This requires a monitoring of public support to ensure that groups will continue to lobby for FNMA. The government bailout of FNMA in 2008 caused tax revenue to be increased but the tax increase had a low per capita value for each individual homeowner. The high capita value was felt by the United States government because of the high price of the bailout. 1
Political Environment Before the conservatorship, FNMA made money by drawing from the Treasury Department as needed.5 The agency then issued preferred stock to the government, which they paid a 10% dividend.5 Lower interest rates on loans gave FNMA an advantage that other mortgage companies and banks do not receive. Since the late 1990s, FNMA along with FHLMC have donated over 3 million dollars to members of congress and invested over 400 million dollars in subprime-backed securities.6 This led to the financial crisis of 2008 and the bailout of FNMA and FHLMC. The Mortgage Bankers Association (MBA) lobbied against FNMA. The association does not want the company to have free …show more content…
They believe that the company is essential in keeping the credit flowing for homeowners, but they acknowledge that it puts taxpayer’s resources on the line.10 According to the Brookings Institute, FNMA can prevent discrimination by private lenders, expand homeownership, and will keep the giant mortgage companies running.10 In contrast, the American Enterprise Institute (AEI) discusses how FNMA encourages the wrong kind of debt for the United States economy.11 The debt they discuss is described as a temporary wealth effect, which is similar to a housing boom then a depression like fall soon after. Their research has shown that homeownership rates for African Americans was 4.2 percent, for Hispanics was 45.5 percent and was 73.4 percent for whites.11 They want FNMA to remove low underwriting to increase the percent of low income and minority people who take our
Political Environment Before the conservatorship, FNMA made money by drawing from the Treasury Department as needed.5 The agency then issued preferred stock to the government, which they paid a 10% dividend.5 Lower interest rates on loans gave FNMA an advantage that other mortgage companies and banks do not receive. Since the late 1990s, FNMA along with FHLMC have donated over 3 million dollars to members of congress and invested over 400 million dollars in subprime-backed securities.6 This led to the financial crisis of 2008 and the bailout of FNMA and FHLMC. The Mortgage Bankers Association (MBA) lobbied against FNMA. The association does not want the company to have free …show more content…
They believe that the company is essential in keeping the credit flowing for homeowners, but they acknowledge that it puts taxpayer’s resources on the line.10 According to the Brookings Institute, FNMA can prevent discrimination by private lenders, expand homeownership, and will keep the giant mortgage companies running.10 In contrast, the American Enterprise Institute (AEI) discusses how FNMA encourages the wrong kind of debt for the United States economy.11 The debt they discuss is described as a temporary wealth effect, which is similar to a housing boom then a depression like fall soon after. Their research has shown that homeownership rates for African Americans was 4.2 percent, for Hispanics was 45.5 percent and was 73.4 percent for whites.11 They want FNMA to remove low underwriting to increase the percent of low income and minority people who take our