naked capitalism: Freddie, Fannie to Provide 125% LTV Mortgages, Worse Than Extremes of Subprime Frenzy
They’ve been testing this for a while. I don’t find it as appalling as Yves does. I think there are some assumptions in here but I believe that these guys have enough access to high quality data to make sure they’re well tested.
Lousy endgames leave buyers not highly motivated to work hard to make payments when adversity arises. They realize, correctly, that they are better off not throwing good money after bad.
But this program nevertheless suggest that the authorities sincerely believe that current price levels for housing are the result of panic, and not a return to historic relationships of housing prices to incomes and rental prices.