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Not Again! Replay of U.S. Housing Crisis Looming?

Feds again pushing banks to loan to customers with weak credit.

House Underwater

The last big crash in the American housing industry, running roughly from the end of 2007 well into Barack Obama’s first term as president, has been blamed on a number of different factors.

But nearly every assessment cites the government’s lowered standards for loaning money as a contributor.

In fact, Peter Wallison, a member of the Financial Inquiry Commission that reviewed the disaster, contends that without the government’s actions, there would have been no housing crisis.

In the Atlantic magazine in 2011, he cited pressure from Democratic U.S. Rep. Barney Frank and others to have government mortgage institutions, Fannie Mae and Freddie Mac, move aggressively into the market for “no-down payment loans,” “subprime” loans and “low quality” loans.

“There is no doubt that the government created the demand for these weak loans; less than 30 percent (7.8 million) were held or distributed by the banks, which profited from the opportunity created by the government,” he wrote then. “When these mortgages failed in unprecedented numbers in 2008, driving down housing prices throughout the U.S., they weakened all financial institutions and caused the financial crisis.”

So can American now expect another such crisis in which millions lose their homes in foreclosure and major banking institutions teeter and crash?

The circumstances could be aligning, according to the Washington Post, which reported a renewed movement to force lenders to loan money to customers who may not be able to repay.  CLICK HERE to read entire article.


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