This is a story Ed Morrissey caught at Hot Air and he is right, ABC News buried the lead but then again, that does not surprise me. The story concerns those no-doc loans that got the economy in trouble in the first place. You know, the loans that the government insisted bankers make, and gleefully backed then with the assurance of Fannie Mae and Freddie Mac. Well they are back.
It’s not Fannie Mae on the hook … but FHA … here’s the gist of the story. ABC reports that the no-doc “liar” loans are being made only to high net worth clients who can easily afford them. And besides, as the article points out, there’s plenty of equity for the banks to fall back on should things sour.
But then Ed catches this. No-doc “liar loans” are also being made to low income high risk borrowers as well, only this time its not Fannie Mae on the hook … it the FHA.
“This guy made $5 million in 2007 and 2008. He’s liquid for $10 million, and he’s borrowing 20% LTV (loan-to-value),” says Dessner. A no-doc loan to that kind of borrower shouldn’t be political dynamite, especially at a time when the Federal Housing Administration is making 95% LTV loans to low-income borrowers with poor credit and little savings, he argues.
Hard to believe? Not for me. This crowd has an agenda. It feels certain people have been denied a piece of the pie like housing or medical care and the Democrats continue to offer plenty of pie. But the bottom line here is the risk … short memories.
Say what? Well, the fact that the federal government has shifted its social engineering to FHA after all but destroying Freddie and Fannie should come as no surprise. Nor should it come as a surprise that they’re using the same mortgage-backed securities mechanism that created the global financial collapse to shed the cost of guaranteeing those loans. But one might have thought that the collapse of the housing bubble from overspeculation and irrational supply of credit would have taught Washington a lesson about interfering with the lending markets.
Go to Hot Air and read the whole thing.