Skip to comments.Housing Finance System? Easy, Until It Crashes
Posted on 07/28/2010 9:22:39 AM PDT by gartrell bibberts
Suppose you were advising policymakers in an emerging market country on how to set up a housing finance system. First, you tell them that people don't have to save much, if any, cash for a down payment, and they don't need to prove they can afford the monthly payments, either. If house prices rise, lend them more!
If the borrower cannot subsequently pay, let him walk away with no recourse to his income or assets, and qualify him again for another loan in a few years.
Concerned with payment shock when interest rates rise? Then prevent his interest rate from ever rising for 30 years, but lower it every time interest rates decline, with no penalty.
(Excerpt) Read more at americanbanker.com ...
The housing market has been an ongoing scam.
Since it became politically correct to have small families the clock on smaller demand for housing has been ticking.
The scams on low down payment and no proof of income were
simply band aids to move the bubble down the road to the next administration.
A house is only worth what someone is willing to pay for it.
Wen supply exceeds demand it becomes a buyers market and prices will go down. This will continue as long as politically correct family size continues.
Many other entitlement issues will also be on the chopping block when the next generation cuts off the credit card.
What I love is how the liberals in ACORN demonstrated and made every effort to make housing available to people who could not give down payments, or show proof of income. They demanded that the government force banks to give these loans.
Now they picket and protest the banks for “predatory lending” that the government forced upon them at their request on the first place!