Secular Café: Are we seriously going down this road again?

Secular Café For serious discussion of politics, political news, policy, political theory and economics and events happening round the world

Are we seriously going down this road again? Apr 7th 2013, 04:05 http://www.washingtonpost.com/busine...5_story_1.html Obama wants banks to offer housing loans to riskier borrowers. Much like the affordable housing act or community reinvest acts, Obama is guaranteeing banks insurance against risky loans in hopes that banks give out loans to these borrowers, borrowers with credit scores around as low as 620 to 680. Now, we know what caused the catastrophic collapse in the housing market in 2008 and we are heading down pretty much the same road by encouraging risky behavior in the mortgage sector. These loans will be interest deductible i.e. government pays back your interest paid in forms of reductions in your annual taxes. Also,down payments as low as 3.5% of the value of the homes would be good enough to secure a loan which means that the loan to value ratio is low enough to be considered an unsafe investment by any bank in the world.

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