I remember when Fannie Mae was a candy company. As the new century fast approaches and I look back on my 30 years of covering housing from my base here in the Nation's Capital, that's the first thought that runs through my head.

Of course, given the giant secondary mortgage market company's multi-million dollar advertising campaigns, the ones Fannie Mae says are designed to create more buyers but some lenders see as a threat to their very existence, most folks nowadays recognize Fannie Mae is in the mortgage business.

But when I started covering housing at the old Washington Daily News in 1969, Fannie May was much more well known. Now, it's difficult to find a candy store with that name. But for better or worse, Fannie Mae is probably embedded in practically everyone's subconscious.

Although most people who know the name realize it stands for home ownership, they may not fully comprehend exactly what the conduit does. It keeps funds flowing for housing by purchasing loans from local lenders and packaging them into securities for sale to investors throughout the world. Along with its sister company, Freddie Mac, it also brings a degree of standardization to the mortgage market, which helps drive down loan costs.

A lot of other things have changed, too. When I started, the only loan available was the 30-year fixed rate variety. Oh sure, you could get FHA or VA financing, but only for 30 years. There was no such thing as an adjustable, balloon or buy-down or any other derivative that many rookie home buyers still find so maddening.

Not only did all lenders offer the same loans, though, they also quoted essentially the same rates and terms. That's because mortgages were pretty much funded with savings, not by investors. What a concept!

And since the federal government told thrift institutions what they could pay on passbook savings accounts and allowed savings and loans and mutual savings banks to pay 25 basis points more than commercial banks Uncle Sam indirectly determined mortgage rates.

There was no true price competition among lenders 30 years ago. Since they all paid savers the same to raise funds and all incurred pretty much the same costs, they all charged the same. Thus, most home buyers took out a mortgage with the same institutions that had their savings accounts.

It wasn't until 1985 that mortgage companies originated a greater volume of home loans than S&Ls $110 billion vs. $109.3 billion. But when you added in the $7.5 billion written by mutuals, thrifts were still the largest source of mortgages. From 1986 to 1989, savings and loans, now known as community banks, held their own with mortgage companies. But from 1990 on, they began getting clobbered.

Since there wasn't much to say about the mortgage market back in the '70s, housing journalists wrote about this new subdivision, that new home design, this builder's philosophy and that broker's grand plan. And so it was until 1980, when the Federal Home Loan Bank Board approved the forerunner of today's ARM. It was called the renegotiable rate mortgage, or rollover, and allowed thrifts to pass on the effects of inflation on passbook rates to borrowers in the form of periodic adjustments in loan rates over the life of the loan.

Fortunately for consumers, anyway rates didn't change very frequently in those days. And when they did go up or down, they didn't move by much.

But at least things were becoming interesting for real estate writers. We finally had something financial to latch on to, and we did so with gusto. And now, a look back at my syndicated columns between 1980 and 1985 reveals just how much and how little has changed since then.

Perhaps even more interesting, though, is that much of what we consider to be new today isn't very fresh at all.

Take the concept of bundled settlement services. The idea, backed by HUD Sec. Andrew Cuomo and most mortgage makers, is to make it easier for borrowers to compare loan costs by allowing lenders to charge one, all-inclusive price for an appraisal, survey, document preparation and all other services. But it isn't original. The scheme was first run up the flag pole in 1981 by the Reagan Administration.

And now I know why I'm dot comatose. It's because I wrote my first story on searching for the lowest rates via computer in late 1983. Of course, there was no worldwide web or Internet back then, but the concept was already in place.

Not everything was so prophetic, however. What ever happened to the money-back mortgage, anyway?

Worse, sometimes nobody was listening. I wrote an award-winning series in late 1984 about how difficult it was for borrowers to cancel private mortgage insurance, and how some lenders were illegally canceling coverage but failing to tell borrowers and pocketing the premiums.

To their credit, Fannie Mae and Freddie Mac changed their rules as a result of my work. But it wasn't until almost 15 years later, when some congressman had difficulty dropping his MI coverage, that Congress saw fit to address the problem.

Published: December 27, 1999

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Editor's Note: This article reflects the opinions of Lew Sichelman only and not necessarily the views of this or any other publication, organization or Website owner.