Video: Proposals in Congress Could Leave Taxpayers Footing the Bill in Subprime Mortgage Crisis

November 20, 2007

WASHINGTON, Nov. 20 /PRNewswire/ — Subprime mortgage troubles continue as Congress considers proposals impacting taxpayers. The measures would give the federal housing administration or FHA – the largest mortgage insurer – and Freddie Mac and Fannie Mae – the largest mortgage lender – a larger role in the housing market.

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http://www.prnewswire.com/mnr/ntu-gse/30812/

“Everybody is trying to propose that these agencies take on more risk-that they insure bigger loans, that they accept borrowers who have put less money down. All these things are going to shovel more risk onto organizations that aren't really well prepared to handle it,” said Dr. Jacob Vigdor, economics professor, Duke University.

Concerns about FHA loans defaulting and the recent accounting scandals at Freddie Mac and Fannie Mae raise questions about who's going to be left footing the bill.

“When the FHA agrees to insure a loan, it's guaranteeing the lender that they won't walk away with nothing. It's not guaranteeing the borrower anything,” said Vigdor.

A recent survey found seventy-five percent of taxpayers oppose government insuring bigger loans.

For more visit, www.ntu.org.

SOURCE National Tax Payers Union