It’s been a while since the US made a wholesale push to get more cash and income-strapped households into the umbrella of more unaffordable American dream of owning a house. Three years to be exact. Now nationalized housing agency Freddie Mac has new 3 percent down plan.
Even with the modest requirements, the mortgage program Freddie Mac introduced in 2015, for most Americans who needed access found themselves excluded. The program was designed for qualified (that being the key word) low-and moderate-income borrowers – i.e., Millennials. FHFA Director Mel Watt told Congress last year that Freddie’s 3 percent down payment program was continuing to grow. It just wasn’t growing fast enough. While putting 3 percent down payment may not have been especially challenging for most Americans, having even the modest income required to go along with it, was.
So according to Zero Hedge, last week, Freddie Mac has new 3 percent down plan announced on Thursday. A twist from the recent past to supercharge its 3 percent down payment program. It launched a widespread expansion of the offering. It announced that it is rolling out a new conventional 3 percent down payment option for qualified first-time homebuyers. Effectively, it was the same as the 2015 program… with one small difference: there would be no geographic restrictions; more importantly, there are no longer any income restrictions.
Assuming I understand the program correctly, first-time buyers need ONLY the 3% down payment to buy a house. That means no income!
Yes, Freddie Mac has new 3 percent down plan. There even is a safeguard in place, I say with tongue in cheek. When all the borrowers are first-time homebuyers, at least one borrower must participate in homeownership education in order to qualify.
The New York Times said in February 2015, “But it is important to know that the low-down payment options now available are not synonymous with the subprime loans that proliferated during the housing bubble, which often required little more than a pulse to qualify. Without these new programs, the population would find themselves locked out from the forced savings plan that is homeownership.”
Call me bowled over. It now looks like sub-primes are back, and all you need is a pulse. Please chant with me: The insanity is back.
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