Heading into the midterm elections, consumer confidence in the economy is at its lowest point since the financial crisis of 2008, a historic calamity those old enough to remember are content to forget. What must not be forgotten are the causes that led to that horrendous economic meltdown: America’s housing and mortgage industries collapsing upon the cracked foundation of subprime lending and the failure of government-sponsored enterprises (Fannie Mae and Freddie Mac) to maintain proper margins of liquidity.
With inflation hitting a new 40-year high five months in a row, empty store shelves, and nationwide supply chain problems, the last thing we need is any additional news to agitate our nerves concerning the economy. Unfortunately, the Federal Housing Finance Agency (FHFA) may be offering up just that, with a looming decision that would upend a currently stable mortgage industry by reconfiguring the way credit scoring models are applied to lending decisions. This is a path we should all hope they decline to follow.
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