The first point would probably take care of the problem FHA is having. If downpayments increased to 10%, I would expect the housing market sales volume to be cut by another half. Painful? Yes. Necessary? You bet. Getting underwriting back to realistic risk-reward ratios will cure most of the problems ailing our marketplace.
And then as a counterpoint there is the mindset of those in charge who are running the ship:
“I don’t think it’s a bad thing that the bad loans occurred. It was an effort to keep prices from falling too fast. That’s a policy.”
Barney Frank, chairman of the House Financial Services Committee on recent FHA lending.
Whoa?!
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