Agency Offers Low Teaser Rates, Questionable Refi Loans



That’s right, FHA is now insuring mortgages with low teaser rates that balloon after a year. See the last bullet-point in this screenshot via Quicken Loans:

They also require tiny/nill downpayments. And it gets better: No income verification! See the last line in this screengrab from Quicken Loans:

Short-sighted much?

Similar loans, known as Ninjas (no income, no job, no assets) were a major part of the sub-prime debacle. While I’m all in favor of getting people out of loans they can’t afford, this is a horrible way to do it. It rewards the private sector by putting all the risk on taxpayers, while lenders reap all the profits.

See last month’s FHA: Bailout Waiting to Happen for more on the scale of the problem. It’s big, with FHA insuring 23% of all loans made in 2009.

I’ll leave you with one more screengrab:

Disclosure: No position in any companies mentioned