Fannie Introduces “Innovative Solutions” so Millennials Drowning in Student Debt can Buy a Home

http://www.fanniemae.com/portal/media/financial-news/2017/student-loan-debt-6546.html

The massive student loan bubble the Feds created has resulted in a generation that is unable to afford a home like previous generations.  Millenials are often not able to find a job that provides a living wage and the ones that bought into the hype that an over-priced college degree provides value often graduate with tens of thousands of dollars in debt.  In order to address this issue, the Feds have whipped up a faux-solution: Lenders can simply ignore student debt!!!

Fannie Mae  released new borrowing rules  to allow millennial borrowers to EXCLUDE student loans, credit cards and auto loans that are “paid by someone else” when applying for a new mortgage.  In addition taxpayer subsidized mortgage loans can be used to repay student debt!  Thank you American Taxpayers for subsidizing a solution that will result in an even larger real estate bubble!

“Fannie Mae announced new policies that will help more borrowers with student debt qualify for a home loan. These innovations address challenges and obstacles to homeownership due to a significant increase in student loan debt over the past decade and provide access to credit for qualified borrowers. The new solutions give homeowners the opportunity to pay down student debt with a mortgage refinance, allow borrowers to exclude non-mortgage debt paid by others as part of the loan application process, and make it more likely for borrowers with student debt to qualify for a mortgage loan by allowing lenders to accept student debt payments included on credit reports.”

“Solutions” include:

Student Loan Cash-Out Refinance: Offers homeowners the flexibility to pay off high interest rate student debt while potentially refinancing to a lower mortgage interest rate.

Debt Paid by Others: Widens borrower eligibility to qualify for a home loan by excluding from the borrower’s debt-to-income ratio non-mortgage debt, such as credit cards, auto loans, and student loans, paid by someone else.

Student Debt Payment Calculation: Makes it more likely for borrowers with student debt to qualify for a loan by allowing lenders to accept student loan payment information on credit reports.

Fannie justifies its irresponsible practices by stating that, “We understand the significant role that a monthly student loan payment plays in a potential home buyer’s consideration to take on a mortgage, and we want to be a part of the solution,” said Jonathan
Lawless, Vice President of Customer Solutions, Fannie Mae. “These new
policies provide three flexible payment solutions to future and current
homeowners and, in turn, allow lenders to serve more borrowers.”

Just what the millennial need- a way to take on more debt while being unable to earn a living wage.  These policies serve to decrease housing inventory, increase prices, and maintain interest rate increases until the entire deck of cards comes tumbling down.  The interesting question would be, what happens after millenials start defaulting on both home and student loans- can the debt be erased through bankruptcy or a deed-in-lieu of foreclosure?  If so- this may be a great deal for millenials who are saddled with debt for a good percentage of their lives!  In effect, a millennial could buy a home, roll in the student debt through a refi (see http://www.sofi.com) and then file for a Chapter 7 bankruptcy thus extinguishing all debt.  Since student debt is not extinguishable through bankruptcy except through hardship, this may be a viable strategy.

The federal government in collusion with the big banks invariably finds a way to artificially inflate markets, put the tax payer on the hook when the market tanks, and then profits from faux-settlements because of a failure to enforce its own laws.

 

5 Responses

  1. Another brilliant solution to an egregious problem, created by the same people who are now offering to load you up with more debt, just rearranging it! Fabulous. This system needs to be “purged” with these morons.

  2. Hilarious….If it wasn’t so sick. Another ploy to extract blood from the unwary. More psychopathic “solutions” to create profits on the labors of all of U.S. The banks need to be relabeled soul killers.,,,,

  3. Thanks for the Laugh Fannie .
    Perhaps you have forgotten those students have already had their blood drained by the government loans for worthless degrees.
    And you want to give them another loan to pay their rent 30 years in advance, charge them interest,taxes and maintains it for you Mr Banker? Bahahahaha

    Oh..what happens when the taxpayers can’t or won’t
    INSURE IT ?

    JUST SAY NO!!!!

  4. sadly the unsuspecting consumer always suffers, and I dont understand why there isnt more education for new buyers. They need to tell them the real facts and they need to understand the market ups and downs and when and when not to buy. and definitely now is not the time. I would have hoped families and anyone else would have learned the real scam the banks and our govt pulled off. Car loans and student loans are no different, but putting the student loan debt under the rug is not the answer for potential first time home buyers, not unless they lump the house and student loan into one payment. Honestly if they cant pay their student loans, do you really think they can pay for a house. People the govt and banks only want to keep you down. it is “sickening” Ian.

  5. If this wasn’t so unbelieveable it would be hilarious! No one in any position to jdo anything about foreclosure fraud has dealt with any of the real issues which caused this criminal mess. Either because they habe no clue, or because they have been ordered to “protect the banks” at all costs. Even though the parties fireclosing arent banks, they are merely servicers with no legal claim on the note/mortgage/house. Sickening.

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