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Isakson says mortgage act could restore housing industry

DULUTH -- Years after the collapse of the housing industry caused a drastic turn in the economy of what was once one of the fastest growing places in the nation, U.S. Sen. Johnny Isakson touted a plan Monday to get the industry back on track.

Speaking to a luncheon crowd at the Gwinnett Chamber of Commerce, Isakson talked about his proposed Mortgage Finance Act, which would place Fannie Mae and Freddie Mac into a receivership and create a new Mortgage Finance Agency to guarantee loans.

"Let's go back to fix the problem we had, which was shoddy underwriting," Isakson said, adding that lax regulations meant that people had to follow few requirements to get a home loan before the bust several years ago. "We had a recipe for disaster."

The new agency, he said, would "create a bridge" to private enterprise, although requirements to receive a loan should include a down payment, proof of a job and insurance. His bill would also create a self-funding catastrophic fund to protect taxpayers from the need of another bail out.

"This system will work and the private sector will flock to it," said Isakson, who spent his career in real estate. "We'll have a robust housing market that isn't financed by government guarantees but private enterprise."

Despite a still-high unemployment rate, Isakson said Georgia is in a good position to draw jobs. He noted last week's announcement of a new Caterpillar plant coming to Athens, and said the deepening of the port of Savannah is playing a role in bringing companies here.

He also talked about the need to get a hold on government spending to get a grip on the rising deficit. Entitlements, which make up two-thirds of the problem, have to be considered, he said, although he added that they are "a promise that can't be broken."

"The great thing about this country is we have always rallied in a crisis, and we are in a crisis," he said.

With energy prices going up, Isakson said he drives a hybrid car and that efforts should be made to try every alternative.

"But there is one thing fr sure, America is powered by petroleum," he said, adding that the country needs to be firm against the threats of Iran, which is partially responsible for the price spike. "Every day we reduce our dependence on that ... our security as a nation will be better than ever."

Comments

Say_that_again 2 years, 9 months ago

I am delighted to see that Senator Isacson is finally admitting that we need more regulation of the banking industry and encouraging alternate fuel vehicles. I need more information to determine if his recommendation of a Mortgage Finance Agency is appropriate, but question the name. Does anyone want to say they work for MFA? How about Home Assistance Management (HAM)? Then Right wing pundits can complain about more pork in government!

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news2me 2 years, 8 months ago

"regulation of the banking industry" by the federal government is the main reason why we are in this crisis. The federal governement is the problem.

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BuzzG 2 years, 8 months ago

This man is a joke. He does not understand that real estate was in a bubble. He wants the taxpayers to blow the bubble back up just so it can burst again. Fannie Mae and Freddie Mac were part of the problem and should be auctioned off to the highest bidder. Don't "create a new Mortgage Finance Agency to guarantee loans." Get the Federal government out the loan business altogether.

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notblind 2 years, 8 months ago

What BuzzG said. The whole housing bubble was created by the goobermint. Get them out of the loan business and not have them provide a taxpayer safety net for the bankers and Wall Street speculators.

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kevin 2 years, 8 months ago

give us the bill # to look it up. I just hope it doesn't give home loans away to anyone that smiles, like the Democrats did some yrs ago. Rememeber the Washginton nut cake- Barney Frank? The rub-a dub-dub speaker who did the most damage by allowing loans without any job?

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CD 2 years, 8 months ago

It should be noted that the original intent of Fannie/Freddie (GSA's) was to ensure a deep secondary market existed for residential mortgages. This, in turn, meant that banks could sell the paper to the respective GSA and then then turn around and make another mortgage. A deep market meant that rates were no where as steep as they would otherwise be. Keep in mind that back in the 1920's, for example, 80+ percent of the population rented vs. owned. If you did own, you paid 50-60% down, obtained a balloon note due in 10 years, and paid a very high interest rate to a lender that could afford to lock up money for an extended period of time.

Had prudent loans been made, the politicians kept their nose out of the way, and the GSA's kept guidelines in check, this housing bust would not have been so deep. Cheap money played a role, but again the fallout would not have been so drastic.

We don't need another agency. We need to get back to prudent loan standards and remember that a "deep" mortgage market is a worthwhile goal and that it is necessary for the housing situation to recover.

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Jan 2 years, 8 months ago

What a strange "blame game" seems to be going on here. First, we have those that want to blame regulations. They never say what regulation and do not want to admit that congress, Democrats and Republicans, passed these regulations as a reaction to unethical behavior of those being regulated. In banking, the next blame is placed on Fannie/Freddie. If you follow the loans that caused the banking fiasco, you will see that Fannie/Freddie were not the ones that originally authorized loans beyond the means of the recipients but rather were the ones duped into buying them in bundles. It does seem more than coincidence that the bank failures in the 80's and this more recent blitz of failures and bailouts both followed deregulation heralded by Republicans, then things were stabilized with new sets of regulations under Democrat control of the white house.

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Linda 2 years, 8 months ago

My, my, why don't the lot of you read the "housing boom and bust" by Thomal Sowell and "Reckless Endangerment" You might learn something!!

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