Bernanke encourages banks to offer "new" mortgage products to low income buyers, "Such products could be designed to avoid or mitigate the risk of prepayment shock and to be more transparent with respect to their terms," Bernanke wrote. [Washington Post]
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Standard loans to low income buyers? I think those are called federal backed loan programs. HUD, VA and FHA. Those programs were created to help low income people obtain homes without getting screwed or ignored by lenders. What a novel idea.
It still amazes me that the industry would rather loan money to people who have good credit but can't afford to pay loans back, rather than lend it to people who can afford it but have less than stellar credit.
I think this is great. Low-income buyers should have the opportunity to take advantage of declining housing prices without being taken advantage of in turn.
In case y'all don't know, deck chairs from the Titanic are worth quite a bit of money. One sold at auction in 2001 for $60,000...
So... maybe they're on to something.
Maybe they should have 100 year mortgages in this country.
This is great, loan money to people who cant pay it back. Wait I think we tried that its called subprime crisis.
Maybe loans would be more affordable if HOUSES were more affordable.
It's ridiculous.
My gosh! This is like asking a junkie to drop Methadone for the real thing. Plus if you remove the ARM aspects, you are left with a conventional. Considering how the low docs is how we got here, I don't think they will fly any more in a CDO as part of some investors portfolio anymore.