Good morning, I have a brief statement and then I will take questions.
This department came out four-square for affordable housing back in the 70’s when interest rates were nearing 17%. No one could afford to buy new houses because the Banks and Wall Street were not being reasonable.
This department ruled that all banks would be forced to make a few loans per year to people who couldn’t afford them. This was not as expensive as it sounds because the homes were located where most people didn’t want to live anyway and were cheap. Almost all of them were located in some subdivision called the Red Line that is located in every town.
This policy continued up until the 1995 when we discovered that we could simply pass a law instructing Fannie Mae and Freddie Mac make loans to the millions of people who couldn’t afford them and then sell them to Wall Street. The resulting financial boom helped everyone; builders, homeowners, plastic pink flamingo makers — everyone. Life was good.
One day, the people who got the loans they couldn’t afford realized that they couldn’t afford them. Not only that, but they realized that if they just stopped making their payments, it could take six months or more before they would be evicted. Six months free rent. It was too good a deal.
We sent those people letters pointing out that it was in their own interest to make their payment and protect their credit rating. Unfortunately, you can not hurt the credit of someone with a FICO score of minus twenty-something.
We tried lending more money to these people who had loans they couldn’t afford so that they could afford to make their payments but, when this plan was discovered, the Banks and Wall Street stopped being reasonable. Again.
We tried passing a bailout bill that would give lots of money to the Banks and Wall Street so they could go back to being reasonable. Unfortunately, a lot of hot-headed voters decided to be unreasonable and threaten lawmakers with unemployment; so, the bill failed.
We are unable to predict when we can get everyone to be reasonable again. Until that time, homes will only be available to those people who can afford them. We think this is unfair. We are working diligently to put an end to it.