The government is meddling in the housing market again. According to the administration, the housing rebound is “leaving too many people people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.”
In response, administration officials say “they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.”
Here is my suggestion – how about people prove they are responsible and can be trusted with the banks money by paying their current bills first? That is what credit scores are based on and it is a pretty good predictor of future behavior. Homebuyers can then qualify for loans without the government(and in the end the taxpayer) pressuring the banks (again), distort the market(again), and having to be guarantors and pay for the losses (again.)