WASHINGTON, Dec. 14 /PRNewswire-USNewswire/ -- The Senate passed
legislation today expanding the power of the Federal Housing Administration
to help address the subprime mortgage issue. The bill would allow the FHA
to lower the minimum amount necessary to get a loan and raise the limit on
the mortgages the FHA can insure. But many experts are concerned that
taxpayers are being put at risk.
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"I don't think we should look towards the government sponsored
enterprises as a solution to this problem. The private market is actually
working very well. We see both lenders and buyers already correcting their
behavior in this market. If you come in again with the government saying
we're going to relax the standards for some of these loans, we'll
implicitly subsidize these loans through our activity in the marketplace;
when you do that, you encourage some of the speculation that got us to
where we are in the first place," said Wayne Brough, Chief Economist,
FreedomWorks. "So I would say we don't look to expand government programs,
such as the government-sponsored enterprises, and let the market do what it
does best, which is allocate these resources to where they should be."
A recent poll by a grassroots organization shows a majority of those
surveyed do not support lowering the down payment requirements.