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How do we get these bozos off the bus?

January 13, 2016

Kevin Williamson writes about a new program at Fannie Mae (FNMA).

The Committee to Re-Inflate the Bubble strikes again.

In lieu of the usual complex regulation larded with special-interest favoritism, here is a simple mortgage rule that could and probably should be adopted: No federally regulated financial institution shall make a mortgage loan without the borrower’s making a down payment of at least 20 percent derived from his own savings.

Period, paragraph, next subject.

Instead of doing that, we are sprinting flat-out in the opposite direction, with government-sponsored mortgage giant Fannie Mae rolling out a daft new mortgage proposal that would allow borrowers without enough income to qualify for a mortgage to count income that isn’t theirs on their mortgage application.

The Committee to Re-Inflate the Bubble strikes again: We’ve just legalized mortgage fraud. […]

In his article, Williamson refers to an op-ed at Investor’s Business Daily that Jeff G passed along last week.

Fannie Mae Rolls Out Easy Mortgage, Catering To High-Risk Immigrants

Subprime 2.0: The White House is rolling out a new low-income mortgage program that for the first time lets lenders qualify borrowers by counting income from nonborrowers living in the household. What could go wrong?

The HomeReady program is offered through Fannie Mae, which is now controlled by Obama’s old Congressional Black Caucus pal Mel Watt. It replaces the bankrupted mortgage giant’s notorious old subprime program, MyCommunityMortgage.

In case renaming the subprime product fails to fool anybody, the affordable-housing geniuses in the administration have re-termed “subprime,” a dirty word since the mortgage bust, “alternative.”

So HomeReady isn’t a subprime mortgage program, you see, it’s an “alternative” mortgage program.

But it might was well be called DefaultReady, because it is just as risky as the subprime junk Fannie was peddling on the eve of the crisis.

At least before the crisis, your income had to be your own. But now, as a renter, you can get a conventional home loan backed by Fannie by claiming other people’s income. That’s right: You can use your apartment roommate’s paycheck to augment your qualifying income. Or your abuela.

You can even claim the earnings of people who are not occupants, such as your parents, under this program. […]

This program is brain dead. I don’t even rent to people with a 45% debt-to-income ratio; it’s too risky. And FNMA wants to write mortgages for them at that ratio? And with only 3% down? And based on income from who-knows-where?

I’d say this is some kind of spoof but it appears to be legitimate news. Ready for the next bail-out, bro?

I wonder who really said, "Insanity is doing the same thing over and over again and expecting different results."

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