Obama is such a giver! Subprime 2.0 to be joined with Credit Score Inflation! [Darleen Click]
All you citizens who work hard and pay your bills on time …
In an orchestrated assault on the credit standards underpinning mortgages, no fewer than four Obama agencies have gone to war against FICO. If politicians don’t want another bank crisis, they’ll stop the attack.
Home loan approvals hinge on FICO credit scores. But the Obama regime views FICO scoring as too strict, cutting off millions of low-income minorities and immigrants from mortgages. So it’s pressuring Fannie and Freddie, which control 90% of the mortgage market and set the underwriting standards for the entire mortgage industry, to abandon FICO for a softer standard in evaluating credit risk […]
The administration’s goal is to inflate credit grades by the end of 2016 and socially promote an estimated 50 million deadbeats and unbanked, unscorable immigrants from the rental market to the mortgage market.
The scheme, of course, will inject a massive new risk into the financial system and beckon another crisis.
But the affordable-housing zealots at the Federal Housing Finance Agency, HUD, the Federal Housing Administration and the Justice Department don’t care. They’re bent on expanding “the credit box,” which has shrunk since the last housing bust they caused, and the only way to do that is to inflate credit scores.
FHFA chief Mel Watt, the former Democrat congressman who before the crisis demanded Fannie and Freddie back loans for welfare recipients in his district, has instructed Fannie and Freddie, the failed mortgage giants now under his control, to come up with “alternative credit scoring models.” They’re expected to make the transition sometime this quarter. […]
This is coming at a time when Fannie is launching a subprime mortgage product called HomeReady that caters to immigrants with weak credit and limited income.
What could go wrong?2007, housing bubble, liar loans