Quote:
Originally Posted by mookiemookie
FNMA seemed to work just fine for 70 years before the crisis.
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Yes, until a demanded to make affordable housing available to everyone. Reduce down payment. Create interest only loans. Sub-prime. Before all of this down payments were a substantial amount. Upwards of 11% or higher. So, a 200k home you would require $22,000 down at 11%. Fair chunk of change to save. For most unobtainable. So again, drop down payment. Be extremely creative with loans. Toss in the new found credit card extravaganza as a result of getting home loan credit...bingo...in the money pit. Foreclosure, housing crisis.
It is evident the creative loan making, reducing requirements for a substantial loan and some folks just not reading what they were signing made the bubble bust.