The WSJ is wrong about FHA loans and nonbanks, and they know it

What does the Wall Street Journal have against nonbanks? That was my first thought when I read the Journal’s recent op-ed: UWM is a government mortgage canary. The op-ed used UWM’s announcement of a $2.05 billion strategic capital partnership to warn against the “riskier” mortgage loans originated by nonbanks. In a rebuttal letter to the paper, Mortgage Bankers Association CEO Bob Broeksmit addressed the claims of elevated FHA delinquencies and said the Journal was trying to “link two unrelated stories under one alarmist headline.” Broeksmit said UWM’s decision was “the product of one company’s own misjudged bet on rates, not any indication of poorly underwritten FHA mortgages.” To me, the attack on nonbanks is just a lazy way to tap into fear about another 2008-style housing crash, even though that kind of lending scenario no longer exists. Instead, the vast majority of mortgages are safe, boring 30-year-fixed loans where homebuyers put 20% down. The boogeyman of ‘risky’ loans Even the subprime loan products of the past have been reformed. Sure, you can get a bank statement loan today, but it will be funded by private investors and they’re the ones taking the risk, not taxpayers. ...