Are We Heading for Another Housing Crisis?

By Maryalene LaPonsie

Ten years ago, a storm was brewing in the housing market.
Lenders were handing out mortgages seemingly to anyone who applied, and in many cases, borrowers weren’t asked for documentation to prove income. Some institutions rolled out adjustable-rate mortgages that featured teaser rates and were marketed to consumers as loans that could be easily refinanced before the interest rate was scheduled to reset and send payments into the stratosphere.
As buyers clamored for homes, prices surged. But then the economy slowed and the bottom fell out of the housing market. Homeowners were unable to make payments, and sagging values made refinancing or selling impossible. The market crashed in what is widely considered one of the worst recessions to hit the country.
While the economy and home prices have both rebounded, some people have expressed concern we are headed for a repeat housing bubble. As of January 2016, home prices were rising at a rate twice that of inflation, according to the S&P/Case-Shiller U.S. National Home Price Index.
What’s more, Fannie Mae and Freddie Mac have unveiled programs to allow first-time homebuyers to make a purchase with only 3 percent down. Plus, some lenders are using alternate credit scores, which may make loans available to those who can’t get one under conventional credit scoring methods. Together, these factors may signal danger ahead. “I wouldn’t discount it,” says John Harrell, a vice president at USAA Bank, about the possibility of another housing crisis. “But I don’t see it as an imminent threat.”
“Read the Full Article at money.usnews.com >>>>”