Changes

Beginning in 1997, FNMA started guaranteeing to purchase mortgages from loan originators on borrowers with demonstrated credit unworthiness, i.e. subprime borrowers or deadbeats. Some of these loans than were snuck in to larger packages of prime mortgages with guaranteed credit worthiness precipitating the [[2008 financial crisis]]. As usual, [[politician]]s loosened the screws on borrowing and easy credit terms with the promise of "a home of your own" or "the American dream," to buy votes. And again when the system collapsed, it was poor people and renters who suffered most having to chip in to bailout the banks and non-creditworthy homeowners, and the loss of employment opportunities for a decade afterward.

Beginning in 1997, FNMA started guaranteeing to purchase mortgages from loan originators on borrowers with demonstrated credit unworthiness, i.e. subprime borrowers or deadbeats. Some of these loans than were snuck in to larger packages of prime mortgages with guaranteed credit worthiness precipitating the [[2008 financial crisis]]. As usual, [[politician]]s loosened the screws on borrowing and easy credit terms with the promise of "a home of your own" or "the American dream," to buy votes. And again when the system collapsed, it was poor people and renters who suffered most having to chip in to bailout the banks and non-creditworthy homeowners, and the loss of employment opportunities for a decade afterward.

Although remaining a government sponsored entity (GSE), the company began selling stock to the public in 1968. Fannie Mae has been described as middle class welfare.<ref>[http://www.bloomberg.com/news/2012-03-01/middle-class-welfare-state-invisible-by-design-commentary-by-ezra-klein.html Middle-Class Welfare State Is Invisible by Design,] Ezra Klein, ''Bloomberg'', 2012-03-01.</ref>

Although remaining a government sponsored entity (GSE), the company began selling stock to the public in 1968. Fannie Mae has been described as middle class welfare.<ref>[https://www.bloomberg.com/news/2012-03-01/middle-class-welfare-state-invisible-by-design-commentary-by-ezra-klein.html Middle-Class Welfare State Is Invisible by Design,] Ezra Klein, ''Bloomberg'', 2012-03-01.</ref>

The company and its reputation were kept alive by the US Government (along with [[Freddie Mac]]) after making billions in loans available to borrowers with demonstratively poor credit histories. Many individuals and pension funds globally, who bought into the illusion of safety and security in a government backed entity, were wiped out when it faltered. It was placed in the [[conservator]]ship of another government sponsored enterprise, the Federal Housing Finance Agency (FHFA), in September 2008, for mismanaging its affairs. It currently guarantees against default about $5 trillion in mortgages of American homeowners—nearly half of all mortgages in the [[United States]].

The company and its reputation were kept alive by the US Government (along with [[Freddie Mac]]) after making billions in loans available to borrowers with demonstratively poor credit histories. Many individuals and pension funds globally, who bought into the illusion of safety and security in a government backed entity, were wiped out when it faltered. It was placed in the [[conservator]]ship of another government sponsored enterprise, the Federal Housing Finance Agency (FHFA), in September 2008, for mismanaging its affairs. It currently guarantees against default about $5 trillion in mortgages of American homeowners—nearly half of all mortgages in the [[United States]].

:''Main article:'' [[Community Reinvestment Act]]

:''Main article:'' [[Community Reinvestment Act]]

In 1999 Raines' Fannie Mae lowered its underwriting guidelines to expand into the subprime lending market,<ref>[http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html Fannie Mae Eases Credit To Aid Mortgage Lending,] Steven A. Holmes, ''New York Times'', September 30, 1999.</ref> a widely held contributing factor to the [[Financial crisis of 2008|Financial crisis of 2007-08]].

In 1999 Raines' Fannie Mae lowered its underwriting guidelines to expand into the subprime lending market,<ref>[https://www.nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid-mortgage-lending.html Fannie Mae Eases Credit To Aid Mortgage Lending,] Steven A. Holmes, ''New York Times'', September 30, 1999.</ref> a widely held contributing factor to the [[Financial crisis of 2008|Financial crisis of 2007-08]].

A strategic alliance forged at the same time between Countrywide Mortgage and Fannie Mae linked the growth of the two companies. The agreement was unique – there was not a general industry practice of giving a volume discount to a mortgage originator. In 2005, the two companies agreed to work together to expand lending to low-income borrowers.<ref>[http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CDIQFjAA&url=http%3A%2F%2Foversight.house.gov%2Fwp-content%2Fuploads%2F2012%2F07%2FCountrywide-112th-Report-7.3.12-1207-PM.pdf&ei=BAw1UdSkKKXhyQHlg4BY&usg=AFQjCNE-SVDLajjQNZyjxsZGuBXxtlqO-g&sig2=YCxVZiHOe405Ru8bRNY_gw&bvm=bv.43148975,d.aWc How Countrywide Used its VIP Loan Program To Influence Washington Policymakers,] House Committee on Oversight and Government Reform, July 5, 2012, pp. 74-76.</ref> Countrywide originated 20% of all subprime mortgages in the United States – an amount equal to 3.5% of U.S. [[GDP]]. Former [[DNC]] Chairman [[Christopher Dodd]] who headed up the Senate Banking Committee tasked with oversight of Fannie Mae and Countrywide did nothing to assess the risks to the financial system or curb the deal.

A strategic alliance forged at the same time between Countrywide Mortgage and Fannie Mae linked the growth of the two companies. The agreement was unique – there was not a general industry practice of giving a volume discount to a mortgage originator. In 2005, the two companies agreed to work together to expand lending to low-income borrowers.<ref>[http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CDIQFjAA&url=http%3A%2F%2Foversight.house.gov%2Fwp-content%2Fuploads%2F2012%2F07%2FCountrywide-112th-Report-7.3.12-1207-PM.pdf&ei=BAw1UdSkKKXhyQHlg4BY&usg=AFQjCNE-SVDLajjQNZyjxsZGuBXxtlqO-g&sig2=YCxVZiHOe405Ru8bRNY_gw&bvm=bv.43148975,d.aWc How Countrywide Used its VIP Loan Program To Influence Washington Policymakers,] House Committee on Oversight and Government Reform, July 5, 2012, pp. 74-76.</ref> Countrywide originated 20% of all subprime mortgages in the United States – an amount equal to 3.5% of U.S. [[GDP]]. Former [[DNC]] Chairman [[Christopher Dodd]] who headed up the Senate Banking Committee tasked with oversight of Fannie Mae and Countrywide did nothing to assess the risks to the financial system or curb the deal.