Thread by @the_CMLA

OK, time for a deeper dive on VA mortgages. Quick sum: @wsj reporters @BenEisen and @NickTimiraos wrote on @GinnieMae & nonbank lenders. They cited a @NYFedResearch paper circulated heavily in DC by @BrookingsInst. We're gonna look at how the story covered @DeptVetAffairs

mortgages, bc there's been a lot of spin in town lately. Specifically, the @wsj story wrote about lending risk generally & that VA mortgages "generally offer the easiest lending terms available today. VA loans don’t require any down payment," This sounds like a risky scenario.

The article later states that "If homeowners default on their mortgages, these nonbanks are on the hook to continue advancing payments to investors, tax authorities and insurers until they are repaid by the government." Again, sounds like a risky deal.

Now, in fairness: we should always monitor lending risk & understand the big picture. But here's where the story did not--repeat, did not--paint the entire relevant picture. Because, guess what?

VA loans, an earned benefit for our veterans & active duty personnel, are the safest

mortgage product out there. How do we know this?

Because @DeptVetAffairs mortgages have had the lowest default rate (of the major mortgage channels) for every year going back to 2007. This includes the category of "Conventional" mortgages. In fact, the VA loans have had the

lowest default rates (compared to Conventional) in every QUARTER going back to 2007. In fact, when industry data tracked "Prime" mortgages (this data set ended in 2016), VA mortgages were usually slight above or markedly LOWER (2009-2013) than PRIME mortgage default rates.

This is something readers should have known, in order to evaluate the big picture, given that the article is discussing risk.

Next issue: should the media cite a study that ALSO missed this picture?

When the study cited in the article states that

"a larger fraction of nonbank originations are FHA or VA mortgages, which tend to be riskier than other types of loans," one has to wonder by what measure the paper found VA loans to be "more risky"? if it's not based on defaults, what is the data measure here? Keep in mind that

TBTF banks and other corporations are well known to "work with" DC Think Tanks AND academics to push forward their agendas. And of course, TBTF Banks are not happy about lost market share to...nonbanks. And it's also been documented by the NY Times that @Brookings has a problem

here. And therefore, it may not be wise to cite such a paper without a great deal of due diligence.

Thank you for following this thread, and--yes, thank you for @DeptVetAffairs for running a very sound mortgage lending program. Thank you for lenders doing a careful job here,

and thank you--of course--to our active duty personnel and veterans serving this country. When it comes to analyzing their earned benefits, a careful job is not only a good idea--they are owed...nothing...less.

.@threadreaderapp unroll pls