*The purpose of this post is to discuss possible weaknesses arising in the housing market. This post is not about politics or proposed policy. In order to keep the thread from getting locked, please refrain from commenting on anything other than the housing data.*
Fascinating article yesterday in the Wall Street Journal: https://www.wsj.com/opinion/here-comes- ... mail_share
The article implies that there are a number of growing concerns in the housing market reminiscent of 2008. We've been collectively told that this market is nothing like 2008 because the mortgage standards are much higher. This article presents a counterpoint to that argument. Perhaps we're headed towards another housing bubble, this time propagated by Fannie Mae and Freddie Mac.
Notable quotes:
"The Consumer Financial Protection Bureau in 2013 effectively barred lenders from issuing mortgages to those whose total debt payments would exceed 43% of income. Yet the CFPB rule exempted government-backed mortgages."
"About 70% of recent Federal Housing Administration loans and 40% of mortgages backed by Fannie and Freddie have debt ratios that the bureau considers risky. That’s up from 30% and 16%, respectively, in 2012..."
"Fannie and Freddie have allowed buyers to take out mortgages with down payments as low as 3%. Harking back to the bubble days of the mid-2000s, personal gifts, lender assistance and government grants can count toward the amount. Some lenders are letting buyers take out second mortgages to make down payments."
"Three-fourths of recently delinquent Fannie and Freddie homeowners have “good” or better credit scores. Call it grade inflation for credit scores.
A series of events have led home buyers to appear more creditworthy on paper. Credit bureaus have removed most medical debt from reports since 2022. Student-loan defaults were also almost entirely wiped out with the Biden administration’s forbearance."
"The FHFA in May instructed Fannie and Freddie to extend the duration of mortgages and cut principal and interest payments by 20% for homeowners facing 'hardships.' ... no documentation required."
Does this feel like a "subprime is contained" moment? Are problems starting to materialize in the housing market, or is the WSJ just trying to get clicks?
*Again, this is not about economic policy or politics. I am speaking to the specific data provided in this article by the WSJ.*
Fascinating article yesterday in the Wall Street Journal: https://www.wsj.com/opinion/here-comes- ... mail_share
The article implies that there are a number of growing concerns in the housing market reminiscent of 2008. We've been collectively told that this market is nothing like 2008 because the mortgage standards are much higher. This article presents a counterpoint to that argument. Perhaps we're headed towards another housing bubble, this time propagated by Fannie Mae and Freddie Mac.
Notable quotes:
"The Consumer Financial Protection Bureau in 2013 effectively barred lenders from issuing mortgages to those whose total debt payments would exceed 43% of income. Yet the CFPB rule exempted government-backed mortgages."
"About 70% of recent Federal Housing Administration loans and 40% of mortgages backed by Fannie and Freddie have debt ratios that the bureau considers risky. That’s up from 30% and 16%, respectively, in 2012..."
"Fannie and Freddie have allowed buyers to take out mortgages with down payments as low as 3%. Harking back to the bubble days of the mid-2000s, personal gifts, lender assistance and government grants can count toward the amount. Some lenders are letting buyers take out second mortgages to make down payments."
"Three-fourths of recently delinquent Fannie and Freddie homeowners have “good” or better credit scores. Call it grade inflation for credit scores.
A series of events have led home buyers to appear more creditworthy on paper. Credit bureaus have removed most medical debt from reports since 2022. Student-loan defaults were also almost entirely wiped out with the Biden administration’s forbearance."
"The FHFA in May instructed Fannie and Freddie to extend the duration of mortgages and cut principal and interest payments by 20% for homeowners facing 'hardships.' ... no documentation required."
Does this feel like a "subprime is contained" moment? Are problems starting to materialize in the housing market, or is the WSJ just trying to get clicks?
*Again, this is not about economic policy or politics. I am speaking to the specific data provided in this article by the WSJ.*
Statistics: Posted by PNWpilot — Mon Aug 19, 2024 9:05 am — Replies 13 — Views 717