No Lessons Learned From Mortgage Crisis

June 10, 2008 04:45 PM
by Rachel Balik
Aspiring homeowners can borrow 105 percent of the price of a home under a new mortgage program from government-chartered agencies.

30-Second Summary

Some aspiring homeowners are so financially strapped that they can’t even afford to cover the closing fees on a home. To facilitate purchases for this low-income group, federal loaning agencies Freddie Mac and Fannie Mae have made it possible to borrow up to 105 percent of the price of a home. People with poor credit and no money in the bank will also be able to secure these mortgages with no down payments.

The availability of these loans is limited to the amount of insurance these agencies can secure on them, and the mortgage insurance industry has been struggling since the recent sub-prime loan crisis. “I don't have specific numbers, but … it’s just intuitive that a lot of the activity has fallen off in light of what's going on” a spokesman for Freddie Mac said.

Despite that and other warning signs, programs like Freddie Mac’s Home Possible Mortgages remain available. The government has made other efforts to amend the current crisis and prevent future loss in the form of stricter regulations and bills in Congress.

Headline Link: ‘Mortgages With No Money Down Still Available’

Background: The Mortgage Crisis and Establishing Regulations

Reference: Regular and Home Possible Mortgages


Most Recent Beyond The Headlines