Government attempts to stimulate lending have meant that loans to the wealthy are being backed by Fannie Mae and Freddie Mac nearly as often as they are for their working-class counterparts, according to a Reuters report cited by NBC News.
Since the housing crisis, the limit on loans guaranteed by Fannie Mae and Freddie Mac has been bumped by Congress to $729,750 from $417,000, meaning that some homeowners are paying very low interest rates on large amounts of cash.
Critics argue that Fannie and Freddie should only back mortgages for low and middle-income buyers. “Nobody I know buys a house for $600,000 or $700,000 who isn’t affluent,” John Taylor, of the National Community Reinvestment Coalition, said.
But others argue that wealthy investors have come to expect government-backed loans and that it would be unfair and damaging to the economy to change that now. “We’ve had government support for housing finance for 75 years. You can’t just pull the rug out from under that,” John Campbell, a Republican congressman, said. [NBC News] – Christopher Cameron