Obama Pushes Banks to Approve Mortgages to Buyers with Weaker Credit

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The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place. President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

Uh Oh…

Administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default. Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default. Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan.

So the Feds are telling the very same banks that we bailed out to knowingly make high risk loans…with no risk to them because we’ll cover it? Does the President understand that FHA is $65 BILLION in the hole already? And many say that’s a low estimate.

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.

Yup – make those loans, make those fees, foreclose and collect the insurance and property AND the tax payers will cover it – no worries because the banks are too big to fail.

Can someone please tell me this article does not say what it seems? Where is this “change”? What happened to cleaning up the “Wall Street” nonsense and getting everything under control? This is nothing short of amazing for all the wrong reasons…READ THE ARTICLE and shake your head as well

Hank Miller
Associate Broker & Certified Appraiser
Atlanta Communities Real Estate
678-428-8276 direct
hank@hmtatlanta.com
www.hankmillerteam.com