Loans For Low-Income Buyers
“1992 called and they want their housing policy plan back”
The government announced the latest set of Affordable Housing Goals for Fannie Mae and Freddie Mac. When asked about the dangers of expanding mortgage help for low income homeowners, Collingwood Chairman, Tim Rood, told David Asman from Fox Business Network’s Cavuto Coast-to-Coast that the real issue isn’t the expansion of opportunities for households who can actually repay. Instead, “the challenge is that we are not being very creative in how we are trying to achieve these housing goals. We have forgotten all the issues surrounding moral hazards. If you focus on the parachutes on these credit paradigms instead of the penalties you get a lot of irresponsible behaviors.” We need to create “sustainable situations” for borrowers, which are more likely based on positive partnerships with lenders than the punitive relationships that are so prevalent in the regulatory environment of today. “There is some value in these quota systems provided that you are being a little more innovative than we were in 1992.” However, we cannot simply have “creditor/debtor relationships, we’ve got to be more creative”.