Another Housing (Mortgage) Crash on the Horizon

carpro · Feb 5, 2015

http://www.cnsnews.com/commentary/hans-bader/another-housing-crash-horizon

Another Housing Crash on the Horizon?

"In the Obama administration, new guidance on housing policy invariably means lowering standards to get mortgages into the hands of people who may not be able to afford them. Earlier this month, President Obama announced that the Federal Housing Administration (FHA) will begin lowering annual mortgage-insurance premiums ‘to make mortgages more affordable and accessible.’

"Government programs to make mortgages more widely available to low- and moderate-income families have consistently offered overleveraged, high-risk loans that set up too many homeowners to fail. In the long run-up to the 2008 financial crisis, for example, federal mortgage agencies and their regulators cajoled and wheedled private lenders to loosen credit standards. They have been doing so again. When the next housing crash arrives . . . homeowners and taxpayers will once again pay dearly."

carpro · Feb 6, 2015

Democrats learned nothing from 2008. It has to be intentional.

Despite the calamitous consequences for taxpayers of past risky loans that were overvalued or underpriced, the Obama administration is promoting such lending. It is ignoring “Congress’s 2011 mandate that Fannie’s regulator adjust the prices of mortgages and guarantee fees to make sure they reflect the actual risk of loss—that is, to eliminate dangerous and distortive pricing by the two GSEs.” The prior director of the FHFA, a non-political appointee, had “worked hard to do so.” But “Mr. Watt, his successor, suspended [those] efforts to comply with Congress’s mandate. Now that Fannie will once again offer heavily subsidized 3%-down mortgages, massive new cross-subsidies will return, and the congressional mandate will be ignored.” The Obama administration is also ignoring the law’s capital requirements for the Federal Housing Administration, which “hasn’t met its capital obligation since 2009 and will not reach compliance until the fall of 2016” even under rosy economic projections.
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poncho · Feb 6, 2015

The borrower is servant to the lender. All hail the oligarchy.

Another Housing (Mortgage) Crash on the Horizon

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Another Housing (Mortgage) Crash on the Horizon

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