First, watch this video before going on:
From 2008; with over 2 Million views
Democrats in their own words Covering up Fannie Mae, Freddie Mac scandal: **a MUST WATCH video**
Remember this from 2009? Obama’s “Christmas Gift” to America. Important Read at link below..
Now that Fannie and Freddie are basically “penny stocks”:
Now What do the Democrats want to do?
And You Thought the Housing Crisis Was Over!
July 27, 2012
Do you remember that thing about how the banks wouldn’t lend to blacks and Hispanics because they were racists? And do you remember how they passed the Community Reinvestment Act so that banks were forced to reduce down payments practically to zero and lend to a lot of people they knew were bad credit risks? And do you remember how Wall Street bundled all these risky subprime mortgages and sold them to investors around the world so that when it became clear that those people weren’t going to be able to pay their mortgages banks everywhere were left holding the bag and all five of the Wall Street investment houses either went under or had to be bailed out by the federal government?
And do you remember how, when it was all over, liberals said it was actually the banks’ fault for “deceiving” all those people into thinking they could afford to buy homes and that the banks should be punished for it and some of those people be allowed to keep their homes anyway? And do you remember how all this cost the government close to a trillion dollars and put the whole economy in a hole that we really haven’t begun to dig ourselves out of yet?
Well, get ready because the whole thing is about to happen again.
Yes, believe it or not, the federal government is now startinganother initiative to force banks to lend to low-credit-rated blacks and Hispanics — not just anybody but specifically blacks and Hispanics — and is threatening — and already imposing — huge punitive fines if they don’t. Moreover, this time they’re going even further. They’re going to take over the credit rating agencies and force them to change their standards to accommodate blacks and Hispanics so that nobody will have any idea who is a bad credit risk and who is not. In so many words, the government is about impose its will on the whole home-lending market and force another round of bad loans so that the banks are going to be looted once again so that even the federal government may not be able to bail them out this time.
The principle instrument this time is not the Justice Department, Fannie Mae and Freddie Mac, as it was last time, but the brand-new Consumer Finance Protection Bureau, designed by good old Elizabeth “Nobody-Ever-Made-It-On-Their-Own” Warren, which should really be called the Bureau for Bringing Down the Entire Economy. As reported in last Sunday’s New York Post by Hoover Institution Media Fellow Paul Sperry, the CFPB has just announced that it is adopting a 20-page “Policy Statement on Discrimination in Lending” issues by the Interagency Task force on Fair Lending in 1994 that kicked off Attorney General Janet Reno’s draconic enforcement of the Community Renewal Act. Part of the policy statement reads, “Applying different lending standards or offering different levels of assistance to applicants who are members of a protected [i.e., minority] class is permissible in some circumstances. Providing different treatment to applicants to address past discrimination would be permissible if done in response to a court order.” There are already plenty of court orders sitting around.
Just two weeks ago Wells Fargo caved to a Justice Department offensive and paid $175 million for alleged past discriminating against minority borrowers. All this occurred even though the bank received an “outstanding” grade in its most recent Community Reinvestment Act exam. The government did not even bother to prove discrimination in a single instance but relied instead on statistics showing lower rates of homeownership in minority neighborhoods. Thomas Perez, the Justice Department honcho who is spearheading this campaign, says banks discriminate “with a smile” and “fine print” and are “every bit as destructive as the cross burned in a neighborhood.” Nice objective evaluation there.
As in most such cases, Wells Fargo chickened out about going to court and refused to admit any wrongdoing but agreed to all kinds of diversity training and sensitivity counseling. The bank will have to “prominently display” a notice informing minority customers that they cannot be turned down for loans just because they are receiving public assistance such as unemployment benefits, welfare payments or food stamps. (Maybe they can even use food stamps for the down payment.) Wells Fargo must provide minority customers $50 million for down-payment and closing-cost assistance, including “Borrower Assistance Grants” of up to $15,000 per individual. It was also ordered to pay $125 million to as yet unnamed victims of previous discrimination. But get this! If those past victims don’t show up, the money must be handed over to community organizing groups. President Obama, you have a job waiting for you if you lose office this fall.
Almost a dozen banks are under similar investigation and will be soon falling like dominoes unless one of them musters the courage to stand up to the Justice Department in court.
But the real destruction is going to be wrought by CFPB, created by Dodd-Frank and just getting started. Last week Richard Cordray, who is serving as a disputed recess appointee without the consent of the Senate, announced that not only will CFPB be going after banks but will also target the credit rating agencies that evaluate people’s creditworthiness based on past performance in paying debts. They too will be vetted for racial discrimination. In May 2011, the non-partisan Policy and Economic Research Council completed what it described as the first evaluation of Equifax, Experian, and TransUnion, the three credit rating agencies. The report concluded that in less than 1 percent of cases was a score changed by more than 25 points after a dispute process and that “consequential inaccuracies are rare.” Moreover, “95 percent of disputing participants were satisfied with the outcomes of their disputes, suggesting widespread satisfaction” with the process. In other words, credit ratings are pretty accurate. Banks rely heavily on them and say that, if anything, the agencies tends to underestimate the rate at which minority buyers will default on mortgages.
So guess what happens next? Under the pretext of “regulating” the agencies, CFPB will hammer away, forcing them to upgrade the scores of blacks and Hispanics. Standards will be diluted or abandoned entirely and within a few years the banks will be flying blind with no reliable information on who is a good credit risk and who isn’t. Does that sound like the formula for another mortgage meltdown? It sure does to me.
With the current administration in power, the perception is growing among minorities that everything in the economy can be had for free and that President Obama and his administration are going to provide it for them. For instance, there is a scam going on around the country right now where con artists call up homeowners and tell them that President Obama has a new program where he is going to pay their electrical bills. All the homeowner has to do is provide his Social Security number and other personal information. The con game started in Michigan among minority populations in depressed cities such as Flint and Grand Rapids. It has now spread as far as far as Florida and Mississippi. More than 2,300 people in Michigan were bilked out of $1 million, another 10,000 have been swindled in New Jersey.
What is amazing is that all these people actually believe that President Obama is ready to pay their electrical bills. It is symptomatic of a rising tide of dependency and the growing sense that nobody has to be responsible for anything anymore and we can all live off “the rich.” If we don’t get these people out of office soon, there isn’t going to be much left to pick over in the American economy.
And the Progressive’s “Back Up” plan if the above doesn’t work?
We Know How Well Fannie and Freddie Managed the Housing Market. Their New Venture? Rehab-to-Rent as a Joint Venture with Community Organizations.
**A Rehab to Rent Scheme**
The purpose of the pilot is to assess the viability of various aspects of the Rehab-to-Rent program, from pricing to sale to operation of the properties themselves. For a detailed discussion of Rehab-to-Rent, see our January 2012 paper, “Rehab-to-Rent Can Help Hard-Hit Communities and Our Economy.” As early advocates of converting foreclosed homes into affordable rentals, the Center for American Progress has been monitoring the pilot closely. At the top of our wish list for the pilot program is to include strong features that enable nonprofit community organizations to participate—most prominently via the use of joint ventures. These joint ventures would enable Fannie Mae and participating community organizations to share the risk and reward of rehabilitating and renting these properties.
How a joint venture works in Rehab-to-Rent
The classic joint venture model involves two parties: the equity (or “money”) partner and the operational partner. Here is a basic version of how it would operate in the Rehab-to-Rent pilot program. Fannie would contribute properties or a substantial portion of the equity in those properties. The joint venture partner would rehabilitate and retrofit the properties and then manage them on an ongoing basis. Fannie would receive a portion of the monthly rent as a fixed income stream and then receive a substantial portion of the eventual sale price of the property.
There are many variations on this structure. Terms could guarantee Fannie a return of equity or minimum monthly income stream, or the terms could offer the operational partner the chance to buy out the property from Fannie at a set price after the holding period. Importantly, the terms of joint ventures in the program permit community organizations such as nonprofit organizations to participate in bulk sales because they do not need to raise all the capital necessary to buy the homes. Instead, they just need access to a smaller pool of funds needed to rehabilitate and operate the properties.
In short, the joint venture results in higher returns to Fannie but lower returns to the joint-venture partner—a fact that community organizations can easily stomach. It also requires less capital on behalf of the “buyer” to get involved—another plus for entities that cannot compete with the cash reserves of financial entities rushing into this space.
Secondary benefits of joint ventures: Still a sale, but with some control
Joint ventures offer an additional benefit to Fannie Mae: They may be considered as sales. Practically, the Federal Housing Finance Agency’s role is to wind down Fannie Mae and Freddie Mac, making any transaction in which Fannie retains an interest in the underlying properties less palatable. In a joint venture, Fannie and its operations partner create a joint venture—a separate entity—and transfer the properties to that entity. Fannie is swapping its interest in the houses for a minority interest in the entity.
The Federal Housing Administration did this in its Section 601 distressed note sales. This Department of Housing and Urban Development program permits the Federal Housing Administration to dispose of delinquent loans of the Federal Housing Administration by auctioning them into private-public joint ventures. Put simply, the agency determined that if it held a minority interest and did not control the assets in the resulting joint venture entity, it could consider the transfer a sale. Similarly, Fannie would not control the underlying assets except to set and monitor quality standards. It too may be able to consider these transfers a sale.
Even though the joint venture could be a sale for accounting purposes, it may still afford Fannie the “long tail” interest it needs to monitor whether landlords are holding up their end of the bargain. In an outright sale, Fannie would retain no interest in the properties, so its only recourse for a buyer’s noncompliance, such as failing to maintain habitable properties or to hold the underlying properties for rent, would be based on contract law. That is, Fannie would have to sue—a prospect that would take between months and years. If the property were sold to a third party in the meantime, it would only complicate matters.