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Why doesn't the government issue home mortgages?
Banks have proven they fail at "weeding out" risky mortgages.
The government lends at 0.25%, which would cut most mortgage payments in half for people. Instead, we get 4% from banks and they keep the profit.
The banks sell the loans back to the government, and so we are all on the hook for the risk anyway.
The only downside is banks make less profits.
"the government was the entity that FORCED banks to give mortgages to unqualified home buyers."
LOL, that explains why banks are being sued by the government for fraudulent lending practices?
4 Answers
- Anonymous8 years agoFavorite Answer
1 the government loans the money to the banks
2 the government underwrites the mortgages through Freddie Mac and Fannie Mae.
3 the government was the entity that FORCED banks to give mortgages to unqualified home buyers.
If the government had left the required down payment at 10% we never would have had a housing crisis.
- Bob BLv 78 years ago
The reason that banks fail at "weeding out" risky borrowers is that if they do weed them out, the government sues them for discrimination. Study up on the Community Reinvestment Act or CRA. It started under Carter, was put on steroids by Clinton, and created the housing bubble under Bush/Obama that crashed the economy.
- ?Lv 78 years ago
Geez, just when you think it can't sink any lower here...it does.
Tell ya whut, hon, why'ncha google "Fannie Mae" & "Freddie Mac", and then git bakk to us, whutchasay?
