This is the fifth time I have written to ask you when there will be an investigation of Fannie and Freddie and I would appreciate an answer.
Today I heard you singing the praises of the Financial Reform bill, but I heard nothing about government owned companies such as Fannie and Freddie being on a list of establishments or businesses or institutions which will be on a special list for special attention. In fact, what I did hear today about Fannie and Freddie was:
A Wall Street Journal piece which was headlined "Signs of Risky Lending Emerge in U.S. with a sub-head "Financial Firms, Eager for New Business, Are Weakening Standards; Fannie's $1,000 Down Payment." What? This cannot be true!
A couple of anecdotes describing folks who have just emerged from bankruptcy and receiving offers of credit cards and being able to start the cycle of debt all over again ended surprisingly with banks telling them that they qualify for credit and their response being "No, I don't" and refusing the offers. Good for them.
Now enter Fannie. I hope WSJ doesn't sue me for copyright infringement, but here are the last two paragraphs of the article:
" Fannie Mae said its low down payment initiative requires borrowers to put down $1,000 or 1% of the purchase price, whichever is greater. The company said it faces limited financial risk because the loans are made through state agencies, which have a solid underwriting history and are on the hook to buy back certain loans that go bad."
"Kate Venne, a spokeswoman for the Wisconsin Housing and Economic Development Authority, said borrowers must meet strict underwriting requirements and complete a home-buyer education course."
And what do they think that will accomplish? Just let ACORN or whatever they are calling the groups who will be pushing for housing for everyone just like the last time loose and watch it hit the fan. Deja vu all over again, as they say. It may take long enough that it won't cause a double dip recession, but you can be sure there will be another dip in the crystal ball. Even before this news the projected number is one million new foreclosures next year.
And we don't even have all the foreclosures for this year on the market yet.