In 1992, the original percentage of loans through Fannie/Freddie mandated to go to low-income folks was boosted to 42%.
In 2000, it was boosted to 50%.
On numerous occasions, George W. Bush attempted to reform it, and was blocked by none other than Barney Frank.
The inevitable happened and the tidal wave of defaults began to crash on the shore in 2007. And now, the very folks who advocated making these loans in the first place are the ones most vocal about investigations for the cause of the current economic and housing crisis. Interesting, that.
Thanks for the explanation!
I understand the thinking behind this, but of course there are those pesky unintended consequences. :)
So it sounds like as housing prices rose during this time, 50% (50%!!) of loans were still allocated to “low income” individuals. I’m guessing income didn’t rise at the same rate as housing, so the number of people in that low income bracket were buying homes that were increasinging out of their price range. Right?