In an effort to boost the housing market, the federal reserve has taken a new and unusual step. Instead of merely buying treasury bonds to lower mortgage rates, it is now going to buy mortgage backed securities. You know them- the toxic ones that caused the problem in the first place.
This is new territory for the federal reserve. Is it even legal?
In order for housing to improve, credit restrictions have to be loosened. The pendulum that had swung so far one way in allowing anyone who could breathe to get a loan, has gone too far in the other direction. The credit requirements are so high that the percentage of people who actually qualify are very slim. There are still a lot of people who want to buy but are shut out of the housing market. That’s another reason you need to learn creative financing techniques.