Higher Priced Loans for Declining Neighborhoods

DMI:

The nation's largest mortgage finance companies, the Federal National Mortgage Association, also know as Fannie Mae, and the Federal Home Mortgage Corporation, a.k.a. Freddie Mac, are planning to adopt a policy which identifies certain areas in the country as "declining markets" and requires borrowers to pay higher interest rates as a result. The exact rate will be determined by a borrower's credit score.

When business identifies a declining neighborhood it will increase the cost of capital. What would a philanthropist or a government do? The same? Write down the written off? Concentrate on building up and protecting the free market Green Zones? Where do we dispose of the human detritus when we mark all to market? For-profit prisons and Beaver Boverton's Double Bottom Line Bakery?   

Comments

[Gerry]

Of course the bulk of this housing bubble is in inflated prices in the boom market, so a large percentage of the at risk loans are likely homes bought far above where the market had been in that area. Areas that would likely show up as "increasing" in any metric they might use.

This is a ploy to make it easier to push the poor people out and gentrify.

[robert guintor]

This is just another way to redline and should be outlawed.