Monday, September 29, 2008

Mortgage Crisis II

An addition to Mortgage Crisis I. Make sure you read the second paragraph. Forseen in 99?

Fannie Mae Eases Credit To Aid Mortgage Lending NY TIMES Sept 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.

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.

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