A recent report from the Wall Street Journal revealed that Fannie Mae and Freddie Mac are continuously backing loans to borrowers carrying a heftier debt load. In his report, Ben Eisen cited IMF data which showed that more loans are going to borrowers with debt-to-income rations of 43%
"The backing of these loans opens up a debate about the government’s role in the housing market. Some say cheap, federally backed financing has made credit available for millions of borrowers who otherwise might not have had a shot at homeownership," according to the WSJ report.
"Others say that more-indebted borrowers are riskier, and that their purchases may be accentuating a rise in home prices that in many areas has outstripped median incomes."
This raises numerous questions as to what action policymakers will take when looking at housing-finance reform.
To learn more about Eisen's report on Fannie and Freddie loans to borrowers that are deeper in debt, click on the image above.