Are You Ready For The Next Mortgage Crisis?

George Yacik - Contributor - Fed & Interest Rates

As an avid observer of the U.S. residential mortgage scene, I couldn’t help but take a keen interest in one of the lead articles in the Wall Street Journal on Thursday. The article was headlined, “The Mortgage Market’s $1 Trillion Pocket of Worry.”

According to the article, bonds backed by “certain risky single-family mortgages topped $1 trillion for the first time in November.” I wasn’t sure what “certain risky” mortgages they were talking about, so I read on. It turns out they are mortgages insured by the Federal Housing Administration (i.e., taxpayers) which, as the Journal noted, “typically go to borrowers with small down payments and lower credit scores.”

While I certainly know what FHA mortgages are, who they go to, and that their market share has been growing sharply since the mortgage meltdown eight years ago, the Journal article was useful in telling a wider audience about yet another government financial crisis in the making. But the article largely skated over another fairly important aspect of the story. Continue reading "Are You Ready For The Next Mortgage Crisis?"