Opinion | Yet More Mortgage Stupidity
An Oct. 3 piece in The Washington Post laid out a financing reality that comes across as surreal to those of us who remember how devastating to shareholder value and job creation the mortgage financing collapse of 2008 was — and that should be all of us.
According to data from the Urban Institute, as referenced in The Post, the federal government now backstops more housing debt than at any point in history.
The reporters at The Post also note that a growing number of homeowners face debt payments that amount to nearly half their monthly income.
About 30% of the loans Fannie Mae approved last year, according to The Post, exceeded this debt payment to household income threshold, up from 14% in 2016.
Sound sustainable? It’s not. So what’s going on here?
Why is this runaway train of irresponsible lending allowed to continue? Lenders and consumer groups demand these conditions, according to the article.
And guess who pays when this creaky machine cracks. Why, the taxpayers do, to the tune of hundreds of billions of dollars.
AIG’s reputation got ripped to shreds during the last collapse, because the buck stops with insurers. They are contracted to pay up when schemes of this magnitude collapse.
Yes, I used the word scheme, a collusion between lenders and their enablers to crank out as much business as will yield them profits in the short term, and damn the taxpayers, fools that they are.
No one wishes for a recession, but we’ll see just how badly this one will smart when the next recession does come. &