Study Shows a Pattern of Risky Loans by F.H.A.

[JohnnyRingo]

4. Well researched and stated.

You make a great point that if house prices rise faster than income, the prices will eventually fall... hard. Seems obvious now, and you're likely right that banks had a lot of stock in handing out perpetual loans on the same property.

As I understand it though, there were five times as many private mortgages that fell into foreclosure than federal loans during the first year of the Great recession. Perhaps that's because deregulation and cheap interest rates drove the market and created a national army of 15,000 realtors scouring neighborhoods searching for prospects, so the low cost loans offered by the govt were a small slice of the overstuffed pie.

The "American Dream Downpayment Initiative" as signed in December 2003 allowed for up to two hundred million dollars a year through 2008, but never received more than twenty five million. The private sector banks easily topped that for "well qualified borrowers" and were left holding the bag along with the insurance giant AIG.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/affordablehousing/programs/home/addi