FNMA and FHLMC doing it again?
Hello All.
I think it's safe to say that by pushing banks to make ridiculous mortgage loans leading up to the "implosion", and promising to back these loans (with dollars it did not have) in the case of default, was a substantial contributor to the bubble build-up.
Though I'm no longer wired in directly to the leveraged purchase element of the buyer market, it seems to me that a huge faction of OO buyers these days are again finding support from the dubious benefactors we know as Fannie Mae and Freddie Mac.
Does anyone else have an eerie sense that a similar build-up of unjustifiable (based on traditional financial parameters) mortgage loans amongst buyers? Notwithstanding the edification of the seller, investors and OO sellers alike, upon finding a buyer who can procure financing, might it be that this intensely insidious pattern of risky lending on little-to-no down payment, federally-backed loans is again establishing a deep footprint? While not overlooking that loan screening is "rigorous" and credit is "tight" in today's market, doesn't it seem odd that so much of this institutional capital is again being backed by fannie and freddie?
My concern is that in the collective eagerness of folks to return to a bullish RE mkt will cause a general non-vigilance to the underlying "catalysts" to "growth". I fear that our pattern of expecting growth as a matter of "when", and not "if", will misdirect our scrutiny of key underlying factors of movement in the markets.
Summarily, I ask you, are we setting the table for an aftershock?
Peace,
Vince