Who’s to blame for the subprime mess?
April 13, 2009 | Center for Responsible Lending, industry | Comments (0)Foxnews.com blames Martin Eakes and the SELF-HELP Credit Union.
So it is important that people be reminded of the facts. And Congress needs to look into the whole sorry mess, and in a way that is designed to get at the truth, not shield the wrongdoers. They could begin by looking at the establishment, in 1994, of the Home Loan Secondary Market Program by a group called the Self-Help Credit Union.
The HLSMP’s stated purpose is to help people who don’t have enough assets to qualify for traditional mortage financing get a home anyway. This, in and of itself I suppose, is a worthy enough goal. But Self-Help then turned around and sold those mortgages in the securities markets to investors — which in turn gave banks access to new funds so they could make additional loans.
At the time, Self-Help President Martin Eakes said his program was helping “hardworking, bill paying,low-income and low-wealth people who may not meet conventional mortgage standards but have income sufficient to support monthly home loan payments.” But, as we now know, it did so much more.
Self-Help got a $50 million grant from the Ford Foundation and entered into a partnership with Fannie Mae to make a nationwide test of the program — to the tune of about $400 million in loans from select national and regional banks each year for five years.
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