Freddie Mac has New 3 Percent Down Plan
It’s been a while since the US made a wholesale push to get more cash and income-strapped households under the umbrella of the affordable house. Three years to be exact. Now nationalized housing agency Freddie Mac has new 3 percent down plan.
Even with the modest requirements, the mortgage program Freddie Mac introduced in 2015, for most Americans who needed access found themselves excluded. The program was designed for qualified (that being the key word) low-and moderate-income borrowers – i.e., Millennials. FHFA Director Mel Watt told Congress last year that Freddie’s 3 percent down payment program was continuing to grow. It just wasn’t growing fast enough. While putting 3 percent down payment may not have been especially challenging for most Americans, having even the modest income required to go along with it, was.
Freddie Mac has New 3 Percent Down Plan
So according to Zero Hedge, Freddie Mac has new 3 percent down plan. It launched a widespread expansion of the offering. It announced that it is rolling out a new conventional 3 percent down payment option for qualified first-time homebuyers. Effectively, it was the same as the 2015 program… with one small difference: there would be no geographic restrictions; and more importantly, there are no longer any income restrictions.
Assuming I understand the program correctly, first-time buyers need ONLY the 3% down payment to buy a house. That means no income!
Yes, Freddie Mac has new 3 percent down plan. There even is a safeguard in place, I say with tongue in cheek. When all the borrowers are first-time homebuyers, at least one borrower must participate in homeownership education in order to qualify.
The New York Times said in February 2015, “But it is important to know that the low-down-payment options now available are not synonymous with the subprime loans that proliferated during the housing bubble, which often required little more than a pulse to qualify. Without these new programs, the population would find themselves locked out from the forced savings plan that is homeownership.”
Some People Should Never Buy a House
Some people should never buy a house says Jack Guttentag, professor emeritus of finance at the Wharton School of the University of Pennsylvania. He says, “These people make poor homeowners, not because of their income, family structure, mobility, ethnicity or where they live. Rather, it is how they live. Whereas successful homeowners live with at least one foot in the future and have learned how to delay some gratifications for future rewards, people who should not own live from day to day — or week to week, or month to month, depending on how often they are paid. Whatever they want, furthermore, they want it now. Typically, they have nothing left at the end of their pay period, and if they run out early, they have to scrimp or borrow, usually at high interest rates.”
They may judge that a house payment can fit I their monthly budget, but don’t count on property taxes, maintenance, and all the little things that they will need to fix instead of waiting for the landlord.
It looks like sub-primes are back, of course, they won’t call them sub-primes, and all you need is a pulse. Please chant with me: The insanity is back.
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