Anorak

Anorak | Dear God the Tories Can Be Stupid Sometimes: Cameron Wants A UK Fannie Mae And Freddie Mac

Dear God the Tories Can Be Stupid Sometimes: Cameron Wants A UK Fannie Mae And Freddie Mac

by | 21st, November 2011

THE latest brainfart from David Cameroan and  Number 10 : the government’s housing strategy, to be launched on Monday, will also include:

A new scheme, running to hundreds of millions of pounds, to underwrite a small percentage of mortgages for “new-build” homes. The scheme is designed to reduce the size of a deposit, particularly for first-time buyers, by shifting the “loan-to-value” ratio. Banks are currently demanding deposits of up to 20% of the value of a property from first-time buyers.

If the housing market suffered a severe downturn, the taxpayer could ultimately be responsible for a part of the loss under the scheme. But homebuyers would first lose their deposits and the loss to the taxpayer would be shared with the bank.

This has been tried before. By the Americans: remember them? The people who had the most enormous, gigantic, housing bust just a couple of years back? The one that crippled all the banks? That’s the ones, sure you remember them.

And what did they have in that system? They had Fannie Mae and Freddie Mac which, umm, guaranteed the mortgages for Americans. And FM and FM went bankrupt, didn’t

You have already read 1 premium article for free today
Access immediately the premium content with Multipass

Or come back tomorrow



Posted: 21st, November 2011 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink