This proves our government is run by complete idiots that never look at history and have no idea what happens in the real world.
Obama administration pushes banks to make home loans to people with weaker credit
Oh. My. Gosh! Do these people have no idea what happened a few years ago and why (at least one of the main reasons) it happened? Heck, 0bama has spent the last 4+ years blaming Bush for the bad economy that he inheritied because of the bank failures. TARP was supposed to bail the banks out, instead it paid off political buddies and huge donors, but that is what I expected to happen.
(Yes, I know TARP was passed under Bush, Karl. It was stupid use of tax dollars and nothing more than political gamesmanship.) Of course the Dems pushed it and the MSM carried the water for them and Bush was afraid of the lambasting he would get in the MSM if he did nothing. But I digress.........
From the article:
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.
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.
I would take the feds at the word....because the government always does what they say and they didn't go after any of the banks or mortgage companies that were forced by the federal government to make high risk loans.
"...would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.
and.... The bankers and mortgage companies certainly remember how the feds treated them after the collapse.....
But banks are largely rejecting the lower end of the scale, and the average credit score on FHA loans has stood at about 700. After years of intensifying investigations into wrongdoing in mortgage lending, banks are concerned that they will be held responsible if borrowers cannot pay. Under some circumstances, the FHA can retract its insurance or take other legal action to penalize banks when loans default.
“The financial risk of just one mistake has just become so high that lenders are playing it very, very safe, and many qualified borrowers are paying the price,” said David Stevens, Obama’s former FHA commissioner and now the chief executive of the Mortgage Bankers Association.
Who do these business people think they are by trying to reduce their risk and not run afoul of the feds. The lawsuits are insane by people who were 'tricked into purchasing more than they could afford'.
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