Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae, joins Mike to discuss risky loans and the housing market.
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Good sense would be to keep the cost of the house for which they qualify to be a lower percent of their income. Too many people were pushed into homes they couldn't afford! It used to be the house payment shouldn't be more than 25% of income, then they started creeping that up and up and then people were in over their heads. Realtors liked it because it made their percentage bigger and speedyloan originators liked it because it made their percentages higher and bundlers liked it because it made their percentages higher, so the homeowner was wrongly encouraged to get into something they couldn't afford. Let folks get into a house, just make it one they can afford. A sliding scale for the credit rating to % down or % of income would make good sense. Maybe that is the problem!
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