Thread: Obama Names Former Freddie Mac Exec. to Head Fed. Housing

Obama Nominates Former Freddie Mac Executive As ‘Housing Commissioner’

Tuesday, March 24, 2009
By Staff, Associated Press

Washington (AP) - President Barack Obama has named a former Freddie Mac executive to head the federal housing commission.

The White House on Monday named David Stevens as assistant secretary at the Department of Housing and Urban Development. The position requires Senate confirmation and would put Stevens in charge of the government's housing mortgage-insurance program.

Stevens now is the head of Long and Foster Companies, a real estate and mortgage firm. He previously worked at World Savings bank and Wells Fargo Home Mortgage.

At Freddie Mac, Stevens was a senior vice president in charge of affordable lending, sales and marketing.

http://www.cnsnews.com/public/content/a ... rcID=45530

Obama Taps Former Wells Fargo, Freddie Mac Executive as Federal Housing Commissioner Nominee

By ALAN ZIBEL AP Real Estate Writer

5:15 PM EDT, March 23, 2009

WASHINGTON (AP) — President Barack Obama on Monday named a longtime real estate industry executive to head the Federal Housing Administration, which during the U.S. housing market's bust has become the main provider of loans to borrowers with weak credit.

The White House on Monday named David Stevens as assistant secretary at the Department of Housing and Urban Development.

The position requires Senate confirmation and would put Stevens in charge of the FHA, the government-run mortgage-insurance program. In the wake of the subprime lending market's collapse, the FHA has become just about the only source of loans to borrowers with poor credit records and low down payments.

The FHA allows borrowers to take out home loans with a down payments of as low as 3.5 percent, compared with 20 percent for a typical loan that doesn't require mortgage insurance.

Stevens is currently president and chief operating officer of Long and Foster Cos., a Chantilly, Va., based real estate brokerage. He previously worked at Wells Fargo & Co., mortgage finance company Freddie Mac and World Savings Bank, a California-based lender.

One big challenge for Stevens will be the U.S. mortgage market's increasing dependence on FHA loans, which are made through by banks, insured by the government and sold as mortgage backed securities by Ginnie Mae, the government's mortgage finance agency.

In the fourth quarter of 2008, the FHA backed about a third of new home loans, up from about 4 percent in 2005, according to Inside Mortgage Finance, a trade publication.

But with the agency's role growing, some lawmakers are worried that the government will wind up on the hook should defaults and foreclosures surge further.

The program "poses significant risks to taxpayers, and therefore requires diligent oversight," Sen. Richard Shelby, R-Ala., said at a hearing earlier this year.

http://www.wnep.com/news/sns-ap-obama-h ... 7840.story

New World Order

Putting the fox in the hen house???

At Freddie Mac, Stevens was a senior vice president in charge of affordable lending, sales and marketing.

From 03/31/2005
http://www.huduser.org/publications/polleg/gse.html


Issue Brief: HUD's Affordable Lending Goals for Fannie Mae and Freddie Mac

Fannie Mae and Freddie Mac, government-sponsored enterprises (GSEs) in the secondary mortgage market, are the two largest sources of housing finance in the United States. They fund these mortgages by purchasing loans directly from primary market mortgage originators and holding these loans in portfolio, or by acting as a conduit and issuing mortgage-backed securities, which are then sold in the capital markets. HUD is the mission regulator for the GSEs, and a major aspect of this regulation involves setting minimum percentage-of-business goals for their mortgage purchases. These goals deal with the enterprises' support for low-income lending and lending in underserved geographic areas, and they have played an important role in encouraging mortgage originators to undertake more affordable lending for lower-income and minority families in recent years. This issue brief discusses the significant increases in these lending goals for the years 2001-03, which should encourage the GSEs to further step up their support for affordable lending.

From 2008
http://www.washingtonpost.com/wp-dyn/co ... 02626.html

How HUD Mortgage Policy Fed The Crisis
Subprime Loans Labeled 'Affordable'

By Carol D. Leonnig
Washington Post Staff Writer
Tuesday, June 10, 2008; Page A01

In 2004, as regulators warned that subprime lenders were saddling borrowers with mortgages they could not afford, the U.S. Department of Housing and Urban Development helped fuel more of that risky lending.

Eager to put more low-income and minority families into their own homes, the agency required that two government-chartered mortgage finance firms purchase far more "affordable" loans made to these borrowers. HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.

Housing experts and some congressional leaders now view those decisions as mistakes that contributed to an escalation of subprime lending that is roiling the U.S. economy.

The agency neglected to examine whether borrowers could make the payments on the loans that Freddie and Fannie classified as affordable. From 2004 to 2006, the two purchased $434 billion in securities backed by subprime loans, creating a market for more such lending. Subprime loans are targeted toward borrowers with poor credit, and they generally carry higher interest rates than conventional loans.


Today, 3 million to 4 million families are expected to lose their homes to foreclosure because they cannot afford their high-interest subprime loans. Lower-income and minority home buyers -- those who were supposed to benefit from HUD's actions -- are falling into default at a rate at least three times that of other borrowers.

"For HUD to be indifferent as to whether these loans were hurting people or helping them is really an abject failure to regulate," said Michael Barr, a University of Michigan law professor who is advising Congress. "It was just irresponsible."

Congress is expected to vote before its Fourth of July recess on legislation that would strip HUD of its regulatory authority over Fannie and Freddie and give it to a stronger regulator.

Fannie and Freddie finance about 40 percent of all U.S. mortgages, with $5.3 trillion in outstanding debt. Owned by private shareholders but chartered by Congress, they are exempt from state and local taxes and receive an estimated $6.5 billion-a-year federal subsidy because they can borrow money more cheaply than other investors. In return, they are expected to serve "public purposes," including helping to make home buying more affordable.

HUD officials dispute allegations that the agency encouraged abusive lending and sloppy underwriting standards that became the hallmark of the subprime industry. Spokesman Brian Sullivan said the agency and Congress wanted to increase homeownership among underserved families and could not have predicted that subprime lending would dominate the market so quickly.

"Congress and HUD policy folks were trying to do a good thing," he said, "and it worked."

Since HUD became their regulator in 1992, Fannie and Freddie each year are supposed to buy a portion of "affordable" mortgages made to underserved borrowers. Every four years, HUD reviews the goals to adapt to market changes.

In 1995, President Bill Clinton's HUD agreed to let Fannie and Freddie get affordable-housing credit for buying subprime securities that included loans to low-income borrowers. The idea was that subprime lending benefited many borrowers who did not qualify for conventional loans. HUD expected that Freddie and Fannie would impose their high lending standards on subprime lenders.

2 more pages follow - long read.....click link..too long o post