White House urging FHA backed High Risk lending.

[SunsetBengal]

One would have thought that the US Government would have already learned a lesson about risky lending to unqualified homebuyers...

http://https://www.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html

Don't understand the implications of such a move?  Don't worry, it's only your tax dollars guaranteeing these loans..

Quote:Deciding which borrowers get loans might seem like something that should be left up to the private market. But since the financial crisis in 2008, the government has shaped most of the housing market, insuring between 80 percent and 90 percent of all new loans, according to the industry publication Inside Mortgage Finance. It has done so primarily through the Federal Housing Administration, which is part of the executive branch, and taxpayer-backed mortgage giants Fannie Mae and Freddie Mac, run by an independent regulator.

The FHA historically has been dedicated to making homeownership affordable for people of moderate means. Under FHA terms, a borrower can get a home loan with a credit score as low as 500 or a down payment as small as 3.5 percent. If borrowers with FHA loans default on their payments, taxpayers are on the line — a guarantee that should provide confidence to banks to lend.
But banks are largely rejecting the lower end of the scale, and the average credit score on FHA loans has stood at about 700. After years of intensifying investigations into wrongdoing in mortgage lending, banks are concerned that they will be held responsible if borrowers cannot pay. Under some circumstances, the FHA can retract its insurance or take other legal action to penalize banks when loans default.

Now, where exactly in The Constitution does it say that people are to get houses, weather they can pay for them or not?  And, where does it say that responsible taxpayers are on the hook to cover the losses, should these people fail to pay their mortgages??

[Nebuchadnezzar]

It's about to become a "Sellers Market" so get ready to make some money!

[JustWinBaby]

This appears to be an old article, although there's no doubt that Obama has put these failed Bush economic policies on steroids.

But there are several reasons this time could be different:
1) The market now understands the risks better. Just like junk bonds blew up and caused a recession to later become a huge and important asset class, CDO's and CMBO's are poised to do the same. And it wasn't those assets alone, but a combination of factors which are also understood better.

2) Avg FICO scores, but still sit around 720, which is pretty absurd (peaked at 750 in 2011, AVERAGE, which is a score you need almost perfect credit history to be above as a first time home buyer)

3) Housing prices have rebounded, but still 8% below the 2008 peak.

4) Assuming 3% annual inflation and going back to the "start of the bubble", prices today sit just 6-7% above the inflation-adjusted average. At the peak in 2006-7, prices were over 47% above the inflation-adjusted average. We'd have to continue at last year's 6% rate for TEN years to get back to bubble-bursting levels, sooner if 3% is too high in today's lower inflation environments

Some people look at the recent rise from the grossly oversold trough in 2011 and say we're in a bubble again. But all assets bounce back significantly and quickly from over-corrected levels once the sell-off stops.

I'm not worried. We'll have a recession in a few years that will put the brakes on this long before we hit any bubble territory.

[fredtoast]

(04-04-2016, 08:07 PM)SunsetBengal Wrote: Now, where exactly in The Constitution does it say that people are to get houses, weather they can pay for them or not?  And, where does it say that responsible taxpayers are on the hook to cover the losses, should these people fail to pay their mortgages??

What does this question even mean?

Where is the Constitution does it say we can have an Air Force?

Also the link does not work for me, But I am pretty sure the FHA does not even cover half of the mortgages in the US.  Do you know where the 80-90 percent number comes from?  And what does "White House urging" mean?

And finally do you have any money deposited in a bank anywhere?  If so do you realize your deposit is insured by the Federal Government?  What is so bad about that?