Fannie Mae will buy 97% LTV mortgages

[Andrew Eaton]

Saw FNMA article this morning. "Fannie Mae will buy 97% LTV mortgages"

You must be joking. [looks to see if this is an Onion article]...

I wish I were joking.

Haven't we been here and done this? This didn't end well the last time around.

But wait, this time it's different!

http://www.housingwire.com/articles/31783-fannie-m...

[Cal C.]

@Joel Owens 

this is not a normal cyclical event.  This is plain and simple government interference into the market.  The President made absolutely sure that the person he picked as the chairman of the FHFA, long time Dem Congressman Mel Watt, would loosen up Fannie's and Freddie's lending standards. Something that the previous chairman flatly refused to do FOR OBVIOUS REASONS!   

So now we have Mel Watt taking the place of longtime Dem operative Jim Johnson, the former Fannie CEO who loosened up lending standards back in the 1990s.  

As in the 1990s the banks thus far are refusing to go along so I'm sure there will be some lawsuits which force the banks to loosen their overlays. I wonder if there will be a new HUD secretary, like Andrew Cuomo, HUD head 1997-2001, who brags about forcing Fannie and Freddie to buy subprime mortgages like Cuomo did. That act of unbelievable stupidity certainly didn't hurt his political career since he is now Governor of NY.

It saddens me to think of all of the people who will be hurt by this move.   I wish everyone could own their own home, but as even Barney Frank said 'government subsidies should be focused on affordable rental housing, not in pushing low income people into owning homes that they can't afford.'

Bottomline-it will take time, but this will be a tragic move on the government's part. 

 @Albert Bui a 2% change in down payment requirements may not seem like a lot but it does when you consider almost 50% of Americans can't come up with $2,000 in 30 days.