Get ready to get soaked (screwed) again.
Let’s go back to late 2007.
Following their mission to meet federal Housing and Urban Development (HUD) housing goals, GSEs such as Fannie Mae, Freddie Mac and the Federal Home Loan Banks (FHLBanks) had striven to improve home ownership of low and middle-income families, underserved areas, and generally through special affordable methods such as “the ability to obtain a 30-year fixed-rate mortgage with a low down payment.
Now 2008. You do remember 2008?
And the result? What happens if you lose your job? If you’ve only shelled out a 3% down-payment, you walk away. Fannie Mae and smaller Freddie Mac owned or guaranteed a massive proportion of all home loans in the United States and were especially hard hit by the 2008 slump. Some worried that Fannie lacked capital and might go bankrupt. Others worried about a government seizure. On September 7, 2008, James Lockhart, director of the Federal Housing Finance Agency (FHFA), announced that Fannie Mae and Freddie Mac were being placed into conservatorship of the FHFA. The action was “one of the most sweeping government interventions in private financial markets in decades”. The government directive to purchase bad loans from private banks, in order to prevent these banks from failing, as well as the 20 top banks falsely classifying loans as AAA, caused instability (Nice word meaning PNATU.) The July 30, 2008 law enabling expanded regulatory authority over Fannie Mae and Freddie Mac increased the national debt ceiling US$800 billion. Remember the “too big to fail” crap?
Fast forward to 2014 and now.
Here we go again.Fanny and Freddie now offer a chance to buy a home with only 3% down. And from the people who are going to profit from this, “The big plus is that these two programs open up home ownership to hundreds of thousands of new buyers. . .” – Melissa Cohn
Yep. And that’s the trouble with the concept that everyone in America deserves to own a home.