Obama to banks: "Make home loans to credit risks"

[Alan C.]

Obama administration pushes banks to make home loans to people with weaker credit

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.

Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.

Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.

They're trying desperately to keep the housing bubble from deflating completely by propping it up with various gimmicks and arm-twisting.

[Victor]

This is so funny in so many levels... tragic too. I'll share it on FB. This is great for one of those funny memes!!

[nathanm]

Just get the Chinese Government to co-sign your loan and you'll be fine.