It's not such a terrible thing but it may not necessarily be the end result, as the Wuli's post #18, on Canadian housing market and ownership rate, shows. In other words, housing prices might have to find the "natural" ownership rate...
Investors in a high risk mortgage would realize a much higher return in their investment.
Reward would become commensurate with risk, and that is how free markets work, i.e., free from distortion of government's influence and direct or indirect (mandated or incentivized) malinvestment.
Yes. We have it now by way of hard money lenders. Borrowers with terrible credit & unverifiable income have always been able to get mortgages—provided they have 30-40% down & a willingness to pay loan shark rates.
Many if not most of those hard money loans will go south, the lenders have priced that into the loan.
No problem for me—again, your hard earned tax money & mine isn’t goint into it. Let borrower & lender figure out what works for them. I don’t care.