Wednesday, June 24, 2009

Why is Barney Frank underwriting loans?

Before I even get to why I ask the question in the blog title, I will give the answer it is because he is completely in the pocket of the housing industry. During the boom he kept heavily pushing the GSEs to underwrite more loans to marginal buyers. Once the GSEs blew up he held hearings to ask why they gave loans to marginal buyers.. Unfortunately nobody ever bothered to answer "Because you asked us to do so".

Back to the matter at hand from the WSJ (emphasis added), Changes Urged to Rules on Condo Loans:
Two Democratic lawmakers are calling on Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery.

In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%...which the firm sees as signals that a building could run into financial trouble..

In a letter to the chief executives of Fannie and Freddie, Reps. Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, and Anthony Weiner (D., N.Y.) warned that the 70% sales threshold "may be too onerous" and could lead condo buyers to shun new developments. The legislators asked the companies to "make appropriate adjustments" to their underwriting standards for condos.

Fannie and Freddie made the adjustments based on their studying defaulting loans and the risk factors that led to the loss. The lawmakers don't care about that, they just want to please the special interest at the expense of the taxpayers. It isn't a coincidence that from the earlier post about the NAR trying to shut down HVCC that they would be turning to Barney Frank.

1 comment:

Noz said...

I don't understand...when it's public knowledge of his involvement, why is this douche still around and being paid? Shouldn't he be in jail?

WTF is wrong with is country and it's people and system?