In “Fannie, Freddie Housing Goals May Exclude Subprime“, the article begins with what I think must be a common myth about the relationship between lower-income and subprime. The article states, “Fannie Mae and Freddie Mac would no longer be able to rely on subprime mortgages to meet their government-mandated goals for helping lower-income Americans obtain home loans”.

The assumption presented here is that people with lower incomes must be subprime. This is false.

While I can’t pretend to understand the eel-knot of Fannie Mae, Freddie Mac and the U.S. government’s regulatory mandates, I do know one thing: Credit-worthiness is about one’s payment history.

In fact, there are a large number of wealthy Americans with sorry credit scores paying high interest rates on mortgages because of their poor credit ratings. The opposite is also true. There are a lot of lower-income Americans who have excellent credit.

Don’t believe the myth. And if you fall in the lower-income bracket with excellent credit, don’t let the media weigh you down with false assumptions about your integrity.

“Lower-income” does not equal subprime.

Rick Wheat
MoneyToys.com