Forbes-

Almost everyone agrees that the Great Recession was triggered largely by the U.S. housing bubble bursting in 2007. For years beforehand, lenders had been giving out riskier and riskier mortgages, including waiving or lowering down payment requirements.

Ten years later, low- or no-down-payment mortgages may be making a comeback. Several private banks are now offering various zero-down mortgage programs or down payment assistance programs for higher-risk borrowers. While they are not identical to the adjustable-rate mortgages that were given out like candy in the runup to 2007, they may herald a worrisome trend that could lead to a repeat of our last housing crisis.

Michigan’s largest bank, Flagstar, is offering a new programto “low-income and moderate-income” borrowers that essentially pays their 3% down payment, plus up to $3,500 for closing costs, for them. Sounds generous, but buyers should be careful to read the fine print: The down payment and closing costs can be taxed as income by the IRS.

[FORBES]

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