FROM A RETIRED BANKER

Written by Jack Kelly
Thursday, 18 September 2008

Lending money to people who probably won’t pay it back isn’t good
Business. If you wrap crummy loans in a clever package, they’re still
crummy loans.

Your typical Wal Mart shopper understands this. But the Masters of the
Universe on Wall Street and in Washington evidently didn’t.

Ostensibly to aid the poor, the Clinton administration and Congress
Encouraged lenders to give mortgages to poor credit risks. The
Combination of easy money and the expansion of the number of borrowers
By extending loans to poor credit risks sent housing prices through the
roof, creating the bubble whose bursting has led to this crisis.
Congress in 1999 repealed the law (the Glass-Steagall Act) that
established a bright line between commercial and investment banks.
This meant bad investments by banks could jeopardize depositors.
Wall Street created ‘derivatives’ which multiplied profits in good
times, but which also multiplied risk if there were defaults.

Most important was corruption and mismanagement at the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage
corporation (Freddie Mac), which together controlled 90 percent of the
secondary mortgage market.

Once your bank has lent you money to buy a house, it can’t lend the
money again until you pay it back. But if your bank sells your
mortgage, it can make another loan right away. Without the secondary
market, most of the funds for home mortgages would dry up.

Fannie and Freddie went broke because they had bought billions of
dollars worth of subprime mortgages, on which borrowers defaulted when
the housing bubble popped. Fannie bought most of its bad mortgages from
Countrywide Financial, whose CEO, Angelo Mozilo, gave sweetheart loans
to senior executives of Fannie Mae.

Fannie and Freddie cooked their books so senior executives would be
paid millions of dollars in bonuses to which they were not entitled.
Inadequate regulation kept the book-cooking from being discovered
until the crisis had become a catastrophe.

President Bush proposed regulatory reforms in 2003 but Congress took
no action. In 2005, John McCain and three other GOP senators proposed
a strong reform bill. It died when Democrats threatened a
filibuster.
When the bill was reintroduced in this Congress, Sen. Chris Dodd, the
New Democratic chairman of Banking Committee, refused even to hold a
hearing on it.

Democrats opposed reform in part because they feared it would mean
fewer loans to poor people.

‘Fannie Mae and Freddie Mac are not facing any kind of financial
Crisis,’ Rep. Barney Frank, D-Mass, told the New York Times when the
Bush bill was introduced. ‘The more pressure there is on these
Companies, the less we will see in terms of affordable housing.’

Chandler AZ Real Estate

1. Will there be a problem when you foreclose a home with an existing equity loan?
2. Is there any legal problem when you foreclose your home with current loan/mortage, and with equity loan?
3. Is there California law that prohibits a home owner from foreclosing his/her home?
4. Do you have to justify when foreclosing a home with an original loan currently being paid for on a monthly basis? How about a home with higher loan due to equity loan added to the original loan amount?
5. Lastly, how do you put your house in a short sale with existing equity loan? Is there any legal problem when you put your home in a short sale with current loan mortgage, plus with equity loan?

Thank you for any answers you can provide.

Truck Frame Straightening

i saw a posting here a week or so ago with the name of a website where you can actually go to have the loan formalized etc. does anyone know the name of that website?

if you get a loan from a family member (this would be a mortgage loan for my first home) and you agree to interest, is the interest deductible like a bank loan interest charge would be?

are there any other tax implications I should know about or be considering if i do this?

any thoughts, guidance etc. appreciated.

thank you.

DIY home building

By Ron Insana; Richard Baker
September 1, 2003
(MONEY Magazine) – Rep. Richard Baker is a driven man. The mission of this firebrand Louisiana Republican: to ensure that Fannie Mae and Freddie Mac, two of the world’s largest financial institutions, aren’t on a collision course with disaster. Baker, a minister’s son and amateur astronomer, goes so far as to compare the potential havoc that, in his view, inadequate oversight of the two mortgage titans could wreak on financial markets and taxpayers to the fallout from an asteroid hitting the earth.

Baker, chairman of the House subcommittee that oversees the two congressionally chartered “government-sponsored enterprises” (GSEs), has for years been voicing concerns about Freddie, formally known as the Federal Home Loan Mortgage Corporation, and Fannie, the Federal National Mortgage Association. A recent internal investigation of accounting at Freddie Mac proved his concerns about the $34 billion (market capitalization) company to be well founded, with allegations of lax internal controls and questionable accounting maneuvers.
Nothing ****** about common sense and crooks!
Man from ACORN: Are you saying that blacks aren’t affected and don’t invest in WallStreet? The black politicians who fought tooth and nail to defend the corruption are far from poor. The black homeowners who lost their homes got hurt too. In other words everyone got hurt and this is a major contributing factor to the current economical situation we are in.
Maldavi: Nothing racial at all about it until you decided to add the ‘Nothing racist’ comment.
Hmm… wonder why you felt compelled to do that?
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I was responding to a poster! Is that still legal under Obama rule?
ty claudiac, I think Baker was on the money!

Boston Real Estate