Were Fannie Mae and Freddie Mac mortgages party to the U.S. mortgage crisis of 2007?
The lending sector that defined the terms to housing finance, is widely considered to be the trigger that led to the global financial crisis of 2008. Dating to the U.S. mortgage crisis of 2007 subprime lending and asset writedowns caused many large banking institutions to forcibly restructure coinciding with financial market reforms.
Borrowing requirements were more lenient in the secondary mortgage market. Loan were funded with sub-prime terms and conditions to monthly principal and interest payments. During the crisis, subprime borrowers attracted to interest-only (IO), and option adjustable-rate mortgages (ARMs) at extremely low initial rates and interest only payments, suffered serious detriment in credit standing; many losing their homes to foreclosure
The Fannie Mae and Freddie Mac mortgage programs were designated as U.S. government operations without private oversight as a result. In this insightful documentary about the changes to follow President Obama’s enactment of new federal mortgage lending programs, host Hazel Henderson and Sarah Stahahan of the New Economy Network, look at the risks of private market speculation versus government lending.
No longer under the mandate of the Community Reinvestment Act, formerly associated with the rules leading to the loan defaults in 2007, federal funding of mortgages have been reformed to include stricter rules, prohibiting sub-prime lending agreements. The film proposes that Fannie Mae and Freddie Mac mortgage financing should be reclassified as a public utility.
Reforming Housing, Fannie Mae, and Freddie Mac: Ethical Markets 4
- ISBN 978-1-61753-752-3
- Run Time (27 Minutes)
- Copyright 2012
- Closed Captioned (CC)