Posted by Karl Denninger
The proposed rule would also establish a method for evaluating and rating Enterprise performance in each underserved market for 2010 and subsequent years and describes the transactions and activities that would be considered for compliance. The Enterprises would be evaluated on four statutory assessment factors: 1) the development of
loan productsnew ways to rip people off, more flexible underwriting guidelineswillful blindness to unsustainable debt-service ratios, and other innovative approaches to providing financingother ways to rob the taxpaying and homeowning public; 2) the extent of outreach to qualified loan sellers and other market participants; 3) the volume of loans purchased relative to the market opportunities available, subject to the statutory condition that FHFA not establish specific quantitative targets; and 4) the amount of investments and grants in projects that assist in meeting the needs of the underserved markets.
Well there you have it. Congressional and FHFA “mandates” to make loans that are unsustainable and impossible to justify on any sort of conservative, fact-based analytics, which incidentally demand that the solution to this problem is lower prices for homes, which then leads to sustainable mortgages with no more than a 36% back end ratio and 20% down payments!
Thank the lobbyists and Congress, once again, for refusing to deal with the actual problem – overly-inflated real estate prices, which incidentally, still exists, and instead directing the taxpayer to bend over once again.