Fannie Introduces "Innovative Solutions" Allowing Student-Debt-Laden Millennials To Buy A Home

Tyler Durden's picture

So what do you do when a massive student loan bubble results in crippling leverage for an entire generation of your population rendering them financially unqualified to obtain mortgage financing and their 'God-given right' to a slice of the 'American Dream'?  Well, you simply change the rules to allow mortgage lenders to ignore all that pesky student debt...anything less would simply be evil and potentially racist, sexist and all sorts of other -ist words.

Luckily, Fannie Mae is right on top of the issue and has just released new rules allowing millennial borrowers to, among other things, simply exclude student loans, credit cards and auto loans that are "paid by someone else"...wink wink...when applying for a new mortgage.  As an added benefit, taxpayer subsidized mortgage loans can also now be used to repay student debt...Hooray for taxpayers!

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.

 

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.

 

“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.”

You know, because more debt is exactly the cure for millennials suffering the financial consequences of too much debt. 

But, at least this should help with inflating Housing Bubble 2.0.

Housing

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Nexus789's picture

Try 70 trillion which is private plus government plus corporate debt. Then you have all the unfunded liabilities such as pensions.

TxExPat's picture

Might be the bankers that are stupid, (as well as the borrowers on this one)...

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.

Student Loan: Cannot be discharged (even in bankruptcy).  Roll it over into a "Cash-Out Refinance" on a home with shady appraisals.

Walk on the Loan, bank gets the house...  Debt discharged.  (This won't work if the appraisals are honest, and normally I frown on fraud, but it seems like both sides would be less than "on the up and up" here.

As Dad used to say

"Son, there is no man easier to cheat than one who thinks he's cheating you".  (He's so intent on his scam, and getting you to sign the paper work before you wise up/sober up, that he loses track of the things you could be doing...).

 

ramius's picture

erm.... check the law mate, the debt already is passed down to the eirs. You inherit a person's goods, rights and liabilities. If you are left with nothing at the end, tough luck. The bank will always get payed. 

1stepcloser's picture

Funny skit, but its a debt based monetary system...someone must borrow to keep currency in circuilation.  We need moar of these families to keep the fake GDP numbers going...

hedgeless_horseman's picture

 

The USA has in the past, and could once again, issue currency directly, instead of using notes of debt borrowed from the banks. But then how would the Rothschild heirs make a living?

Most Americans have no idea that the U.S. government once issued debt-free money directly into circulation.  America once thrived under a debt-free monetary system, and we can do it again.  The truth is that the United States is a sovereign nation and it does not need to borrow money from anyone.  Back in the days of JFK, Federal Reserve Notes were not the only currency in circulation.  Under JFK (at at various other times), a limited number of debt-free United States Notes were issued by the U.S. Treasury and spent by the U.S. government without any new debt being created.  In fact, each bill said “United States Note” right at the top.  

 

http://theeconomiccollapseblog.com/archives/debt-free-united-states-note...

And we all know what happened to President Kennedy.

Ghordius's picture

excellent comment by HH, but this one from 1stepcloser really deserves an answer:

"a debt based monetary system...someone must borrow to keep currency in circuilation"

that's a funny theory, and no, there is absolutely no evidence of it being true

you don't have to borrow moar just to keep the thing going on. don't mistake the advertisment: "Borrow moar" with reality

Theta_Burn's picture

Quick..

Que a Rick Santelli outrage vid about all the deadbeats out there not paying thier bills and how he a taxpayer should not have to pay for it..

ACMeCorporations's picture

My parents (depression survivors) used to call that the Polish credit plan: 100% down, no easy monthly payments.

youngman's picture

Trust me the Liberals never see themselves paying off this debt..they truly believe that is will be forgiven at some point in time....they think they deserve it for free..and they will vote for the person that sas just that...

auricle's picture

sorry, there are many conservatives that operate with the same delusion. 

espirit's picture

Current Economic Policy.

If you don't hold it, you don't own it.

new game's picture

banksters goal is moar debt every which way but a burden on themselves. and if it goes south, well guess what, we all bail the fukers out again...

Dog Will Hunt's picture

We are going back to indentured servants soon and the libtards are to stupid to see it them  

And this time, it won't be racist conservacucks like you cracking the whip.

D Nyle's picture

Boy you're stupid, The slave owners were Democrats, the Republicans freed them (Lincoln was a Republican). Welcome to Debt Slavery

 

SoDamnMad's picture

Let's see. I haven't paid on my $100,000. student debt bill but I hear I can get a house.

I heard that you can stop paying and live in it for 3 years before they foreclose and work tho throw you out.

So I shall live in the place without paying, hand the loss to the banker who hands the loss to Fannie who hands the loss to the taxpayer.

Meanwhile I shall work under the table to live so I can buy lots of neat shit.

Maybe I shall even go riot with the other antifas who are doing the same thing.

Buck Johnson's picture

It's getting close to that now.  This is crazy, truly crazy.  The banks and govt. want their cake and eat it too.  They need the young workers to buy houses to keep the housing market artificially inflated but since those workers have student loans they can't.  So instead of making where the student debt can be put in bankrutpcy or forgiven and then let them go get a house they allow or want them to push that debt and others onto someone else in the family or whoever.  So they get to have housing 2.0 and also get to have that debt non discharged and on someone else.  And they mean to tell us that someone is going to volunteer to take over that debt, right.

 

 

Pandrasus's picture

I think it's time for a re-read of The Servile State by Hillaire Belloc. Debt peonage for the masses and extraordinary riches for the 8,500 at the top. And occasional treats thrown to the military and intelligence personnel keeping the few safe from the masses.

D Nyle's picture

Thanks for the book suggestion, it sounds very interesting for these times

eatthebanksters's picture

Now that's more like it!  Shades of 2008 only this time who is going to play Barney Frank's role.

Vlad the Inhaler's picture

The kids these days are calling it a flash mob.  Bank Withdrawal Flash Mob (tm).  The problem is that they'll bail the banks out with your tax dollars in no time so you still lose.

INTJ Economist's picture

Yeah, that's actually not how it works, despite what nearly everyone believes.  Your taxes don't pay for shit at the federal level.  Watch Bernanke:

https://www.youtube.com/watch?v=U_bjDAZazWU

meditate_vigorously's picture

For selfish reasons, I just want them to keep the housing bubble going for about 5 more years so I can make a profit when I move back to flyover country.

youngman's picture

I sold my condo in Denver 2 years ago..I had to take a price cut..the broker said it was a good deal....for him it was..he got his commission...I bet I have left 200,000 on the table ....make me want to puke

Your Good Friend's picture

With the way rental rates are falling in and around Denver, you did quite well.

 

Look out below.

new game's picture

since real estate is relative(gotta live somewhere), did you buy another home that went up? renting? put proceeds in stock market? bonds? drugs and hookers? 9mm bullets? new truck? money market? expatriot? so, really can't evaluate if good or bad...

Houses Depreciate's picture

Hopefully he rented considering renting is half the monthly cost of buying.

83_vf_1100_c's picture

You again? No, it is not half unless you are comparing a 2br apt rental to a large home mortgage. What is your schtick? Rental agent.

We are closing in a week on our NC house sell. Yay! I hated owning a nice house in a declining neighborhood 1100 miles away.  We suspect the buyer is a fund that turns them into rentals. Probably make it a section 8 for boons. Sorry Dad.

Houses Depreciate's picture

Renting certainly is half the cost of buying. Start doing bigboy math instead of DebtDonky math.

invest3's picture

Just refi with a tax-payer backed mortgage, pay off the student debt with the proceeds, and let the underwater property go into foreclosure.  There, now we're debt free!

undercover brother's picture

The hand holding and coddling by the government is just so pathetic.  Now they want debt riddled people to go further into debt via refinancing their college dept into their home mortgage.  gimme a freaking break.  

Uncle Tupelo's picture

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."- Ludwig von Mises -

meditate_vigorously's picture

If only the Mises Institute was concerned with that kind of philosophy over their globalist JWO philosophy.

Libertarians are part of the problem, along with conservatives and progressives (the latter 2 being redundant).

techpriest's picture

Is there anyone who isn't part of the problem?

ItsyBitsy90's picture

We all know how this will end...

Intoxicologist's picture

Yeah. They won't know how/too lazy to maintain a home, so in 20 years homes across America will look worse than houses on an Indian reservation. Eventually, they'll need to be demolished and CAT will turn an honest profit.

canisdirus's picture

You think suburban homes are in good shape? They're already pure garbage, considering most have spent 20-40 years being neglected by the current boomer owners. Suburban houses are a pain in the ass to maintain.

Your Good Friend's picture

Any house costs a fortune to maintain. Houses  depreciate rapidly.

Houses Depreciate's picture

"Any house costs a fortune to maintain. Houses  depreciate rapidly."

You better believe it mister.......

Some folks's picture

Jonathan LAWLESS, got that one right, how fitting.

Blano's picture

So if some kid had their parents cosign on student loans, he/she could just blow the loans off, make their parents pay AND become MORE likely eligible for a mortgage?

What a country!!

Bear's picture

I once got a Fannie loan ... It two and 1/2 inches of paperwork with every financial transaction for the prior six months  ... Of course I had assets and no debt a job and a house with no mortgage with 500,000 in equity.

Hitlery_4_Dictator's picture

Tptb be getting desperate.

Twee Surgeon's picture

If ever there was a good sign, that is one. They are getting desperate. When the coming collapse happens they will be all out of Value Coupons right quick.

Swamidon's picture

What's the point of hooking the stupidest fish twice except to prove that you can do it?