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FHFA wants to boost mortgage access to low-income borrowers

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Mortgage Professional America | 02 Sep 2014, 08:11 AM Agree 0
The FHFA has released proposed new goals for the mortgage finance firms as part of agency director Mel Watt’s initiative to increase access to housing
  • Pat Anderson | | 02 Sep 2014, 09:55 AM Agree 0
    WOW! What a great idea, bring back FNMA's My Community mortgage. $100.00 down. 500 credit score. 60% debt ratio. How can that hurt the housing market? I'm sure Frank and Dodd would both agree that this will work.
  • G Montigny | | 02 Sep 2014, 09:58 AM Agree 0
    Isn't this what caused the 2008 RE meltdown?
    Home ownership is not a RIGHT! It is something that you have to earn.
  • Plain and Simple | | 02 Sep 2014, 11:17 AM Agree 0
    Decent, safe and sanitary housing is a right. Home ownership is a priviledge.
  • Tom C | | 02 Sep 2014, 11:20 AM Agree 0
    You would think the government had learned their lessons over these last 20 years that owning is home is a privilege not a right. We have had at least four Presidents that kept passing laws to move us down the path of making it easier and easier for low to mod income individuals to own homes instead of renting. In the early 2000s we had finally reached a point if you had a 580 credit score and breathing you could purchase a home, that worked out well in 2007 with the housing industry going in the tank.

    Fannie Mae and Freddie Mac were darling of Wall Street, producing outstanding profits year over year with availability of mortgage money for anyone that could show documentation for three items, ability to pay/cash to close, willingness to pay and an appraisal equal to or greater than the sales price. The key word in my prior sentence is documentation.

    Suddenly in the mid 1990s government leaders decided raising home ownership from it 62% level to 68% with a primary focus on low to mod income individuals was a great idea. Lenders were forced into their goal through the Community Reinvestment Act, CRA. Lender had to lower their proven safe underwriting mortgage standards to meet the new CRA requirements to expand or even get approval to put in a ATM machine in a new locations. After lenders complained to Congress they had a vault full of unsaleable mortgages Fannie Mae and Freddie Mac was forced to purchase these low to mod mortgage so it would make up 40% of their entire portfolio. Anyone in the housing industry know the rest of this story since 2007.

    My suggest to Mr. Watts is to focus on financial literacy in our educational system starting in the elementary schools so we can stop these poor decisions that have landed many in the low to mod income group. I could write all day about this housing mess which is still trying to heal however going back to a proven disaster that affect every homeowner in America is not a path I think we should take.

  • William Matz | | 02 Sep 2014, 11:32 AM Agree 0
    This will run into a roadblock called the Ability to Repay. Ultimately, borrowers have to be able to repay the mortgage [Duh!]. The ATR rules now require that to be evaluated. The mortgage crisis was not caused by any bad mortgage products but by virtually ignoring whether borrowers had the ability to repay for the chosen mortgages. The sad thing is that many of the mortgage products no longer available could help lower income borrowers, but only if used in conjunction with a well-thought-out financial plan. For borrowers early in their careers with solid jobs and rising incomes, options such as temporary buydowns, interest-only, and even neg ams can be appropriate, but they must be fully explained, and there must be a clear plan for how borrowers will deal with rising payments.
  • Johnforjustice | | 02 Sep 2014, 11:44 AM Agree 0
    Fannie Mae and it's lawyers continue to steal homes from homeowners by committing fraud on the courts by submitting forged mortgage notes.
  • crefin | | 02 Sep 2014, 06:05 PM Agree 0
    Correction.....this is not what started the meltdown. Corrupt Wall Streeters, their derivative products, and the repeal of Glass-Steagall . is what gave us the crash....please get educated on this.
  • Tom C | | 03 Sep 2014, 08:04 AM Agree 0
    Crefin, my comment was not to blame the entire housing collapse solely on the government’s actions. You are correct Wall Street found ways to securitize junk Mortgage Backed Securities (MBS) packages into smaller tranche and receive an AAA rating from the credit rating agencies.

    My point, which you missed, is the government, national, state and local, set the laws and rules the citizens and business must live within. Sometimes these laws and rules have untended consequences, like the one we are discussing. Every homeowner in America felt this pain, in 2009 along there was over 7 trillion dollar lost in real estate values. That is just under 222 billion dollars of equity per second for the entire year to cover the 7 trillion.

    There is plenty of blame to pass around to all involved in mortgage financing, MBSs packaging and the housing industry however the direction of these activities were put into play by our government officials. Their intent may have been honorable in trying to increase low to mod ownership however the results were a disaster. Why do we now want to consider returning to that failed event?
  • XXXXXXXX | | 03 Sep 2014, 06:56 PM Agree 0
    I didn't see the part of the article that read "This means lenders will have to stick there necks out by offering risky mortgages to unqualified borrowers"
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