Obama supports efforts to sue originators for robo-signing violations. The double whammy: Do what I tell you to do and when you do I will sue you to boot.
What Clinton started Obama continues — government mandate that Fannie and Freddie lend to people with little or no documentation. Hence the housing mess continues.
The Clinton administration required Fannie Mae and Freddie Mac to lend to low income, minority borrowers. In early 2004 senior management of Fannie and Freddie realized that the only way to meet Clinton political mandates was to massively cut underwriting standards. Which they did.
Per “The Failure of Models that Predict Failure by Rajan, Seru Viz, more than half of the mortgage losses reflected the predictable consequences of low-doc and no-doc lending.
If the under-writing standards at Fannie and Freddie circa 2003 had remained in place, nothing like the magnitude of the sub prime crises would have occurred. Taxpayer losses at Fannie and Freddie alone may exceed $300 BILLION.
Obama has perpetuated the low underwriting standards that gave us the crises. Obama encourages the postponement of foreclosures by lending support to various states’ efforts to sue originators for robo-signing violations.
Now Obama wants to sue the originatiors who fulfilled the politically motivated demands of the goernment-sponsored agencies that drove the morgage crisis.
For more, read The Mortgage Crisis: Some Inside Views in The Wall Street Journal, by Charles W. Calommiris, October 27, 2011.
DrCameronJackson@gmail.com
