The Garn–St. Germain Depository Institutions Act of 1982
An Act of Congress, that deregulated the Savings and Loan industry. This Act turned out to be one of many contributing factors that led to the Savings and Loan crisis of the late 1980s.
The bill, whose full title was "An Act to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans," was a Reagan Administration
The bill is named after its sponsors, Congressman Fernand St. Germain, Democrat of Rhode Island, and Senator Jake Garn, Republican of Utah. The bill had broad support in Congress, with co-sponsors including Charles Schumer and Steny Hoyer.[3] The bill passed overwhelmingly, by a margin of 272-91 in the House.[4]
Title VIII, Alternative Mortgage Transactions, allowed Adjustable rate mortgages [5]
Bush Whitehouse Unveils Exotic Mortgage Rules
November 15, 2006
Interest-only and payment-option ARM lenders will have to qualify borrowers at the fully indexed rate with potential negative amortization added to the loan amount under final federal regulatory guidance issued last month. Banking regulators rejected industry complaints that the new underwriting guidelines on programs will be too restrictive. However, these proposed rules are still subject to a 60-day comment period and may be changed before finalization.
Under the mandate, payment-option adjustable-rate mortgage servicers must include in the monthly mortgage statement an “explanation” that if borrowers choose the minimum monthly payment — which many do — it would increase their loan balance. “The regulators stuck to their guns,” said Howard Glaser, a former Department of Housing and Urban Development attorney who runs a consulting practice—
“…. It is rare for federal regulators to step in and regulate a specific product. They are doing so here out of concern that they need to protect both the borrower and the bank.”
These products have been very popular during the recent housing boom and the tightening of these standards at a time when the market is slowing may serve to exacerbate the situation.
FHA Backs More Than Half of Loans for New Homes
By Nick Timiraos Oct 2009
Just how big a backstop is Uncle Sam providing to the housing market right now? Here’s one indication: The number of home buyers relying on low down-payment mortgages obtained via the Federal Housing Administration and other federal agencies.
Some 59% of new home buyers are using government-backed loans from the FHA and other agencies, according to a survey of home builders by John Burns Real Estate Consulting, an Irvine, Calif.-based consultancy. The FHA accounts for nearly half of all mortgages, while loans from the Department of Agriculture and the Department of Veterans’ Affairs account for another 10% of all loans for new homes.
The government’s share of the market rises even higher in certain areas. In Northern California, for example, builders said that the government accounted for 76% of all mortgages, while the government share stood at 65% in the Midwest and 62% in South Florida.
South Florida also has the highest share of all-cash new home purchases, at 22%, largely the result of investor purchases of condos and other attached homes. Southern California and the U.S. Northwest had the highest share of purchases with jumbo loans, at 15% and 13%, respectively.
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