The KGB of Our Credit System

Well, we have been indoctrinated, vaccinated, hyperventilated, isolated, inoculated and just about every reason “why” the credit system is a mess by everyone from the top to the bottom. All fingers are pointing at “bad mortgages” Bull crap! Plain and simple. Do you think for a cotton pickin minute that all of a sudden people with bad credit or loans made to people with weak credit is some “brand new baby”.

The mortgage industry is partly to blame for sure. Greedy lenders, investors and brokers have all pulled their chair up the to “buffet table” of profits and helped themselves. Now, prior to these “portfolio loans” we relied mostly on FHA, GI, Fannie Mae and conforming loans.

A lot of people bought a home using the FHA guidelines. The credit criteria was relaxed and folks with credit issues were given a chance to own a home and pay competitive rates. Yup, if you had some minor credit issues, you were given some leeway to explain them and if you had a job, paid your bills on time for one year and proved to the underwriters that you deserved a home, by golly, you got a mortgage. Have these folks lost their homes? Not in a long shot. WHY NOT? Because the FHA fully understood credit issues and produced a credit guideline that enabled these folks to qualify.

Read the Complete Story at cash on the blog

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