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The Return of the $1,000 Down Mortgage
Fannie Mae and State Housing Agencies Are Offering Little-Money-Down Mortgages. But Why?
By Annie Lowrey 8/5/10 6:00 AM

“Buy new with $1,000 down,” the advertisement says, the words resting atop a trim green clapboard house offset by a bright blue sky. “The time has come. Stop wasting rent check after rent check and start building equity in your own home. And with only $1,000 down, affordable monthly payments and no private mortgage insurance required, the dream is closer than you think.”

It sounds too good to be true. But it is true. This offer does not come from a subprime lender, looking to reel in thousands of unqualified and ill-advised homebuyers, only to slap them with add-ons, fees and variable rates. It is not a teaser or a trick. The advertisement references a program initiated by the National Council of State Housing Agencies and Fannie Mae, the taxpayer-backed, government-sponsored enterprise that buys up mortgages from lending banks.

The pilot program is called “Affordable Advantage,” and it has now been adopted by three states — Massachusetts, Wisconsin and Idaho. (Other states, such as Pennsylvania, California and Colorado, have similar state programs.) The initiative is small, reaching just a few hundred people so far. But it is looking to expand. Given the dangers of these types of mortgages and the specter of the housing bubble, where unconventional loans wreaked disaster, it is also raising questions from wary housing experts and legislators.
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Talk about not learning from your mistakes!
How stupid are these people ?
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Nasty rumor on the business channels about Fannie and Freddie forgiving a portion of underwater mortgages. Hopefully just a rumor as it would cost the US taxpayer a lot. Not to mention that it would be a big fat "screw you" to everyone who didn't chase the bubble.

There is an excellent article in the latest National Review about ending the mortgage interest deduction. It's past time to get the government out of the housing and mortgage business.

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