It turns out that Wall Street's financial titans, who are reeling from their dalliances with bad mortgages, could have learned a lesson from the Philadelphia Housing Authority, of all places.
While the real estate bubble swelled on the strength of exotic adjustable-interest and no-interest mortgages, the PHA insisted that anyone buying its homes would have to stick to that boring old standard, the 30-year fixed mortgage.
The result? Not one of the Housing Authority's 390 homeowners has defaulted. What's more, because the authority subsidizes the cost of its homes, it vets would-be low-income homeowners far more thoroughly than the mortgage giants do, agency spokesman Kirk Dorn said.
If only Fannie Mae were so careful.
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