Search the archives – this one has been discussed and dismissed before. Also check out previous discussion on housingbubblecasualty.com.
The paper is full of problems. For one, it does not recognize CLTV. Fannie Mae, as well as lenders, only have to report the 1st loan, not the 2nd.
On an 80/20 loan, Fannie Mae, as well as the author of this paper, count is as a 20% down.
The correct number to track is the Combined Loan to Value, which makes an 80/20 loan a 100% CLTV. But it is only a 80% LTV. Notice the paper didn’t even bother to inform you it is LTV they are using. They don’t want to point out the distinction. Idiots!
