The Federal Housing Finance Agency (FHFA) announced rules this week that will make it easier to get government backing for a mortgage loan. In some cases, mortgage applicants won't even have to make a down payment.
This all goes a little too far, says MarketWatch columnist David Weidner.
That's not to say there is no problem, he writes. Average Americans are essentially cut off from credit. So the FHFA is prodding home lenders to make more home loans, Weidner says.
"The FHFA and the Obama administration are both worried about the amount of credit available to the average American. It’s an epidemic problem," he says. "The government is essentially saying: 'Go ahead and lend; we’ll hold the paper.'"
"But in trying to ease credit and turn a mythic housing recovery into a real one, the FHFA may be overreaching."
And why is that? "You know exactly who’s going to be taking out those loans: People who can’t afford them," Weidner says. "You know how this new policy is going to play out."
Experts say the housing choices made by those who have been shut out of mortgages in recent years due to their foreclosures or short sales will be important.
"The behavior of these potential boomerang buyers will be a big part of shaping the U.S. housing market going forward," Daren Blomquist, vice president at RealtyTrac, told The New York Times.
"The bigger question now becomes how many have the stomach for homeownership again and how many will stay as long-term renters."
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