Why should the government guarantee mortgages at all?

[CrusaderFrank]

Why should the government guarantee mortgages at all?

During the depths of his Depression, FDR started the process of having the Federal Government buy mortgages from banks.

That was more than 70 years ago.

Before the Internet

Before the Personal Computer

Before FICO scores

Why do we need the Federal Government guaranteeing mortgage in the first place?

Investors can obtain all the credit information they need on a borrower in order to price the paper.

Why should the government guarantee mortgages at all?

 

[percysunshine]

Why should the government guarantee mortgages at all?

Because it says so...right there...in the Constitution....the part about taxes.

 

[EdwardBaiamonte]

Why should the government guarantee mortgages at all?

Because it says so...right there...in the Constitution....the part about taxes.

its just a tiny part of the liberal nanny state that was not vaguely imagined by our founders

 

[Dad2three]

Why should the government guarantee mortgages at all?

During the depths of his Depression, FDR started the process of having the Federal Government buy mortgages from banks.

That was more than 70 years ago.

Before the Internet

Before the Personal Computer

Before FICO scores

Why do we need the Federal Government guaranteeing mortgage in the first place?

Investors can obtain all the credit information they need on a borrower in order to price the paper.

Why should the government guarantee mortgages at all?

GSE'S WORKED FOR 70 YEARS TILL DUBYA


U.S. policymakers often treat market competition as a panacea.

However, in the case of mortgage securitization, policymakers’ faith in competition is misplaced. Competitive mortgage securitization has been tried three times in U.S. history - during the 1880s, the 1920s, and the 2000s - and every time it has failed.


Most recently, competition between mortgage securitizers led to a race to the bottom on mortgage underwriting standards that ended in the late 2000s financial crisis.


This article provides original evidence that when competition was less intense and securitizers had more market power, securitizers acted to monitor mortgage originators and to maintain prudent underwriting. However, securitizers’ ability to monitor originators and maintain high standards was undermined as competition shifted market power away from securitizers and toward originators


Although standards declined across the market, the largest and most powerful of the mortgage securitizers, the Government Sponsored Enterprises (“GSEs&#8221, remained more successful than other mortgage securitizers at maintaining prudent underwriting.



Competition and Crisis in Mortgage Securitization by Michael Simkovic :: SSRN



The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.



Private lenders not subject to congressional regulations collapsed lending standards

http://www.ritholtz.com/blog/2011/1...ow-the-facts-of-the-economic-crisis-stack-up/

 

[CrusaderFrank]

Why should the government guarantee mortgages at all?

During the depths of his Depression, FDR started the process of having the Federal Government buy mortgages from banks.

That was more than 70 years ago.

Before the Internet

Before the Personal Computer

Before FICO scores

Why do we need the Federal Government guaranteeing mortgage in the first place?

Investors can obtain all the credit information they need on a borrower in order to price the paper.

Why should the government guarantee mortgages at all?

GSE'S WORKED FOR 70 YEARS TILL DUBYA


U.S. policymakers often treat market competition as a panacea.

However, in the case of mortgage securitization, policymakers’ faith in competition is misplaced. Competitive mortgage securitization has been tried three times in U.S. history - during the 1880s, the 1920s, and the 2000s - and every time it has failed.


Most recently, competition between mortgage securitizers led to a race to the bottom on mortgage underwriting standards that ended in the late 2000s financial crisis.


This article provides original evidence that when competition was less intense and securitizers had more market power, securitizers acted to monitor mortgage originators and to maintain prudent underwriting. However, securitizers’ ability to monitor originators and maintain high standards was undermined as competition shifted market power away from securitizers and toward originators


Although standards declined across the market, the largest and most powerful of the mortgage securitizers, the Government Sponsored Enterprises (“GSEs”), remained more successful than other mortgage securitizers at maintaining prudent underwriting.



Competition and Crisis in Mortgage Securitization by Michael Simkovic :: SSRN



The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.



Private lenders not subject to congressional regulations collapsed lending standards

Examining the big lie: How the facts of the economic crisis stack up | The Big Picture

Did you know that FHA, Fannie and Freddie all guarantees mortgage and they set the standard for AAA rated paper, irrespective on underlying creditworthiness?

 

[EdwardBaiamonte]

U.S. policymakers often treat market competition as a panacea. [/B]

of course it is; thats why there are 100's of thousands if not millions of products on the market all regulated very very well by capitalism. In the USSR and East Germany and Red China and in American banking you had huge regulatory interference and you had a disaster for obvious reason.

A child can understand this just not a liberal. China deregulated not regulated to prevent another 5o million from starving to death.

 

[CrusaderFrank]

What's "market competition" when the Federal government decided to stamp AAA on No Income No Assets Loans?

 

[Mad Scientist]

Why should the government guarantee mortgages at all?

As a gift to the Bankers that own the Government.

 

[EdwardBaiamonte]

Why should the government guarantee mortgages at all?

As a gift to the Bankers that own the Government.

own? please present evidence or admit to being little more than a liar.

 

[Dad2three]

Why should the government guarantee mortgages at all?

During the depths of his Depression, FDR started the process of having the Federal Government buy mortgages from banks.

That was more than 70 years ago.

Before the Internet

Before the Personal Computer

Before FICO scores

Why do we need the Federal Government guaranteeing mortgage in the first place?

Investors can obtain all the credit information they need on a borrower in order to price the paper.

Why should the government guarantee mortgages at all?

GSE'S WORKED FOR 70 YEARS TILL DUBYA


U.S. policymakers often treat market competition as a panacea.

However, in the case of mortgage securitization, policymakers’ faith in competition is misplaced. Competitive mortgage securitization has been tried three times in U.S. history - during the 1880s, the 1920s, and the 2000s - and every time it has failed.


Most recently, competition between mortgage securitizers led to a race to the bottom on mortgage underwriting standards that ended in the late 2000s financial crisis.


This article provides original evidence that when competition was less intense and securitizers had more market power, securitizers acted to monitor mortgage originators and to maintain prudent underwriting. However, securitizers’ ability to monitor originators and maintain high standards was undermined as competition shifted market power away from securitizers and toward originators


Although standards declined across the market, the largest and most powerful of the mortgage securitizers, the Government Sponsored Enterprises (“GSEs”), remained more successful than other mortgage securitizers at maintaining prudent underwriting.



Competition and Crisis in Mortgage Securitization by Michael Simkovic :: SSRN



The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.



Private lenders not subject to congressional regulations collapsed lending standards

Examining the big lie: How the facts of the economic crisis stack up | The Big Picture

Did you know that FHA, Fannie and Freddie all guarantees mortgage and they set the standard for AAA rated paper, irrespective on underlying creditworthiness?

"FHA, Fannie and Freddie all guarantees mortgage and they set the standard for AAA rated paper, irrespective on underlying creditworthiness"



LOL, SO YOU DON'T KNOW WHAT YOU ARE TALKING ABOUT, SHOCKING!!!


Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown



Government data show Fannie and Freddie didn’t take the same risks that Wall Street’s mortgage-backed securities machine did. Mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.



“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown - The Daily Beast

 

[CrusaderFrank]

GSE'S WORKED FOR 70 YEARS TILL DUBYA


U.S. policymakers often treat market competition as a panacea.

However, in the case of mortgage securitization, policymakers’ faith in competition is misplaced. Competitive mortgage securitization has been tried three times in U.S. history - during the 1880s, the 1920s, and the 2000s - and every time it has failed.


Most recently, competition between mortgage securitizers led to a race to the bottom on mortgage underwriting standards that ended in the late 2000s financial crisis.


This article provides original evidence that when competition was less intense and securitizers had more market power, securitizers acted to monitor mortgage originators and to maintain prudent underwriting. However, securitizers’ ability to monitor originators and maintain high standards was undermined as competition shifted market power away from securitizers and toward originators


Although standards declined across the market, the largest and most powerful of the mortgage securitizers, the Government Sponsored Enterprises (“GSEs”), remained more successful than other mortgage securitizers at maintaining prudent underwriting.



Competition and Crisis in Mortgage Securitization by Michael Simkovic :: SSRN



The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.



Private lenders not subject to congressional regulations collapsed lending standards

Examining the big lie: How the facts of the economic crisis stack up | The Big Picture

Did you know that FHA, Fannie and Freddie all guarantees mortgage and they set the standard for AAA rated paper, irrespective on underlying creditworthiness?

"FHA, Fannie and Freddie all guarantees mortgage and they set the standard for AAA rated paper, irrespective on underlying creditworthiness"



LOL, SO YOU DON'T KNOW WHAT YOU ARE TALKING ABOUT, SHOCKING!!!


Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown



Government data show Fannie and Freddie didn’t take the same risks that Wall Street’s mortgage-backed securities machine did. Mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.



“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown - The Daily Beast

You must be a genuine fucking retard.

No Income No Asset = Subprime

 

[Dad2three]

U.S. policymakers often treat market competition as a panacea. [/B]

of course it is; thats why there are 100's of thousands if not millions of products on the market all regulated very very well by capitalism. In the USSR and East Germany and Red China and in American banking you had huge regulatory interference and you had a disaster for obvious reason.

A child can understand this just not a liberal. China deregulated not regulated to prevent another 5o million from starving to death.

China

 

[Dad2three]

What's "market competition" when the Federal government decided to stamp AAA on No Income No Assets Loans?

Yeah, Gov't did that *shaking head*


“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown - The Daily Beast


The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence.

To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.


Don't ask; don't tell: book profits, "earn" bonuses and closet your losses

The first document everyone should read is by S&P, the largest of the rating agencies. The context of the document is that a professional credit rater has told his superiors that he needs to examine the mortgage loan files to evaluate the risk of a complex financial derivative whose risk and market value depend on the credit quality of the nonprime mortgages "underlying" the derivative. A senior manager sends a blistering reply with this forceful punctuation:

Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don't have it and can't provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.

Fraud is the principal credit risk of nonprime mortgage lending. It is impossible to detect fraud without reviewing a sample of the loan files.

William K. Black: The Two Documents Everyone Should Read to Better Understand the Crisis

 

[Dad2three]

Did you know that FHA, Fannie and Freddie all guarantees mortgage and they set the standard for AAA rated paper, irrespective on underlying creditworthiness?

"FHA, Fannie and Freddie all guarantees mortgage and they set the standard for AAA rated paper, irrespective on underlying creditworthiness"



LOL, SO YOU DON'T KNOW WHAT YOU ARE TALKING ABOUT, SHOCKING!!!


Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown



Government data show Fannie and Freddie didn’t take the same risks that Wall Street’s mortgage-backed securities machine did. Mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie.



“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown - The Daily Beast

You must be a genuine fucking retard.

No Income No Asset = Subprime

Start with the most basic fact of all: virtually none of the $1.5 trillion of cratering subprime mortgages were backed by Fannie or Freddie. That’s right — most subprime mortgages did not meet Fannie or Freddie’s strict lending standards. All those no money down, no interest for a year, low teaser rate loans? All the loans made without checking a borrower’s income or employment history? All made in the private sector, without any support from Fannie and Freddie.


The Myth of Fannie Mae, Freddie Mac, Barney Frank, the Housing Bubble and the Recession | The Long Goodbye


1. Private markets caused the shady mortgage boom: The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market, especially the private label securitization channel (PLS) market. The Government-Sponsored Entities (GSEs, or Fannie and Freddie) were not behind them. The fly-by-night lending boom, slicing and dicing mortgage bonds, derivatives and CDOs, and all the other shadiness of the mortgage market in the 2000s were Wall Street creations, and they drove all those risky mortgages.

Here’s some data to back that up: “More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions… Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.”



2. The government’s affordability mission didn’t cause the crisis



3. There is a lot of research to back this up and little against it: This is not exactly an obscure corner of the wonk world — it is one of the most studied capital markets in the world.




4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now


MY FAV:

AEI'S Peter Wallison in 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”


Hey Mayor Bloomberg! No, the GSEs Did Not Cause the Financial Meltdown (but thats just according to the data) | The Big Picture

 

[Dad2three]

Why should the government guarantee mortgages at all?

As a gift to the Bankers that own the Government.

own? please present evidence or admit to being little more than a liar.

Rent is a better word right Bubba bitch?

 

[The Rabbi]

Dad is a crack addict, as evidenced by his many, long, rambling, incoherent and pointless posts.

Why should the government guarantee any private contract? Get rid of all of it. No bank deposit guarantees. No pension guarantees. All of it sucks, all of it is counterproductive.

 

[Politico]

Why should the government guarantee mortgages at all?

They shouldn't. People should pay the loans they take out,

 

[eagle1462010]

Dad is a crack addict, as evidenced by his many, long, rambling, incoherent and pointless posts.

Why should the government guarantee any private contract? Get rid of all of it. No bank deposit guarantees. No pension guarantees. All of it sucks, all of it is counterproductive.

I scroll past them now as they are useless.

No the Gov't shouldn't be in the housing business.

 

[CrusaderFrank]

What's "market competition" when the Federal government decided to stamp AAA on No Income No Assets Loans?

Yeah, Gov't did that *shaking head*


“The idea that they were leading this charge is just absurd,” said Guy Cecala, publisher of Inside Mortgage Finance, an authoritative trade publication. “Fannie and Freddie have always had the tightest underwriting on earth…They were opposite of subprime.”

Wall Street, Not Fannie and Freddie, Led Mortgage Meltdown - The Daily Beast


The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence.

To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.


Don't ask; don't tell: book profits, "earn" bonuses and closet your losses

The first document everyone should read is by S&P, the largest of the rating agencies. The context of the document is that a professional credit rater has told his superiors that he needs to examine the mortgage loan files to evaluate the risk of a complex financial derivative whose risk and market value depend on the credit quality of the nonprime mortgages "underlying" the derivative. A senior manager sends a blistering reply with this forceful punctuation:

Any request for loan level tapes is TOTALLY UNREASONABLE!!! Most investors don't have it and can't provide it. [W]e MUST produce a credit estimate. It is your responsibility to provide those credit estimates and your responsibility to devise some method for doing so.

Fraud is the principal credit risk of nonprime mortgage lending. It is impossible to detect fraud without reviewing a sample of the loan files.

William K. Black: The Two Documents Everyone Should Read to Better Understand the Crisis

Fannie and Freddie gave AAA rating to subprime paper

 

[CrusaderFrank]

Dad is a crack addict, as evidenced by his many, long, rambling, incoherent and pointless posts.

Why should the government guarantee any private contract? Get rid of all of it. No bank deposit guarantees. No pension guarantees. All of it sucks, all of it is counterproductive.

Dad is as wrong as Krugman as well who also no idea what constitutes a "Subprime" mortgage