March 9, 2011 (Chris Moore)
Freddie Mac has posted a chart on its website in response to information that it feels was erroneous in an article by the New York Times. In the article, the author Binyamin Appelbaum, claims that Fannie Mae and Freddie Mac had slashed the requirements for down payments in recent years and that two-thirds of the borrowers whose loans were guaranteed by the companies from 1997 to 2005 made a down payment of less than 10 percent. Freddie Mac decided to set the record straight.
In a simple statement, Freddie Mac said this on its website:
“Only 9 percent of borrowers made down payments of 10 percent or less on mortgages Freddie Mac bought between 1997 and 2005, not the two-thirds estimate erroneously made in recent media reports.”
The article is titled “Without Loan Giants, 30-Year Mortgage May Fade Away.” However, the article soon degenerates into a piece about the author’s opinion of the role that Freddie Mac and Fannie Mae played in the housing crisis and although I would agree with Applebaum on the premise that they did indeed play a role, apparently his facts aren’t all right…and Freddie Mac decided to tell him so.
Furthermore, there are far more complex reasons as to why and how the housing bubble and the subsequent crisis evolved. Your government, the Federal Reserve, Wall Street, banks, investors, mortgage companies, and even the homeowners who believed the hype and purchased homes they should never have bought were complicit partners in our economic crisis.
Five years from now, the process of purchasing a home will be very different than it is today, but the problem is, the rules of tomorrow are being written today and nobody knows what the ultimate effect will be. Speculation now is just plain foolish but apparently makes for a good story.
Tags: Freddie Mac, Fannie Mae, New York Times, housing crisis, mortgage industry