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Government Mortgage Guarantees Should Be Limited

By Implode-Explode Heavy Industries

"First, a federal mortgage guarantee is really just another kind of subsidy. The government is taking on default risk, instead of forcing either banks or borrowers to bear the risk. Some people, including me, would argue that the government shouldn't guarantee any mortgages. But as long as it's going to, it might as well only back the mortgages for those who would need that subsidy to afford to buy a home. In other words, there's definitely no reason the government needs to guarantee the mortgages of rich Americans"

Full post as published by Mortgage Lender Implode-o-Meter on October 30, 2010 (boomark / email).