Fannie and Freddie Ready to Blow Up Housing Market Agains With 33 -To-1 Leverage. Low Down Payment Mortgages Are Back

The Detroit Free Press reports:

One of the culprits in the building and bursting of the nation's housing bubble, the low-down-payment mortgage, is back in favor and readily available at a lender near you.

Quicken Loans, Flagstar Bank and Troy-based Ross Mortgage are among the Michigan-based firms taking part in a new and somewhat controversial program offered by Fannie Mae for fixed-rate conventional home loans with 3% down payments. Freddie Mac starts backing similar loans next month.

The two bailed-out housing finance corporations reintroduced their 3% down products in December as a way to assist prospective first-time home buyers who have the income to pay off a mortgage but lack the savings for a large upfront payment. Prior to the announcement, Fannie and Freddie's lowest down payment option was 5%.

Twenty to one leverage isn't enough for Fascist Mae and Fascist Mac! Just a reminder, even the riskiest hedge funds aren't leveraged 33 to 1. Isn't it time to separate housing from state?