Here are two contrasting opinions of the proposed changes:
"'Three percent [down payments] can disappear and become zero real quick,' said Mark Calabria, director of financial regulation studies at the libertarian Cato Institute. 'This is the sort of thing that gets people underwater.'"
"Still, the potential agreement 'would allow credit to flow more freely to lower- and middle-income households,' said Mark Zandi, chief economist at Moody's Analytics. 'That's vital to getting the housing recovery moving forward.'"Perhaps most importantly, as mentioned above the changes would directly benefit low-income and middle-income families and (possibly) give them an opportunity to buy houses. What do you think the outcome of this policy would be? Would it spur on the housing market, or would it just create another risky mortgage lending atmosphere (similar to the one we saw pre-2008?) Are you in favor of the proposed changes? Read more here.
The author seems somewhat biased towards the "opportunity creating" side of the argument so I feel more prone to agree with his conjecture. Between both sides, it I think David Stevens said it best in stating that their just needs to be more clarity for lenders. He states, “Assuming Director Watt announces some new framework to give better clarity for lenders to extend credit to more qualified families, this will be a good step forward for the housing market." So, it looks like if they approach this with less ambiguity and more clarity (like the article states), I am in favor of the proposed changes and I believe that it would spur the housing market.
ReplyDeleteThe idea of lowering interest rates to help the housing recovery move forward is a great one. I don't think that lowering the rate would create another risky environment or a 'bubble" because I think that the government has better policies in place to ensure that mortgages are granted to people who can actually afford to pay them.
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