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Date: October 29, 2009
Subject: Subprime mortgage level returns to pre-crisis state

Imhotep (Wisdom to You) All,

Check out this article from a French news agency. If you want the truth about the US economy, stay away from CNN and US Govt reports. Read what the other countries are saying about the economy. Why, because they know smoke screens when they see them and they are the ones who are buying up the US wealth. Why...because Americans spend more than they invest...but that's another article one day.

Nearly all loans backstopped

Agence France-Presse
Published: Tuesday, October 27, 2009

Related Topics Fannie Mae

The market share of subprime U.S. home mortgages, which caused the collapse of the housing market at the epicentre of the financial crisis, has returned to pre-crisis levels, a central bank report showed yesterday.

But the Federal Reserve Bank of San Francisco study said nearly all of the
loans were now owned or guaranteed by the government, which has pumped
hundreds of billions of dollars to keep the market afloat.

Government-backed agencies Fannie Mae, Freddie Mac and Ginnie Mae "are
providing unprecedented support to the housing market -- owning or
guaranteeing almost 95% of the new residential mortgage lending," said
John Krainer, a senior economist with the regional central bank who penned
the report.

"This shift in mortgage finance has had a profound impact on the types of
borrowers receiving loans," he said.

The subprime market had shrunk to virtually nothing in the first quarter
of 2008 after triggering the housing collapse following defaults by

Subprime borrowers, usually lacking good credit histories, find it nearly
impossible to obtain mortgages from mainstream lenders.

Since the January-March period last year, "increased FHA (Federal Housing
Administration) lending ... has revived this segment of the market," Mr.
Krainer said.

"After plummeting in early 2008, the share of borrowers with FICO credit
scores lower than 660 has returned to just higher than 20%, the same share
as when subprime securitization peaked in 2006."

FICO is a company that developed a popular scoring system for assessing
credit risk. Subprime loans are usually classified as those where the
borrower has a FICO score below 660.

The report warned that recovery of the embattled housing industry will be
slow amid a credit crunch that has persisted since the crisis.

"Credit supply problems, however, still appear to be a major problem
affecting the housing market," it said.

"With the vast majority of current mortgage lending now intermediated in
some form by the GSEs (government-sponsored enterprises), it will be
difficult for the housing market to return to normal."

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Until next time...protect your wealth.

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Narmer (Think With A Unified Brain and Mind)

Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
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"A Prudent man foresees the difficulties ahead and prepares for them; the simpleton goes on blindly and suffers the consequences."

Proverbs 22:3 -- Living Proverbs

LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. G&G Associates gets paid a commission from a membership purchase at


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