So you thought the financial crisis ended the mad leveraged mortgages. Think again.
Mortgage bonds guaranteed by U.S. agency Ginnie Mae will probably swell to $1 trillion by the end of 2010 because borrowers with low down payments or bad credit scores can only qualify for government-insured loans, Bank of America Corp. analysts are saying.
The Federal Housing Administration, which insures loans with down payments as low as 3.5 percent and has no credit-score requirements, is “the only source of funding for these leveraged borrowers,” according to Ankur Mehta and Ohmsatya Ravi, who wrote the report, say.
Loans backed climbed to $680 billion as of June 30 from $360 billion two years earlier. Ginnie Mae continues to back the mortgages in the same format as the old days. Lenders package the mortgages into bonds backed by Ginnie Mae.
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