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WSJ: New Appetite for Mortgage Bonds That Sidestep Fannie and Freddie

Wall Street firms are again packaging and selling mortgages that the government-backed firms can’t or won’t back

"Lenders also have restarted making loans that don’t conform to the standards Fannie and Freddie require. Some use alternative documentation, such as bank statements instead of pay stubs, to verify borrowers’ income."

Comments

  • And those lenders should be allowed to crash and burn if it comes to that.
  • Yes-file that under "here we go again..."
  • The requirement is for self-employed individuals, not those who work for private companies or in public sectors. In the past, the banks require to see 2 years of tax return so to establish the income.
  • Old_Joe said:

    Yes-file that under "here we go again..."

    You beat me by 2 seconds. :)

    History may not repeat, but it sure as s--t rhymes...
  • Whitesnake's Here I Go Again:

  • Maybe another crash, and then another investment-of-the-decade opportunity in performing non-agencies that got marked down with the trash. I wouldn't complain if the latter happened again.
  • edited August 26
    I remember shopping for a mortgage loan in the spring of 2007 when we were purchasing a winter home on the gulf coast of Florida. One lender (not the one we selected) didn't want to see any documentation of household income...what the application form stated was all they wanted to see. It doesn't sound like things are that bad yet. It sounds like we are still in the "I don't tell the IRS what I really earn" stage of the evolution of the process.

    It will be interesting to see if the Fed takes notice this time around. My faith in their information gathering capabilities dove in 2007 when they continued to be unconcerned about the housing bubble after I observed on the ground in Florida how insane the mortgage market had become. ( Fed: Mortgage Defaults Won't Hurt Economy )
  • That is totally nuts. In 2008, house value took a significant hit in addition to defaulting on their mortgages.
  • davfor said:

    My faith in their information gathering capabilities dove in 2007 when they continued to be unconcerned about the housing bubble after I observed on the ground in Florida how insane the mortgage market had become.

    I observed the same thing in 2002 buying a home. We had the request in for what we needed (and about the most we felt comfortable borrowing), and the lender's reply was to offer to lend double what we asked for.

    I was very surprised that the bubble lasted so long after that.
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