Remember that pilot program in which a handful of states offered government-backed, $1000-down new home loans? Turns out you can get into one with less than a grand—quite a bit less. CNBC reports on one couple taking advantage of the offer who managed to get into a house for a mere 67 cents. (At that point, why not just give the home away for free?) Backers argue that the program's strict underwriting standards and the fixed, long-term mortgage rates it offers mean it won’t be simply be a one-way ticket to default for most of those who sign up. But as John Carney says, that’s not a terribly persuasive argument:
Adjustable rate loans are not the primary drivers of defaults—the primary driver is the combination of borrowers who have negative equity and expect that the value of their home will not appreciate soon. This means that no money down home loans are particularly dangerous—regardless of how vigorously lenders counsel homeowners or screen for credit scores.