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Obama Orders Same Policy That Sparked Mortgage Meltdown
Government: Lend to less qualified or face discrimination lawsuits
WND
Undaunted by the housing market collapse that crashed mortgage banks, cut the rug from underneath homeowner equity and slammed taxpayers for billions in bad loans, the Obama administration now has launched a major push for banks to hand out mortgages to those with “weaker credit,” including some on public assistance.
Edward Pinto, a former top executive at Fannie Mae, now with the American Enterprise Institute, confirmed to WND the government’s adoption of a strategy that requires banks to lend to less qualified borrowers or face discrimination complaints.
Just like before.
He is outraged, as are other housing industry experts and economists.
“This push by FHA will continue to set up for failure the very families and neighborhoods its mission is to help,” he told WND.
Economist Stan Liebowitz told WND the move is an “unnecessary risk being imposed on the economy for no gain except some political chits being generated by politicians for their own venal purposes.”
Liebowitz, an economics professor at the University of Texas at Dallas, said the federal government is once again pushing banks to lower lending standards, which is “exactly what the government did starting in the mid 1990s.”
Yet the worst problem with the administration’s approach could be that it fails to resolve a disturbing underlying issue: the large number of homeowners with negative equity – or homes on which they owe more than the value.
Nobel Prize-winning economist Vernon Smith told WND that 22 percent of homeowners are in negative equity, which places the nation in bad company.
Reposted with permission.
