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Loan Guarantees Are Not Enough

Loan Guarantees Are Not Enough

By Leslie Strauss
September 13, 2012

It’s less expensive for the government to guarantee a loan made by a bank than to be the lender itself. FHA and VA loan guarantees are well known and well used. It’s not surprising, then, that there has been a shift in USDA’s lending too, away from direct loans towards guarantees, especially after recent changes made USDA’s guarantee programs self-supporting. But guarantees cannot replace direct loans — they serve different populations.

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