FHA-Backed Loans: The New Subprime
The Bear on Nov 24 2008 at 4:50 am | Filed under: Economy
The same people whose reckless practices triggered the global financial crisis are onto a similar scheme that could cost taxpayers tons more.
As if they haven’t done enough damage. Thousands of subprime mortgage lenders and brokers—many of them the very sorts of firms that helped create the current financial crisis—are going strong. Their new strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of modest means.
You read that correctly. Some of the same people who propelled us toward the housing market calamity are now seeking to profit by exploiting billions in federally insured mortgages. Washington, meanwhile, has vastly expanded the availability of such taxpayer-backed loans as part of the emergency campaign to rescue the country’s swooning economy.
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