Here we go again. Like its two predecessors, President Barack Obama's administration is pushing policies to make more home loans available to people with weaker credit, The Washington Post reports.
Officials say the policies will help power the economic recovery. The housing market is finally turning around nationally and lower-income earners would have a chance to buying in. But skeptics say it could open the door to the risky lending that caused the housing crash in the first place.
In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs - including those offered by the Federal Housing Administration - that insure home loans against default.
The administration's efforts come in the midst of a housing market that has been surging for the past year but that has been delivering most of the benefits to established homeowners with high credit scores or to investors who have been behind a significant number of new purchases.Banks are largely rejecting the lower end of the scale. After years of intensifying investigations into wrongdoing in mortgage lending, banks are concerned that they will be held responsible if borrowers cannot pay.
Those trends raise concern about proposals to ease lending standards, say the conservative American Action Forum. ".@washingtonpost reports WH push for lending to borrowers w/bad credit. Taxpayers will pay unless #FHA is reformed," he group (@AAF) tweeted. "We need responsible standards and reform that don't put taxpayers at risk of another bailout."
Via The Washington Post, and Politix.