Sub-Prime Mortgages that Led to the Foreclosure Crisis is False [mortgageprotectiontips.blogspot.com]
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The Short and Simple Story of the Credit Crisis -- The Full Version By Jonathan Jarvis. Crisisofcredit.com The goal of giving form to a complex situation like the credit crisis is to quickly supply the essence of the situation to those unfamiliar and uninitiated. This is the original, full version.
mortgageprotectiontips.blogspot.com The Crisis of Credit Visualized - HD
Recently SEC (Securities and Exchange Commission) entered into the war against Fannie Mae and Freddie Mac. The commission fielded a legal suit against three of the executive from each of the companies. The charge was that the disclosures they had made were “materially falseâ€Â regarding the portfolio sizes dealing with sub-prime mortgages.
Robert Khuzami the enforcement chief of SEC said that the action indicted that “all individuals, regardless of their rank or position, will be held accountableâ€. But this statement has to be taken with a pinch of salt because SEC is now playing up the gallery.
The charge is unusually weak. Two scholars of American Enterprise Institute (noted for its conservative leanings), Peter Wallison and Edward Pinto, have concluded that Fannie Mae and Freddie Mac started off the crisis and led the private sector into this quagmire because of their sub-prime lending.
For instance Alt-A loans may have had the appearance of sub-prime mortgages but they were given only to those with high credit scores.
No internal Internet mails have shown that the executives contradicted any of the statements they had made in public; there were no instances of dubitable insider sale of stocks. The financial statement disclosures of Fannie and Freddie clearly indicate that they had been transparent in outlining the credit features of the portfolios dealing with mortgages, although they did not brand any non-traditional loan as sub-prime.
About one year previously a shareholder had brought a suit against Fannie Mae charging the agency for not making proper disclosures; the judge had thrown out the suit saying that the disclosures made on sub-prime portfolio of the firm was adequate.
Default data is missing from the complaint filed by SEC; Wallison and Pinto have ignored this conveniently. The fact is that despite all shortcomings, Fannie Mae and Freddie Mac had some principles about the loans that were non-prime that they made; to prove it they have the default figures. This is the truth.
David Min, criticizing Wallison points out that during the second quarter of last year (2010) the rate of delinquency on all the loans guaranteed by Fannie Mae and Freddie Mac was 5.9%. This can be contrasted with the national average â€" 9.11%.
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