Wall Street Journal staffer Joe Light reports on the most recent push among government agencies and private capital sources to kick-start the paralyzed market for mortgage-backed securities issued by private institutions.
Otherwise, mortgage loans will continue to be out of reach for many would-be worthy buyers who fail to qualify for government-backed financing. Light notes that failure to re-start the market could also hurt more stable borrowers if future policy makers decide to pull the government back from lending and there is no private market to take its place. Light writes:
The federal government can back a loan as long as a borrower has a down payment of at least 3.5% and a credit score of 580, on a scale of 300 to 850.
But borrowers who have trouble documenting income, such as the self-employed, or who have certain blemishes, such as a missed mortgage payment in the past few years, can be excluded from government loans no matter the down payment or credit score they bring to the table.