POLITICS

Realtors push for lower credit standards on taxpayer-backed loans

By |
Politics,Beltway Confidential,Timothy P. Carney,Housing,Government Loans

I’m not one for telling banks whom they can and cannot lend to — except for when those loans are guaranteed by U.S. taxpayers. The chief economist of the National Association of Realtors suggests it is time to “dial down the credit stringency” — including for loans guaranteed by the Federal Housing Administration.

My AEI colleague Ed Pinto argues that this isn’t a good idea. Examining the incentives of the messenger are relevant:

The NAR’s stated goal is to boost home sales by 15–20 percent. This goal is self-serving because the association’s members would earn a commission on these additional sales. But what about the working class  families with a FICO score of 620, 640, or even 660 who would get one of these FHA loans under the NAR’s proposal? Is this sensible lending or a return to unsustainable lending?

It seems relevant to me that the National Association of Realtors is, so far, this year’s largest single-industry lobbying organization, according to data from the Center for Responsive Politics.

View article comments Leave a comment