]AND from The Cato Institute...
In the case of the housing price boom, the government played a
role in stimulating demand for houses by proselytizing the benefits of
home ownership for the well-being of individuals and families.
Congress was also more than a bit player in this campaign. Fannie
Mae and Freddie Mac were created as government-sponsored enterprises. Beginning in 1992 Congress pushed Fannie Mae and Freddie
Mac to increase their purchases of mortgages going to low- and moderate-income borrowers. In 1996, HUD, the department of Housing
and Urban Development, gave Fannie and Freddie an explicit target:
42 percent of their mortgage financing had to go to borrowers with
incomes below the median income in their area. The target increased
to 50 percent in 2000 and 52 percent in 2005. For 1996, HUD
required that 12 percent of all mortgage purchases by Fannie and
Freddie had to be “special affordable” loans, typically to borrowers
with incomes less than 60 percent of their area’s median income
number was increased to 20 percent in 2000 and 22 percent in 2005.
The 2008 goal was to be 28 percent. Between 2000 and 2005 Freddie
and Fannie met those goals every year, and funded hundreds of billions of dollars worth of loans, many of them subprime and
adjustable-rate loans made to borrowers who bought houses with less
than 10 percent down.