Bill Clinton on the Mortgage Crisis
With the housing crisis becoming an increasingly central campaign issue in the race for the White House, former President Bill Clinton provided his two cents on the issue while stumping for his wife in North Carolina.
From the Wall Street Journal:
Mr. Clinton blamed the foreclosure problem on mortgage payments that increased because brokers sold loans that were packaged into "stocks."
"All these families were told in fairness that they could be charged higher interest if the economy changed," Mr. Clinton told a crowd in Jacksonville. "None of these families were told in total fairness—none of them, I've read these agreements—that these mortgage companies would package all their mortgages up and turn them into stock and let people bid on them. They thought it was a bird's nest on the ground. They thought that housing would go up."
Full article here.
Tags: mortgages | Bill Clinton | housing market
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Bill Clinton Comments
Mr. Clinton is not accurate in his condemation of mortgage brokers. A broker has never secutized any mortgage loans. Brokers only sell loan products that are developed by lenders (mortgage banking companies and commericial banks). Loans are delivered into mortgage backed securities (not stocks) that are sold to FNMA and FHLMC by these same lenders, not mortgage brokers. Brokers have no part in the securitization, sale or approval of any mortgage loans. Mr. Clinton, get your facts straight before you slander a whole group of people.
Bill Clinton doesn't understand the system
How is it that Bill Clinton can talk about an issue, act as though he's an authority on the subject, but have absolutely no clue what he's saying? During his term as president, HUD had their highest delinquency rates ever. Many of those loans were securitized by wall street and packaged as well. He said while consumers were advised their rates could go up, no one advised the consumer that the loans could be packaged into securities. What affect does that have on the mortgage borrower. It's a shame that brokers are attacked by people who don't understand the system. Brokers are the only group that disclose everything to the consumers. Banks do not have those same disclosure requirements. As far as I know, brokers have never designed a mortgage program, determined the amount of acceptable risk for the program, approved the borrower for the loan, funded the loan, sold it to wall street, or foreclosed on the loan. All of that is done by the greedy banks and wall street. By the way, check out the Georgetown University study that shows borrowers who obtain a mortgage through a mortgage broker actually receive a better rate than those who went directly to the banks. The difference in the rate was over 1% !!!
Mortgage Crisis
Unfortunately Mr. Clinton does not understand how mortgage loans are originated and sold in the secondary market. This is exactly how the corner grocery store that sells cigarette is blamed for causing cancer to the consumer. HELLO where is the billion dollar manufacturer, the distributor and the surgeon general????
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