cromag

Fannie and Freddie Did Not Cause This Crisis

Some of the info you state is plain ignorant and shows a lack of understanding in loan origination.

You say "they [Mortgage Brokers] have every incentive to push the guidelines as hard as they can and to find a way around them whenever possible.

If mortgage brokers had done their job and only made loans to people who could pay them back..."

Fannie and Freddie created an automated underwriting system where a computer algorithm checks the data and issues an approval. The algorithm would approve loans in excess of 65% total debt ratio and sometimes not require income verification. This had nothing to do with the Broker/Originator and everything to do with Fannie and Freddie.

The GSE's approved these parameters and the rest of the lenders followed suit, even within their own porfolio products. The Algorithms did the underwriting, the brokers did the originating, not the other way around.