- 1938: Fannie Mae is created "to provide local banks with federal money to finance home loans in an attempt to raise levels of home ownership and the availability of affordable housing"
- 1942: The National Housing Agency is established by Executive Order 9070
- 1947: "The Housing and Home Finance Agency is established through Reorganization Plan Number 3"
- 1950: Fannie Mae is acquired by the Housing and Home Finance Agency from the Federal Loan Agency
- 1954: Fannie Mae becomes a "'mixed-ownership corporation', meaning that federal government held the preferred stock while private investors held the common stock"
- 1959: "The Housing Act of 1959 allows funds for elderly housing"
- 1964: "The Housing Act of 1964 allows rehabilitation loans for homeowners"
- 1968: Fannie Mae becomes a privately held corporation "to remove its activity and debt from the federal budget." [Note that as of 2003, the "combined debt [[of Fannie Mae and Freddie Mac]] is equal to 46 percent of the current national debt."]
- 1968: Ginnie Mae split off from Fannie Mae
- 1968: Ginnie Mae guarantees "the first mortgage passthrough security"
- 1970: Fannie Mae is authorized to purchase conventional loans
- 1970: Freddie Mac created, "to compete with Fannie Mae"
- 1971: "Freddie Mac issued its first mortgage passthrough"
- 1981: "Fannie Mae issued its first mortgage passthrough and called it a mortgage-backed security."
- 1992: Fannie Mae and Freddie Mac "have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families"
- 1999: Fannie Mae "under pressure from the Clinton administration to expand mortgage loans to low and moderate income borrowers"
- 2003: "in 2003–2004, the subprime mortgage crisis began"
Fannie Mae is only one example of such policies.
2 comments:
2003: "in 2003–2004, the subprime mortgage crisis began"
You write that as if it has anything at all to do with the preceding stuff you wrote. You have made no valid connection between the mortgage mess and Freddie and Fannie and just putting the two side by side in your article is a dishonest way to try make a connection. And yes Wikipedia does the same thing.
It is easy to show this story you're telling about govt policy is bogus by asking you to answer two questions.
1) If govt policy goosed Freddie and Fannie into providing increased credit availability how come F&F's share of mortgage funding fell to a record low during the housing bubble?
Maybe this article from 2006 will help with your answer:
https://www.robertstoweengland.com/writer/19-the-rise-of-a-private-label
2) If govt policy forced Freddie and Fannie to make reckless risky loans now come Freddie and Fannie ended up with the loans that did not fail?
There is no other funding source for US home mortgages that even comes close to doing as well at picking the loans that did not fail.
https://www.americanbanker.com/opinion/gse-critics-ignore-loan-performance
"There is no data anywhere to cast doubt on the vastly superior loan performance of the GSEs."
If you want to find blame for the mortgage debacle you might look at the funding source for the loans that did fail. You might look at the funding source for the loans that nobody would ever fund at any other time.
http://securitization.weebly.com/private-label-mbs.html
Private investors pumped $6 trillion dollars into the mortgage market during the bubble. They funded loans to borrowers who had bad credit history, who put no money down and who were not required to document income or assets. On top of that these borrowers were often extended additional credit each month to meet the monthly mortgage payment. Private investors funded millions of these loans while Freddie and Fannie did not fund a single one.
An addition to the list, from "Recent Changes to a Measure of U.S. Household Debt Service" by Dynan, Johnson, and Pence, from 2003:
"Before 1993, the federal government participated indirectly in the student loan market by guaranteeing loans made available by private lenders, a good portion of which were commercial banks. In 1993, it began disbursing education loans directly to households through the congressionally mandated Federal Direct Student Loan Program (FDSLP). The FDSLP expanded rapidly..."
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