Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
That really didn’t take long to forget did it? 6 years? And America is back….
At least this time around with Fannie and Freddie (and FHA) controlling almost the entire mortgage market we can go direct to the taxpayers for the future bailout rather than having the messy step of picking winners and losers in the banking sector. Via the Washington Post.
- 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.
- ….administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs (so any future losses go directly out of taxpayers pockets) — 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.
- 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.
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