The article highlights the impressive stability of housing credit since the implementation of Qualified Mortgage (QM) laws post-2010, contrasting it with prior deteriorating trends before the Great Recession. Since COVID-19, foreclosure rates have remained low, and current homeowners are in a favorable position due to strong credit scores and home equity. While credit stress emerges in credit cards, auto loans, and student loans, the overall housing market appears resilient. The influence of legal reforms like QM and bankruptcy law has been crucial in shaping current credit stability and preventing over-leveraging.
The QM mortgage law and 2005 bankruptcy reform law have been unsung heroes of the U.S. economy, moderating household credit expansion since 2010.
While there are signs of credit stress in other debt forms, homeowners appear to be stable, thanks to strong credit scores and home equity.
Foreclosure levels have been low since COVID-19, contrasting with the deteriorating housing credit situation that preceded the Great Recession.
Late-cycle lending risk is a factor in the housing market, but the current credit situation compares favorably to credit cards and student loans.
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