The Return of Subprime? (mortgage, mortgages, housing, prices)

[lluvia]

Are we heading toward another subprime mortgage crisis?

“Today, the Fed is again ignoring the GSEs and their potential contribution to future instability. According to Freddie’s 2016 annual report, ‘Expanding access to affordable mortgage credit will continue to be a top priority in 2017.’ Fannie/Freddie have redefined ’subprime’ to a credit rating of below 620; previously, these firms and banking regulators had used 660 as the dividing line that defined a subprime borrower. Now by using the lower number, they may be buying even weaker mortgages than before the financial crisis.”
“The GSEs are wrapping new sub-subprime mortgages into the mortgage-backed securities they sell to the market. Fannie and Freddie guarantee these securities, and because the federal government stands behind the GSEs, there is little market discipline. Think about that: With regard to subprime mortgages we may now be in worse shape than we were before the crisis.”
“According to the Fannie/Freddie annual reports for 2016, it is surely the case that subprime mortgage issuance is one force driving house prices once again — up by about 30% over the past four years and now about back to the elevated peak in 2006. Why isn’t the Fed talking about this matter? Someone please convince me that ‘this time is different.’”

Are we heading toward another subprime mortgage crisis? - CNN.com

[SWFL_Native]

The whole system is rigged and everybody has their pocketbooks open again to make money.

Nobody is looking out for fundamental valuations and practical lending standards.

[BoBromhal]

I can't say I could clearly understand the op-ed piece.

If we're allowing Fannie/Freddie to go 40 points lower on a credit score now, that's not a good thing when there's not 10-20% down from the borrower.

[LifeIsGood01]

FHA allows 580 and up with 3.5% and below 580 score 10% down.

[forzalugano]

I would say no bubble like in 2008-9, the past market you have stated income loans with low down payments and low FICO scores. Today they have to verify the income, if FICO scores are low like on the FHA deal under 580 you need 10% in the game and proof of income to qualify.

In 2007 you could have a 520 FICO, state or makeup your income and put nothing down. They would sell the loan to Wall Street and pass of the risk to some investors.