Regulators To Issue Mortgage Warning

Wash Post ^ | 4/07/2006 | Kirstin Downey

[ex-Texan]

Bank Chief Seeks to Rein In Risky Deals

As the real estate market slows, some mortgage lenders are trying to prop up profits by relaxing lending standards for certain types of loans, endangering borrowers and financial institutions, a top banking regulator said yesterday.

Speaking to the New York Bankers Association, John M. Reich, director of the Office of Thrift Supervision, warned that some lenders are making it too easy for unsophisticated borrowers to take on risky nontraditional mortgages that they may not fully understand. * * *

But a regulatory crackdown on the loans, known as interest-only and option mortgages, could prove problematic for some pricey real estate markets, such as the Washington area, where buyers have become increasingly dependent on such loans.

About two-thirds of all people who bought homes in the Washington area in 2005 used interest-only or option mortgages, many of which have adjustable interest rates, up from 2.2 percent in 2000 * * *

Local mortgage brokers say borrowers are taking out these loans because it is the only way they can afford to buy a home today. * * *

"Without these products, homes couldn't be purchased. If they are taken off the market, it could precipitate a disaster of epic proportions." * * *

These new loans are risky for some borrowers, said Thomas Shaner, executive director of the Maryland Association of Mortgage Brokers, but their use has fueled the local real estate market.

"If people suddenly can't get an interest-only loan because the feds are clamping down on how many are out there, it'll drive the market down,"

[ex-Texan]

The Fed is clamping down on risky mortgages. In places like D.C., risky loans have fueled real estate markets into a bubble that is about to burst. The economic shake out will begin for real in about six months. [Helpful site here] By the end of next year, people will be lining up to buy foreclosures. 'Nuff said.

[ex-Texan]

That is not an advertisement, it is a link.

[jiggyboy]

Local mortgage brokers say borrowers are taking out these loans because it is the only way they can afford to buy a home today.

This statement is beyond transparently stupid. If the only way to buy a home is with a suicide loan, then you can't afford that home. It's that simple.

And if home sales are stagnating, it ain't directly because these loans aren't available, it's because the price of the home is too high. That's simple too.

[browardchad]

The WaPo is a blog? Who knew?

[ex-Texan]

Notice #2 is signaling the realtors and mortgage brokers on FR to jump in and complain about the news report. 'Nuff said.

[Petronski]

Blogpimpapalooza!

[ex-Texan]

Here come the rest of the realtor and mortgage broker crowd to censor the news.

[Petronski]

"Censor the news?"

Nah.


Just pointing out how you're using FR to drive traffic to your blog.

[ex-Texan]

That is what your true intention is: Demanding censorship of news about mortgages.

[sully777]

LOST ANOTHER HOME TO DIE-TEK's INTEREST-ONLY SCAM

---

[Petronski]

That is what your true intention is.

You're lying again. I've demanded no such thing.

[starbase]

Here come the rest of the realtor and mortgage broker crowd to censor the news.

Accusing us all of being realtors and brokers is a defense invented by Ex-T. He, in fact, does not know the professions of any of us at all. We're concerned Freepers here to expose a blog pimp who regularly violates forum rules by posting links which personally profit him.

Here's a link that links to two more examples of Ex-T's profit garnering activities here on FR.

He always includes his personal sales links in the first post, which he has done again this time.

Ex-T's threads should be moved to Chat, or pulled on the grounds business activity is banned by forum rules.

[sully777]

"Censor the news?"

Nah. Just pointing out how you're using FR to drive traffic to your blog.

---

Oh, I see. You're referring to the [helpful site] listed in the comments box. Yes, yes, yes. I was directed to a blog with lots of pop-up ads and a photo of tornado destruction in Tennessee.

For a second I was wondering why the Washington Post was considered a blog. That's being generous to the WP (lol).

Ex-texan is a good person. Perhaps the link was inadvertent.

[ex-Texan]

I have not made a dime from FR. Your personal attack on this news report is obvious to everybody, starbase.

[Petronski]

Perhaps the link was inadvertent.

Perhaps it was inadvertently posted on virtually every thread he posts?

[Alex Murphy]

The economic shake out will begin for real in about six months. [Helpful site here] By the end of next year, people will be lining up to buy foreclosures. 'Nuff said.

Most of the foreclosed-on homes in my area were in disrepair long before the actual foreclosure. I'd say their (former) owners were unprepared, financially or socially, for the responsibilities of ownership, and demonstrated it by taking out an ARM or interest-only mortgage to begin with. The banks were equally as irresponsible for approving such loans when the individuals' earnings histories show an inability to meet increasingly-higher commitments. Foreclosures will cost the banking industry dearly, too, since they loaned the money out and will have to sell the now-downtrodden properties at a loss.

On a brighter note, Hopefully the foreclosure aftermarket will place more responsible individuals in those homes, which would benefit everyone involved.

[sully777]

Leaving the erupting flame war ASAP

[sully777]

I'm staying out because I don't know anything beyond this thread.