November 24, 2008

From out of The Memory Hole

Here is an informative June 24, 2002 article from Realty Times about Bush's plan to increase minority homeownership by 5.5 million households. This trade journal emphasized six years ago that the core of Bush's plan was raising the minority/low income quotas for Fannie Mae and Freddie Mac mortgage activity by a total of $440 billion. This is the kind of thing that gets lost in time because there's no partisan point to remembering it. Republican flacks want to blame Fannie Mae, but here's the Republican President leaning on Fannie Mae to increase its minority quota by $260 billion.

(By the way, do you ever get the feeling that historians will someday look back on the Bush-Obama years as a single era?)

When President Bush announced his Minority Homeownership plans last week in Atlanta, his top priorities were new federal programs: a $2.4 billion tax credit to facilitate home purchases by lower-income first-time buyers, and a $200 million national downpayment grant fund.

But none of the new federal programs--if passed by Congress--will come even close to achieving the 5.5 million-household increase in minority homeownership the President set as his target.

Instead, most of the heavy lifting was assigned to two mortgage market players that have sometimes come under fire from Bush administration officials and Congressional Republicans: Fannie Mae and Freddie Mac.

Fannie's and Freddie's commitments are the bedrock core of the President's ambitious plans--but didn't get the headlines. Fannie Mae agreed to increase its already substantial lending efforts to minority families by targeting another $260 billion of mortgage purchases to them during the next nine years. Freddie Mac agreed to buy an additional $180 billion in minority-household home loans during the same period.

Both corporations also announced specific plans to increase home purchases by African-Americans, Hispanics and immigrants. Fannie Mae, for example, pledged to create an entirely new mortgage product “designed to meet the unique needs of New Americans.” The new loan concept would include underwriting changes that remove some of the common barriers immigrants encounter here--denial of credit because of inadequate or short credit histories, reliance on communal funds for downpayment money, and language and cultural issues. Fannie also promised to establish 100 “outreach partnerships” with predominantly-minority churches, mosques and “other faith-based institutions” to fund mortgages for their congregations.

Besides its $180 billion mortgage purchase commitment, Freddie Mac gave President Bush a promise to implement a 25-point program aimed at increasing minority homeownership. Some of the points were cutting-edge. For example, as part of an effort to remove the fear of financial loss from first-time minority home buyers, Freddie committed itself to “explor(e) the viability of equity assurance products to protect home values in economically distressed areas.”

Pressed for details on “equity assurance” by RealtyTimes, Freddie Mac vice president Craig S. Nickerson said the idea is still at an embryonic stage, but might involve limited guarantees or insurance coverage to protect buyers from the possibility of loss of their initial equity stakes should property values in their neighborhoods decline.

Some “urban neighborhoods get passed over (by potential buyers) because of fears of where the market might go,” said Nickerson. Freddie's effort would be to examine “whether we can create structures to minimize (buyers') downside risks”--whether through some form of new equity-preservation insurance, public-private “rainy day” funds, or federal assistance targeted to backstop values in predominantly minority neighborhoods.

Also on Freddie's 25-point to-do list: “cross-border credit” efforts that would allow immigrants' credit files from their home countries to be acceptable to U.S. lenders; “automating non-traditional credit,” where minority borrowers have no or minimal existing bank or credit reference but do have rental and utility payment histories; and a variety of new “downpayment assistance” plans to put cash in the hands of first-time buyers.

Published: June 24, 2002

Also, I'm starting to realize that Bush's "faith-based initiatives" were not irrelevant to the mortgage meltdown. I don't have anything close to a full grasp of the story yet, but there's definitely a story there.

My published articles are archived at -- Steve Sailer


Anonymous said...

Also, I'm starting to realize that Bush's "faith-based initiatives" were not irrelevant to the mortgage meltdown.

You just reminded me of something a real estate developer told me a couple of years ago... He built subdivisions in an urban (i.e. black) part of town and his marketing campaign involved putting ministers on commission.

They'd stand in the pulpit and declare that buying a home is the first step of fulfilling the American dream and their Christian duty. Every church member who bought a house, the minister got a check.

It was all legal, apparently, if the payments were structured as part of a downpayment assistance program. Legal, that is, until the IRS took the punchbowl away in 2006.

Under these programs, a non-profit provides a downpayment to the buyer and is then reimbursed by the seller, often a home builder. In 2006, the IRS stripped several of these non-profits of their tax-exempt status, ruling that the programs benefit sellers more than buyers since sellers often raise their asking price to cover the amount they theoretically "donated."

Sebastian said...

I'm amazed no one's commented so far.

How do you ruin a good program with the best of intentions? Read the post again to find out.

Still, at least Fannie and Freddie loans had credit requirements. Wih wasn't true for the rest of the stuff the big banks and Wall Street were pushing.

My two cats could have gotten a loan through Countrywide.

kurt9 said...

No, Steve. Historians will refer to Clinton-Bush-Obama as a single era. On social economic issues, Bush has proven himself to be as "liberal" as Clinton or any democrat for that matter. McCain has also be very liberal on social-economic issues as well. Do remember than he co-authored a global-warming bill along with Lieberman in 2005. Had McCain been elected, he would most certain have been just as liberal as Obama is going to be. The difference is that, being a more skilled politician, McCain would have been more effective at moving legislation than Obama will be (I expect Obama will not to be very effective at moving legislation).

Bush's father was not that conservative on economic issues. The only economic conservative president we ever had was Reagan.

Anonymous said...

I suspect Kurt9 is right about Bush and Clinton. Does anyone really believe that either Clinton thinks killing babies is okey-dokey? I'm pretty sure they don't, but they both know that abortion is a hot button for the left wing of their party, and you can't get the Democratic nomination without at least giving the appearance you're pro-abortion.

Same thing with Bush. He could have at least made some token gestures to the anti-abortion crowd during his two terms, but he hasn't had much to say, has he? Mexico and her people are way more important to Bush than abortion (and just about every other issue as well), so he spent his time and political capital fighting for amnesty.

The Clintons, Bush, McCain, and Obama are all from the same DC elite and share similar attitudes on most issues, which is to say they all share a certain contempt for middle America.

Sebastian said...

God caused the housing bubble! At least that god that THOSE people pray to!

LOL! I wonder how much Joel Osteen made. Whoops, I'm sorry Beo, you're trying to taint black democrats.

Well there's one good thing. At least Countrywide and the other predatory lenders got enough religion to figure out how to exploit it.