More high-risk borrowers turning to state housing finance agencies

High-risk borrowers are increasingly obtaining low down payment mortgages that don’t require mortgage insurance from state housing finance agencies, Bloomberg reports.

That’s largely because such agencies are exempt from a new mortgage rule that encourages banks to verify that borrowers have the ability to repay their loans.

State housing agencies say they are entitled to their exclusion from the rule because they have sound lending practices that have resulted in relatively low default rates.

Source: Bloomberg