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A few days ago, an article appeared in the Financial Times revealing that “Last month, the government-sponsored mortgage finance agency Freddie Mac filed a proposal with its regulator, the Federal Housing Finance Agency, to enter into the secondary mortgage market, otherwise known as home equity loans”.The article’s author, Meredith Whitney, claims that if approved, this “could begin to unleash almost $1tn into consumers’ wallets. By the autumn, it could be on its way to $2tn”.That would be a tremendous stimulus to the economy.But is it a good idea?Putting aside for a moment concerns of its potential inflationary impact, the Global Financial Crisis was a credit crisis triggered by bad housing loans. Would allowing government-sponsored entities like Freddie Mac to unleash a flood of new loans risk repeating the sins of the past?For answers, we’re fortunate to turn to mortgage lending expert & housing analyst Melody Wright.Melody, who was on the frontlines of the meltdown in mortgages during the GFC, is highly concerned this new lending scheme, if enacted, will end up disastrously.Video Length: 00:59:03More By This Author:
Are Trillions Of New Loans About To Be Pumped Into The Housing Market?
