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Wednesday, May 11, 2011

Federal Mortgage Guarantees May Be Cut Back


“By summer’s end, buyers and sellers in some of the country’s most upscale housing markets are slated to lose one their biggest benefactors: the deep pockets of the federal government. For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans…. But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone.” (New York Times)

Why are any mortgages at all guaranteed by the government?

FEE Timely Classic
“Bootleggers, Baptists, and Bailed-Out Bankers” by Bruce Yandle