I recall back in the 90's right before getting into Real Estate, I was working as an Account Executive for a very large bank. We focused mostly on what's popularly known as "A Paper", which is to say we only gave loans to those who were creditworthy and expected to be able to pay the loan payments. In a meeting at the corporate office, there was talk of opening new branches however we were being barred from doing so because of our reluctance to start doing risky loans. These loans our bank refused to do are commonly known as "sub-prime" loans and we now know the result of numerous lending institutions making these risky loans to people who should never have been given a loan. My bank is no longer in business by the way.
I won't go into all the details of the causes of the well known mortgage meltdown in this post. That's not the purpose of this writing. For the details, you can always refer back to my previous post "How Did We Get Here" Today's post will be a quick look at something happening that hearkens back to the whole "sub-prime" debacle. And I'm really concerned.
Recently, a group met to discuss credit standards and how to affectively provide loans to those with less than stellar credit. The symposium, co-hosted by the National Association of Realtors, the Asian Real Estate Association of America and the National Association of Hispanic Real Estate Professionals came to a consensus that "government-sponsored enterprises should update their scoring models" to address the "unique spending and savings habits" of some borrowers who have been left out of purchasing a home due to...bad credit. It went on to state that FHA is looking at new credit scoring models in order to bring "housing opportunities within reach of more Americans." And it appears the "more Americans" they are trying to get loans to are those that have less than "A-Paper" criteria.
I'm all for helping people realize the dream of homeownership. That's what I do. But I don't want to see us go back down the road that got us into a huge mess as before. But unfortunately, I see us heading in the same direction as before.