Easy access to home buying credit is back

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Joined: 17 Apr 2007
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15 May 2014, 10:02 am

So the new shift in policy is to make mortgages easier to obtain (removing many down payment requirements put in place after the housing market bust) and to reduce (in some cases remove) the liability of lenders in terms of making responsible lending decisions. What could possibly go wrong?

Some of the more recent information:
http://www.latimes.com/business/la-fi-fannie-freddie-20140514-story.html#page=1

Quote:

By keeping Fannie and Freddie on course, Mel Watt, the new director of the Federal Housing Finance Agency, essentially announced a major shift in direction for the bailed-out companies, one that ensures they will keep playing the main role in housing finance for the foreseeable future.

Watt, the first Democrat to run the agency under President Obama, said Tuesday that he would not force Fannie and Freddie to reduce the limits on loans they buy or guarantee as the previous regulator had indicated.

In addition, he said the agency was taking steps to loosen mortgage credit by easing standards on when banks could be forced to buy back some loans sold to Fannie and Freddie.

"Mel Watt just made it easier to get a home," said Ed Mills, a policy analyst at FBR Capital Markets.

Quote:

There is broad agreement that Fannie and Freddie should be replaced, and House and Senate lawmakers are working on legislation to do that as part of an overhaul of the housing finance system.

The Senate Banking Committee is expected to pass an overhaul bill Thursday, but it appears unlikely that it will make it through Congress this year.

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chris5000
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15 May 2014, 4:59 pm

I would like it
I want to buy a 20k house in the near future

NobodyKnows
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15 May 2014, 9:08 pm

On to Round Two. This'll be fun.

pezar
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15 May 2014, 11:14 pm

Fool me once, shame on you, fool me twice, shame on me. The American public is so stupid that you can fool them over and over. So, what do you think, another five years before Financial Collapse 2 is unleashed on the stupid? Hopefully I'll be pretty much off grid in Oregon by then and will get to pop popcorn and watch Los Angeles burn via streaming internet video.

zer0netgain
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16 May 2014, 5:42 am

NobodyKnows wrote:

On to Round Two. This'll be fun.

+1

Easy credit is what made the housing bubble, and the simple fact is that you deal with low income people by making houses for people on low income...not expensive homes they need massive loans (which they can't afford) to purchase.

The market will correct itself. Easy credit disrupts market forces.

sonofghandi
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16 May 2014, 7:00 am

chris5000 wrote:

I would like it
I want to buy a 20k house in the near future

Buying a $20K house is much different than the current limitations that approach a half million dollars. This loosening of standards will allow people to borrow for homes that are far beyond their ability to pay, while the banks just chop up the loans and pawn off the majority of the liability to Fannie Mae and Freddie Mac once again. And thanks to election year politics, there will be no reform of these entities.

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richardbenson
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17 May 2014, 10:21 am

Probably more bad news.

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