Wednesday, December 02, 2009

Another gov't-induced housing bubble ~ By John Stossel

Commentary from WorldNetDaily
John Stossel By John Stossel Posted: December 02, 2009 ~ 1:00 am Eastern © 2009 The Federal Housing Administration announced this week that it wants tougher rules on mortgage lenders. It's about time. Maybe FHA got spooked by the recent New York Times story titled "Easy Loans to Wealthier Areas," which said: "In its efforts to prop up a shattered housing market, the government is greatly extending its traditional support of real estate, including guaranteeing the mortgages of middle-class and even upper-class buyers against default." The Times explained that San Francisco, one of the priciest real estate markets in the country, had no government-insured mortgages two years ago, but now "the government is guaranteeing an average of six mortgages a week here. ... The Federal Housing Administration is underwriting loans at quadruple the rate of three years ago even as its reserves to cover defaults are dwindling." And some of those loans are surely questionable. The Times explains that 27-year-old Mike Rowland and his friends were able to buy a two-unit apartment building for almost a million dollars. "They had only a little cash to bring to the table but, with the federal government insuring the transaction, a large down payment was not necessary." "It was kind of crazy we could get this big a loan," Rowland said. Yes, it was crazy. Such policies do not end well. Young Rowland gets that. Even the Times does: "With government finances already under great strain, the policy expansions are creating new risks for American taxpayers." READ FULL STORY >
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