The (former) regulator, as well as congress, held the GSEs (Fannie and Freddie) to the standard and mission statement to provide affordability to the mortgage market. For Freddie, this included programs that were exclusive to customers of Freddie that allowed borrowers with not-so-perfect credit, as well as low to mid incomes purchase homes. Although the default rates for those particular loans are higher than the average loans purchased by Freddie Mac - traditionally the default rates were lower in comparison to the sub-prime loans on the primary markets.
Freddie and Fannie did purchase SOME Alt-A loans, which was in direct response to market demands and pressure to achieve higher levels of profitability to answer to shareholders... Fannie and Freddie are not directly responsible for the mortgage crisis, but it's easier for the government to put a show of strength in place versus actually applying regulatory standards to all mortgage originators. It's easy to pull one over on the consumer, as most people aren't aware of what Freddie and Fannie do, that a secondary mortgage market exists, or how it will affect the world economy.
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timeasmymeasure
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Date: 2008-09-09 12:20 am (UTC)The (former) regulator, as well as congress, held the GSEs (Fannie and Freddie) to the standard and mission statement to provide affordability to the mortgage market. For Freddie, this included programs that were exclusive to customers of Freddie that allowed borrowers with not-so-perfect credit, as well as low to mid incomes purchase homes. Although the default rates for those particular loans are higher than the average loans purchased by Freddie Mac - traditionally the default rates were lower in comparison to the sub-prime loans on the primary markets.
Freddie and Fannie did purchase SOME Alt-A loans, which was in direct response to market demands and pressure to achieve higher levels of profitability to answer to shareholders... Fannie and Freddie are not directly responsible for the mortgage crisis, but it's easier for the government to put a show of strength in place versus actually applying regulatory standards to all mortgage originators. It's easy to pull one over on the consumer, as most people aren't aware of what Freddie and Fannie do, that a secondary mortgage market exists, or how it will affect the world economy.