Fannie Mae Home Ready Program- Repeat of 2008?

Question

http://news.investors.com/ibd-editorials/010716-78...

The above article explains a new program Fannie Mae will be instituting that allows people to come together (whether related/living together or not) and pool "income" amounts to qualify for mortgages.

The article poses the idea that this is what called the mortgage crisis and huge increase in foreclosures across the country from 2008. What do you think this means going forward? Will the same thing happen again this time?

Melissa Gittens · Answer

Thanks for the insight Chris Mason

Chris Mason · Answer

Oh, and incidentally:

* House Hacking now has a route to viability other than FHA, if for some reason your situation will not let you check one of FHA's little boxes.

Chris Mason · Answer

Article is sensationalist, contains racial coding in order to appeal to folks that dislike African Americans and Latinos, and factually wrong on several points.

I'm not going to go paragraph by paragraph and correct the author, I'll just say that:

* Yes, FNMA HomeReady is now a thing.

* No, this isn't recession-causing nonsense.

* Use of boarder income must be documented over 9 of the 12 most recent months. As investors you get to use anticipated/hypothetical rental income to qualify, so this is more conservative than the requirements for investors.

* Use of non-borrowing household member income is not calculated into DTI, it's simply a compensating factor to allow DTI to go up to 50%. (FHA, I can go to 54.99% DTI; this is more conservative).

David Dachtera · Answer

No. 2008 was caused by predatory lending: using "tricks" to put people into home loans which they, ultimately, cannot afford claiming they'd be able to refinance before the unaffordable payments kick in since appreciation was being driven by supply and demand. In that case, demand was being artificially generated by these loans. The banksters confessed to this.

This time around, the only thing holding property values at bay IS the knee-jerk response of the lending industry which is keeping borrowers out of the market. Otherwise, demand would be like water through a breached levee and home prices would launch into inter-stellar space.

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."- DJ Benedict