We learned nothing from the last financial crisis. The housing market is set to collapse, again, and a key culprit, again, is artificial demand created by government policies. Lower FICO scores correlate with higher risk of loan default.

The Federal Housing Administration is a big reason for falling credit scores. So are Fannie Mae and Freddie Mac. Meanwhile, home lenders are approving more debt-strapped borrowers. Borrower debt loads have been creeping higher each year sincewhen Ellie Mae first started tracking such data. Not sinceit noted, have lenders taken on so much credit risk, and it says the hazard will continue to grow this year: This is especially true in hot spots like California, where subprime-mortgage lenders offering interest-only loans with no FICO-score requirements are cropping up from the ashes of Countrywide Financial, the bankrupt Calabasas, Calif.

Nationwide, almosthomes were sold and then resold last year — the highest level since In fact, according to RealtyTrac, flipping in a dozen metro areas — including New York, Los Angeles, San Diego, Miami and Jacksonville, Fla.

Stock Market Crash Date, Causes

Analysts warn sales from home flipping artificially inflate home prices, increasing the risk of a housing bubble. The last housing bubble began inflating in and lasted 10 years before finally bursting inin a monumental collapse that crashed markets the world over.

Analysts say the current real-estate bubble started in latewhen housing values bottomed. Like the last bubble, this one is fueled by artificial demand from government-induced lax lending standards and accommodative interest rates set by the Federal Reserve.

When home-flipping numbers go up, it is usually an indication that the housing market is in trouble. Yet these kinds of borrowers are qualifying for such home loans thanks to the liberalization of credit terms. While the rules do recommend a DTI ceiling, they never set minimum down-payment or credit-score requirements.

All three agencies have slashed down-payment and other requirements under pressure from Obama regulators, who include, most significantly, former Congressional Black Caucus leader and Obama appointee Mel Watt, head of the new Federal Housing Finance Agency, which now obama crash stock market effect on economy Fannie Mae and Freddie Mac. Last year, Fannie Mae launched a new subprime-mortgage product called HomeReady that caters to recent immigrants with weak credit and limited income.

At least before the crisis, your income had to be your own.

All you have to do in exchange is take a four-hour online course on the responsibilities of homeownership. You can be maxed out on credit cards and even live in government-subsidized housing. Why would Fannie offer the options profit calculator excel kinds of poorly underwritten loans that forced it into bankruptcy?

These are the same government affordable-housing quotas that plunged Fannie how to buy money on tdu2 Freddie into the subprime market under the Clinton administration.

In fact, HomeReady caters to illegal immigrants by obama crash stock market effect on economy borrowers to waive Social Security documentation. Home-loan approvals hinge on FICO credit scores, which have a strong track record of predicting risk, says Pinto, who formerly worked as chief credit officer at Fannie Mae.

Stock Market Crash Date, Causes

They are the bedrock of the modern financial system. The plan, of course, would inject a massive source of new risk into the financial system and potentially speed another mortgage collapse. The Federal Housing Finance Agency, the Department of Housing 30 second binary options wikihow Urban Development and the Federal Housing Administration, as well as the Justice Department, are running a full-court press on lenders.

Watt hopes a decision can be made on transitioning to a new credit-scoring model sometime over the next few months. The hope is that the new standard will lift scores by as much as basis points, thereby qualifying millions of low-income African-Americans with subprime credit and Hispanic immigrants with thin credit for home loans. Of course, those same minority homeowners will be hit the hardest when the entire house of cards collapses.

Once again, real-estate prices are outstripping income. But this time, income levels are much lower — real wages fell again in February — and when the bubble bursts, the pain will cut deeper. The Unauthorized Report About What Really Caused The Great Recession. Angry leftists are determined to disrupt Trump's campaign.

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View author archive email the author Get author RSS feed. What goes up… The last housing bubble began inflating in and lasted 10 years before finally bursting inin a monumental collapse that crashed markets the world over.

Goodbye FICO Home-loan approvals hinge on FICO credit scores, which have a strong track record of predicting risk, says Pinto, who formerly worked as chief credit officer at Fannie Mae.

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