Democrat holdovers working on making another housing crisis

Paul Sperry:

A pair of top Obama-appointed bank regulators still serving in the Trump administration could spark another mortgage meltdown by lowering credit standards and encouraging risky lending practices.

Democrat Mel Watt, who is serving a special five-year term as head of the Federal Housing Finance Agency, is pushing the mortgage-lending giants he regulates — Fannie Mae and Freddie Mac — to offer home loans to deadbeat borrowers with shaky credit, setting up conditions for another housing-market crash, industry officials warn.

Meanwhile, the other Obama holdover — liberal Democrat Richard Cordray, who continues to head the Consumer Financial Protection Bureau through 2018 — has launched an unprecedented crackdown on credit reporting bureaus for allegedly widespread errors and bias, leading the industry to strip some negative information from credit reports used by home lenders, which analysts fear could blind them to default risks.

“We are dumbing down the requirements all over again,” warned former chief Fannie credit officer Ed Pinto. “It’s getting very dangerous.”

Credit scores of approved borrowers, for example, already have been trending down, even as their debt levels have grown, according to Ellie Mae, a leading mortgage data firm. And the Office of the Comptroller of the Currency recently warned: “This easing trend over the past three years is similar to the degree of easing in the years preceding the 2008 financial crisis.”

Watt, a former Congressional Black Caucus leader, has been demanding Fannie and Freddie ease credit standards — just as the feds did starting under President Bill Clinton, in pursuit of the same goal: “to help African-Americans achieve the goal of homeownership,” as Watt declared in a recent speech in New Orleans.
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Congress should be investigating these two. What they are doing will have a negative impact on people with good credit as the bad loans start going into default again.  It was this kind of crazy lending that caused the 2007 mess that almost took the US and world economy down.  Democrats should not be allowed to do it again.

It is a mistake to trust Democrats on this issue.