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June 24th, 2009

Do They Never Learn?

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Here we go again. While we wanted to be the first to coin that phrase as it pertains to the recent push by two Congressmen for Fannie and Freddie to loosen their lending standards, we were beaten to the punch (it was one of Drudge Report’s top headlines today) — so we’ll have to settle for second place.

But settling for second won’t stop us from reiterating just how unbelievable we think it is that certain lawmakers have already begun to revert back to the actions and decisions that were among the basic causes of this housing crisis and the subsequent recession.

From the Wall Street Journal:

Back when the housing mania was taking off, Massachusetts Congressman Barney Frank famously said he wanted Fannie Mae and Freddie Mac to “roll the dice” in the name of affordable housing. That didn’t turn out so well, but Mr. Frank has since only accumulated more power. And now he is returning to the scene of the calamity — with your money.

Mr. Frank (D., M.A.) and Anthony Weiner (D., N.Y.) urged the CEOs of Fannie Mae and Freddie Mac to loosen their lending standards to accommodate those wishing to purchase condos, regardless of whether or not the borrowers are qualified by Fannie and Freddie’s standards. The lawmakers claim that Fannie and Freddie’s newer, more stringent lending policies “may be too onerous” and stand to threaten the recovery of the housing market:

In an interview with the paper, Weiner said the rules have “had a real chill on the ability to get these condos sold,” at a time when prices of condos have fallen enough to attract potential buyers.

Fannie and Freddie have stepped up and instituted stricter lending policies because they are still trying to pick up the pieces from the last time Congress demanded they loosen their lending standards in order to attract more borrowers. The push for the GSEs to increase their lending in the volatile condo market is the same as when “Congress…pushed for leniency for low-income borrowers and for those with spotty credit, assuring their constituencies that the American dream of home ownership would be available to all.” That was before the bubble burst.

Now, in the wake of the disaster that ensued after only a few years of lending to those under-qualified/risky borrowers, our lawmakers, those tasked with looking out for our best interests, want to repeat the same policies that got us in trouble in the first place.

Here we go again.

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7 Responses to “Do They Never Learn?”

  1. William Says: June 24th, 2009 at 7:33 pm

    Unbelievable!! Just bloody unbelievable.

  2. Tim Manni Says: June 25th, 2009 at 11:57 am

    You got that right!

  3. Bill Rice Says: June 25th, 2009 at 1:31 pm

    No. I am not sure how many times we have repeated this “affordable housing” pattern–at least twice since the great depression.

    I just finished “Housing Boom and Bust,” by Thomas Sowell does an excellent, simple, and succinct analysis of your argument above.

    Wow! Amazing.

  4. Tim Manni Says: June 25th, 2009 at 1:48 pm

    Bill,

    Thanks for commenting and thanks for the plug on twitter. I’m going to have to read that book for myself.

    Let’s just hope some other lawmakers recognize what we’re about to do and put a stop to it.

    Do you have a blog? I used to follow you on ‘Morning Mortgage Notes,’ but I was wondering if you write more on a daily basis. I appreciate your input on this blog and want to reciprocate.

    -Tim

  5. Bill Rice Says: June 25th, 2009 at 9:11 pm

    I have a few different venues.

    I run Lenderama.com, which is a mortgage industry (loan officers primarily) community blog. However, since most of my Kaleidico.com (mortgage CRM) clients are interested in sales topics most of my blogging is on BetterCloser.com (mortgage sales and marketing tips).

    I am intending to get mortgage morning notes up and moving again, but time is always the enemy.

  6. Tim Manni Says: June 26th, 2009 at 9:24 am

    Bill,

    I hear you, there seems to be never enough time in the day — there’s blogging, emails, and now Twitter — not to mention everything else you have to do in a given day. Thanks for commenting, I’ll definitely be checking in on your posts.

    Good hearing from you,
    Tim

  7. Today’s Blogmarks | New Trommetter Times Says: June 26th, 2009 at 4:22 pm

    [...] Do They Never Learn? (hsh.com) [...]

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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