to do before I got started," said Jefferson, who attended the fair with his son Jamelle, 7.

"While lenders who spoke Monday evening offered advice on how to improve credit ratings and other problems, they also acknowledged that discrimination can be a problem. "There's discrimination in America in general," said Anthony Weekly, NBD vice-president. "About one in seven people that (ask for information) gets a loan, but usually the denial is for poor credit." (Detroit News 04/20/99 by Jodi Upton)
[former link *http://www.detnews.com/1999/metro/9904/20/04200235.htm]

Utah (Salt Lake City): Companies Help Minorities With Home Mortgages (05/01/99)
"Premier and M&T Mortgage in Midvale this week agreed to work with the U.S. Department of Housing and Urban Development (HUD) to make an even deeper commitment to helping minorities buy homes. Both companies already seek out low-income and minority customers, especially Latinos, through Spanish-speaking loan officers.

"But they also now have signed formal agreements with HUD to conduct second reviews when loans are declined and to help those who don't qualify address the factors that led to loan denials. "It basically requires lenders to go the extra mile," said Richard Bell, community representative at HUD in Salt Lake City. "It's sometimes hard to persuade them to agree to something like this."

"The agreements do not require lenders to change their underwriting practices. Each applicant still must have a satisfactory credit history, manageable debt load, be employed, and in most cases, have some type of down payment. About 20 Utah lenders have signed HUD agreements in the past two years, but Bell said Premier and M&T have perhaps taken the concept of marketing to minorities and helping them qualify for loans the furthest. (The Salt Lake Tribune, Sat., 05/01/99, by Lesley Mitchell)
[link http://www.sltrib.com/1999/may/05011999/business/101982.htm ]

Wisconsin (Milwaukee): Racial Lending Gap Here Still Too Wide, But There's Hope (04/11/99)
"The hubbub over the large racial gap in home loans here obscures a trend: a dramatic jump in the rate in which home seekers of all races are turned down for loans around the nation. For some reason, Milwaukee has bucked this trend, and on both sides of the color line. (On the white side ... the mortgage rejection rate stood pat; on the [minority] side, it rose and then fell.) A consequence is that the nation's white home seekers now fare about as badly in obtaining loans as do Milwaukee's home seekers of color.

"That parity was not exactly the objective of efforts to close the racial lending gap here. Rather, the goal was parity within Milwaukee. Nonetheless, the parity between Milwaukeeans of color and white Americans as a whole may oddly act as a tribute to those efforts, which may have kept the minority rejection rate from soaring here, as it did across the nation.

"At first glance, the city's latest mortgage data was glum. Milwaukee still led the nation in racial disparity, the city comptroller noted in his annual report on the gap. Outsiders had exhorted the industry to practice fairness. The industry itself had vowed to tackle the problem.

"Ironically, whites may have directly benefited from efforts to expand the number of minority people who receive home loans. After all, making the application process fairer could expand the pool of eligible whites as well as eligible minorities. Hence, such efforts may help explain why the rejection rate has not soared among whites here as it has across the nation." (Milwaukee Sentinel Journal 04/11/99)
[link http://www.jsonline.com/news/editorials/0411loans.asp ]

Wisconsin (Milwaukee): Did You Know Bad Credit is Racist! (04/01/99 - dead)
"The city comptroller's office released numbers showing non-whites in metropolitan Milwaukee were nearly three times as likely to be denied a mortgage or home improvement loan as whites with the same income." The comptroller's report failed to mention bad credit histories.

"Race doesn't come into factor, as far as we're concerned," said Kip Malmstadt of All-American Mortgage in Brookfield.

"An account executive at a local bank said lenders were wary of accusations of bias because the applicant's race is included on many federal loan applications. "Everyone's heard about redlining lawsuits, we're very aware of that." The result: "You really don't look at race."

"All of the experts interviewed stopped just short of saying most blacks seem to have inferior credit compared with whites. That's understandable.

"It's a loaded question, one fraught with land mines. But my Tuesday column made the distinction between personal and institutional racism. An individual's personal feelings don't have to jibe with company policy to create a bias. They still insisted, it's about credit.

"An e-mail from a loan officer put it this way: "As president of a credit union who lends money to white, blacks, Hispanics and anyone else based not only on income, but more importantly on credit rating, I know that any survey which does not take credit rating into account is worthless."

"Another caller explained, "In this industry, we look at three things, call them the three C's . . . credit, capacity (income) and character."

"There was also this suggestion to explain why Milwaukee remains first in the gap between black and white. There is an awful lot of black poverty here. And that's not the mortgage loan industry's fault." (Milwaukee Journal Sentinel 04/01/99 by Eugene Kane)
[former link *http://www.jsonline.com/news/0401kane.asp]

Related: Whites in Milwaukee rarely denied loans; theories on why abound (04/05/99 - dead)
"Call it Milwaukee's white advantage. White residents in the metropolitan area enjoyed a home-loan approval rate of 91.7% in 1997, the highest in the nation, and well above the 76.8% national average. This startling fact emerged from the recently released annual review of lending compiled by the city comptroller, and it appears to be the force behind the area's nine-year label as worst in the nation when it comes to racial disparities in home loans." [The Comptroller's report pointedly failed to examine the role that bad credit histories play in turning down loans.]

"It's not that Milwaukee is the worst place for minorities to get loans. The area's denial rate in 1997 was 23.9%, lower than the 34% national average. But we're by far the best place for whites, which fuels the color gap, said Comptroller W. Martin Morics. "The loan denial rate here is incredibly low for whites," Morics said. "I can't say why." No one else can either -- at least with authority. One analyst thinks the answers may lie in a local tendency to save more and borrow less than most Americans. Another sees a link to our lower bad-debt rate and higher marriage rate." (Milwaukee Journal Sentinel 04/05/99 by Michele Derus)
[former link *http://www.jsonline.com/news/0405loans.asp]

Fannie Mae: Fannie Mae, NAACP Join in Minority Mortgage Plan (01/21/99 - dead link)
"Fannie Mae Chairman Franklin Raines last week called for continued efforts by Fannie Mae and mortgage lenders to reach out to those 'at the margins' of home ownership. Blacks, Hispanics and immigrants trying to buy homes would be a major focus of outreach, Raines said." Raines made no mention of assistance for the millions of white families who have difficulty purchasing homes.

"Raines, a former White House budget chief, noted that home ownership by white families is close to peak levels, now at 73 percent. Only 45 percent of U.S. homeowners are minorities, suggesting an untapped market, he said." [Raines ignores the fact that 'minorities' account for far less than 45 percent of total U.S. population.]

"Fannie Mae, the largest source of financing for U.S. home mortgages, and the NAACP, the oldest U.S. civil rights organization, said they will join forces on Thursday to help more black families buy homes." [Notably absent from the NAACP / Fannie Mae press release was any mention of assistance for the significantly larger number of non-minority families who have difficulty purchasing homes.] (FoxNews, 01/21/99)
[former link **http://www.foxnews.com/js_index.sml?content=/news/wires2/0121/n_rt_0121_2.sml]

Related / Similar:

Fannie Mae to Aid Chicago Minority Homeowners (09/29/99)
NEW YORK, Sept. 29, 1999 (Reuters) - "The government-chartered mortgage securities company Fannie Mae pledged Tuesday to commit more than $1 billion to boost minority home ownership in Chicago by expanding a program to create more affordable housing.

Fannie Mae's CEO Franklin Raines stated he believes such a race-based program is necessary to increase the rate of homeownership by minorities.

Fannie Mae's "HouseChicago" program served as a model for the race-based mortgage plan. "HouseChicago" has funded $10 billion in affordable housing over the course of four years. (Based on Reuters 09/29/99 via Home Building and Remodeling Network)
[Link http://builder.hw.net/news/1999/sep/29/fann29.htx ]

Mortgage Plan to Aid Immigrants (09/28/99)
"Legal immigrants waiting for permanent residency would be eligible for single-family home loans under a new housing initiative to be announced in Chicago Tuesday.

"Fannie Mae, the nation's largest source of financing for home mortgages, is allocating $100 million nationwide to a New Immigrants Initiative that would allow immigrants--some who wait as long as 20 months for immigration officials to process their residency applications--to buy their first home.

"Fannie Mae officials also plan to pledge $1 billion to increase the overall minority homeownership rate in Chicago, augmenting the HouseChicago affordable-housing plan, which the lender said has helped more than 120,000 local families over the last four years.

"Fannie Mae CEO and Chairman Franklin D. Raines said the announcement was believed to be the largest single investment any company has made to serve minority families. "The commitment is necessary because we continue to suffer from a racial homeownership gap," Raines said.

"Interested immigrants must provide copies of immigration documents and must have a visa authorizing them to legally work in the U.S. They also must have lived and worked in the U.S. for at least two years. The immigrants could qualify for down payments as low as 3 percent through the new initiative. Permanent residents and U.S. citizens also are eligible.

"The $1 billion is an addition to a 10-year, $12 billion commitment already made by Fannie Mae to create flexible mortgages, fund home renovation and build rental housing in Chicago." (Chicago Tribune 09/28/99 by Teresa Puente)
[link http://www.chicago.tribune.com/version1/article/0,1575,SAV-9909280218,00.html ]

Mortgage Group Joins NAACP to Help Blacks Purchase Homes (01/22/99)
"The Federal National Mortgage Association and the NAACP have formed a partnership that will provide up to $110 million in financing for families who cannot afford big down payments. Under the partnership announced Thursday, Fannie Mae will provide financing for qualified black borrowers who will be able to put down as little as 3 percent to 5 percent of a home's value.

"The new program also is designed to help at least 20,000 black families get information on home ownership. While 73 percent of white families own their own home, only about 45 percent of black and Hispanic families are homeowners, officials said.

"The mortgage giant also pledged to finance an unlimited amount of mortgages for qualified families recommended by the NAACP, the nation's oldest civil rights organization. Traditional credit requirements will be eased for black families whose credit histories were marred by burdensome medical expenses." (Chicago Tribune, 01/22/99)
[link http://chicagotribune.com/version1/article/0,1575,SAV-9901220073,00.html ]

[Editor's Note: This Tribune story says "only about 45% of black and Hispanic families are homeowners" which is a distinctly different meaning than the Fox story, above, which says "Only 45% of U.S. homeowners are minorities."]

Home Loans: If You Are A Minority, Traditional Credit Does NOT Apply (03/22/99)
"Residential mortgage lending is on the rise in San Antonio, exceeding the national growth rate for home-purchase loans, according to recently released government figures. But the statistics also reveal ongoing disparities in home mortgage lending in the San Antonio area along ethnic lines, particularly among upper-income borrowers.

"The data, gathered by the Federal Financial Institutions Examination Council under the Home Mortgage Disclosure Act (HMDA), were presented in a report published by the Federal Reserve Bank of Dallas. Some 8,000 lending institutions nationwide are covered under HMDA -- including banks and nonbank lenders such as mortgage companies.

"The figures encompass both conventional and government-insured loans and are broken down geographically by Metropolitan Statistical Areas (MSAs). The San Antonio MSA includes Bexar, Comal, Guadalupe and Wilson counties. The data do not take into account borrowers' credit histories, assets or debt -- all of which play an important role in the mortgage application process, according to industry observers." (San Antonio Business Journal, 03/22/99, by Sebastian Weiss)
[link http://www.amcity.com/sanantonio/stories/1999/03/22/story3.html ]

END (2) Mortgages, Fannie Mae