Really? I am open to convincing myself, jp, but where do I go to see the evidence? I am a little skeptical because the end goal of the folks organizing the home lending market seems to be keeping home prices high. People like Larry Summers and Bernanke have said very directly that the key to “recovery” is “fixing” the housing market. And they don’t mean prudent lending and prudent prices. They mean keeping prices as close to peak levels as possible. They are backing it up with enormous amounts of easy money.
How is all that not ending up in easy FHA loans? Isn’t the down payment requirement for FHA loans just 3.5%? And doesn’t the $8K tax credit count? And isn’t it common for sellers to arrange kickbacks to buyers for the (tiny) residual if they don’t want to put up even the tiny remaining fraction of the purchase price? None of this sounds prudent to me, or difficult to game.
But I am no RE expert, so perhaps it’s a whole new game out there, and I haven’t seen it yet.
