Got bad credit? Want to buy a home? You're in luck! President Obama is ramping up the country for housing bubble 2.0 as he urges banks to loan to people with poor credit so they can purchase a home. What could go wrong? Oh just about everything. And don't worry, the government is going to promise banks everything will be just fine.
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.
Shorter version: President Obama's crappy economy has caused people's credit to decline and even though the economy isn't much better (and neither is their credit) he wants them to buy a home with money and credit they don't have. Fantastic. As a reminder, the housing market crashed after the government forced banks to lend to people who 1) shouldn't have been applying for a housing loan in the first place 2) had no way to pay a housing loan back 3) never intended to pay back the housing loan in the first place.