Show me one example of progress that the government has made where they have not just shifted the credit risk of our economy from one entity to another, or from the private sector businesses to the taxpayer. Still looking, I know.
Well, it looks like Ginnie Mae, or the Government National Mortgage Association, is the next big systemic risk on the horizon. The Wall Street Journal outlines it very clearly in “The Next Fannie Mae“. Basically, Ginnie Mae is selling all of the mortgages that Freddie and Frannie used to sell. So it’s loan growth has blossomed while Fannie and Freddie are dying.
“Ginnie May’s mortgage exposure is expected to top $1 trillion by the end of next year – or far more than double the dollar amount of 2007.”
The only problem is that Ginnie has looser regulations and insurance policies on their mortgages. Which is probably why it is growing so quickly.
“It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar?”
How could we let this happen? How could the government let this happen? Well, the government actually encourages this. The White House and Congress continue to approve more legislation extending the extra-large loan limits. It’s up to the people to do something about it. Either call your congressman to request change, or call your neighbor to warn them about taking out these mortgages.
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