Nobody wants to return to the kind of risky home loans that spurred
2008’s banking collapse. Sliding back toward lax lending would be nuts.
Yet Washington officially endorsed such loans this month.
Federally controlled mortgage giants Fannie Mae and Freddie Mac announced they’ll back loans to low-income Americans who put just 3% down, even though such loans have a high default rate.
The risky mortgage program has the blessing of Federal Housing Finance Agency chief Mel Watt, the former Congressional Black Caucus leader whom President Obama recently appointed to regulate Fannie and Freddie.
Watt also backs home loans for borrowers with “less-than-perfect credit scores.”
Since Fannie and Freddie guarantee 90% of US mortgages, private lenders will match their weaker standards. Many of these weak loans will, in turn, be securitized and traded on Wall Street.
http://nypost.com/2014/12/21/government-fuels-next-housing-collapse-with-unstable-mortgages/
Yet Washington officially endorsed such loans this month.
Federally controlled mortgage giants Fannie Mae and Freddie Mac announced they’ll back loans to low-income Americans who put just 3% down, even though such loans have a high default rate.
The risky mortgage program has the blessing of Federal Housing Finance Agency chief Mel Watt, the former Congressional Black Caucus leader whom President Obama recently appointed to regulate Fannie and Freddie.
Watt also backs home loans for borrowers with “less-than-perfect credit scores.”
Since Fannie and Freddie guarantee 90% of US mortgages, private lenders will match their weaker standards. Many of these weak loans will, in turn, be securitized and traded on Wall Street.
http://nypost.com/2014/12/21/government-fuels-next-housing-collapse-with-unstable-mortgages/
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