CHAIRMAN'S CORNER

Many years ago, I met a man, a banker, who I have come to respect and admire a  great deal.  I asked him to make me a loan, secured only by a mortgage that I held on out-of-town property.  After discussing the normal questions that come up at a time like that, he told me he would approve the loan because I had passed his test of the three "C's".
               1. Collateral
               2. Capacity
               3. Character  
Today, I called my friend and we discussed the proposed B*%#-out.  I vented a little and he told me he felt that the B*%#-out was a must for the  good of the Country.  He gave me sound reasons and, respecting him and his opinion as I do, I am sure he is right.  In the end, we will like say "yes" to the B*%#-out for the sake of our America.

Nevertheless, I would feel much better if someone were held accountable for the wrongs that brought us here. Held  before us for all to see.  Maybe have to wear a "sleaze" sign for 25 to life.

Basically we, as taxpayers, have the same issues before us today. The borrower wants a $700 BILLION dollar loan. 

          1. COLLATERAL value?
          2. CAPACITY to repay?
          3. CHARACTER?

While you ponder the issue, jump to the next column and read the article from SEPTEMBER 30, 1999.

TODAY'S CRISIS

COLLATERAL - now less than loan.
CAPACITY to repay or sell is nil.
CHARACTER Questionable????

DUH!

Fannie Mae
Eases Credit
To Aid
Mortgage Lending 

By STEVEN A. HOLMES

Published: New York Times
September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers.

These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

See Times (Click Here)