Jesus, this is beyond stupid.
They go on to debate the how this version of no-money down might not be as dangerous as the old adjustable-rate mortgages. Who are they kidding? Adjustable rate basically just guarantees default whereas a fixed rate with no money down is just living paycheck to paycheck risky.
But either way, having negative equity is very, very dangerous. And that's what a no-money-down borrower has in this market, because prices aren't rising much, and they need to find thousands of dollars to pay broker commissions and closing costs if they want to sell.
What truly boggles the mind is that the government still thinks that it's somehow a good idea to help push people with basically no savings into homeownership. Do they want to make sure that a whole new class of financially marginal people can enjoy the benefits of foreclosure?
Have we learned nothing? How can one even call this homeownership? This is bank ownership. I'd counsel selling stocks in any company involved with these type of loans.
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