Great blast from Ed Pinto at AEI on the state AG settlement and how the proponents of "affordable housing" have suddenly become concerned with foreclosure abuse, fraud and poor loan underwriting standards. How quickly we forget the role played by the affordable housing coalition of the 1990s and beyond in creating the housing mess. Chris
National People’s Action, vocal in calling for loosened underwriting standards in 1991, is now calling for “restitution” for the damages that resulted from banks doing what NPA asked for, namely following Fannie and Freddie’s aggressive lead and abandoning their “conservative standards.”
Point 1: National People’s Action’s testimony before the U.S. Senate Banking Committee in 1991:
“Lenders will respond to the most conservative standards unless [Fannie Mae and Freddie Mac] are aggressive and convincing in their efforts to expand historically narrow underwriting.” Testimony of National People’s Action representative before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on February 28, 1991.
Point 2: February 7, 2012 - interview with a representative of National People’s Action:*
“George Goehl of the National People's Action, a collection of community housing groups, said $25 billion for homeowners would be a ‘paltry down payment,’ considering that roughly 11 million homes are underwater by a combined $750 billion.
"’Anything less than $300 billion is a win for the 1 percent that lets the banks off too easily and falls short of helping both middle-class families and communities targeted most by big bank fraud,’ Goehl said.”
One more point - in about 1986, during my tenure as Fannie Mae’s senior vice president for marketing, I warned NPA that any effort by Fannie Mae to launch a massive national affordable housing program would be as disastrous for homebuyers and neighborhoods as FHA’s failed efforts were in the 1960s and 1970s.
*http://abcnews.go.com/Business/wireStory/calif-ny-foreclosure-abuse-deal... [6]
Edward Pinto <edward.pinto@aei.org [7]>
Resident Fellow
American Enterprise Institute
Cell: 240-423-2848