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,"

[starbase]

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

"Personal" attack on a news report? Wow! Pull yourself together Ex-T, you can come up with better lines than that. I've seen you do it before.

Hey, for "personal", how about this cowardly act by you where you Googled Petronski's screen name and then posted the search in FR to intimidate her?

Now that's personal!

[lewislynn]

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.

LOL! What's wrong with this picture...Oh I know, relaxing lending standards for certain types of loans, isn't illegal.

Wouldn't you like that "top banking regulator" nanny job ex-Texan so you can save us all from ourselves by stopping this mortgage lending nonsense?

[Petronski]

...to intimidate her?

Him, actually.

Just ask cyborg. ;O)

[starbase]

Him, actually.

Just ask cyborg. ;O)

Oops! Apologies. I guess the Wanda Petronski in the book left me thinking you were a woman! Sorry!

[Polybius]

About two-thirds of all people who bought homes in the Washington area in 2005 used interest-only or option mortgages, ............. "Without these products, homes couldn't be purchased. If they are taken off the market, it could precipitate a disaster of epic proportions."

These gimmick loans have artificially jacked up real estate prices so high that "it could precipitate a disaster of epic proportions " if buyers were actually forced to pay anything on the principal.

In other words, these people will never actually own their own homes.

"Saint Peter don't you call me 'cause I can't go. I owe my soul to the Savings & Loan."

[ex-Texan]

Petronski was feeling a bit picked on. He did the exact same thing on this thread where he started attacking Protestant Christians. Now you join in claiming I'm a bad person. Come off it. I was just joking and everybody knows it.

[nmh]

Good post!

Some may not like the truth you post through reputable newspapers (even if they are left leaning). Even right leaning papers are saying the SAME things. My best guess is that they are sweating it out with THEIR interest ONLY loans on houses they can't afford and don't want it rubbed in their faces. If you looked under their chairs ... I'd bet you'd see HUGE brown spots as they sweat it out.

[Petronski]

He did the exact same thing on this thread . . .

Where did I do the exact same thing? The "exact same thing" would be to post the results of a google of someone's screenname. Can you link the exact post where I did that?

Do you know you are required to ping anyone you mention by name in a post?

"...where he started attacking Protestant Christians.

I was not attacking Protestant Christians, I was attacking false statements about my religion.

[nmh]

Again, The Washington Post is RIGHT on this issue:

"A variant, called option adjustable-rate mortgages, allows borrowers to decide how much they wish to pay each month and whether they want to pay down the principal. The risk in interest-only and option ARMs, however, is that at a future point, the loan payments are recalibrated to make up for payments not made during the early phases of the loan -- and could double in a single month."

"These loans also pose the risk that people could end up in homes with higher mortgage balances than when they were bought."

I can easily see this happening. They can't pay the interest on the INTEREST ONLY loans once they GO UP. I can easily see in a former "hot" market they paid MORE than they should and then coupled with HIGH interest rates, bail out and OWE MORE than the HOUSE IS VALUED.

I see prices going down in New Jersey and this is NOT a cheap state in property/land and the HIGHEST in the nation for taxes. More and more "reduced" or "new price" is becoming more common in you better neighborhoods.

[nmh]

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

You: 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.

People do it ALL THE TIME - primarily YOUNG people. They are strapped financially and push it to the limit to get the "forever house" NOW. They HOPE for raises to ease the financial stress. They don't want to acknowledge that they can't afford it. They are shallow, yes stupid people, that want to "look successful" and "have it NOW."

"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."

Home sales are slowing because it runs in cycles - typically five year cycles. It was on an UP cycle and now it is leveling off. People paid the peak prices - more than the house was worth. Now some are starting to PAY the higher interest rates and CAN'T.

You are fortunate that you have COMMON SENSE. Many people DO NOT HAVE COMMON SENSE and wish to live in denial of what they can really afford. It's an attitude out there - INSTANT GRATIFICATION. They want what their parents worked for all their lives - NOW!

[starbase]

He did the exact same thing on this thread where he started attacking Protestant Christians.

That was a pretty cheesy bait-n-switch Ex-T. I scrolled through the whole thread but only saw a link Petronski posted to the life of Martin Luther. If you can provide the exact post I'll look at it, but I don't think that post really exists.

As long as your threads with promotional activities are moved over to Bloggers and Personal, then I don't really care how much cheap crap you hawk.

On a serious note, you have a very venomous streak, and absolute lies, and manipulations come far too naturally to you for your own good.

Seriously, I suggest you reflect that just because something comes easily, it may not be good for you at all. Your bait-n-switch here, your accusation that we're all realtors when you know you don't know what we are, and your thuggish posting of Google searches of other people's screen names are all pretty damn poisonous.

You should change your ways, really. In the meantime, as long as your threads get moved over to Bloggers and Personal, well then, ***promote away!!!***

[ex-Texan]

The powers that be do not want the sordid truth to come out. Lenders are making irresponsible loans for the purpose of continuing House-ATM Machine-Bubble. Naive buyers who cannot afford houses have been defrauded and signed up for very risky loans out of a sense of desperation. This whole mess is going to explode into print pretty soon. I have heard that Congress and the Justice Department are investigating allegations of massive fraud and organized crime in the mortgage industry. I see many ramifications and possibly severe repercussions ahead.

The people attacking me on this subject may have private personal motives for piling on. Their efforts were really intended to censor the subject matter.

[ex-Texan]

I could Gooogle the name 'starbase' all day long 24/7. All it would turn up is garbage info. That is obvious to everybody. He was just play acting. There is nothing wrong with searching someone's screen name.

[Petronski]

There is nothing wrong with searching someone's screen name.

It's all about intent.

[ex-Texan]

My intention was humor. I was just joking. And you know it. Calling you "Wanda," was just a joke. If you claim otherwise, you are just lying again.

You blew the whole thing up with false allegations. You probably complained to your FR buddies and they came running like little groupies to defend your 'honor.' You always post additions to the KEY WORDS section. Using key words to call your buddies. Also, you always post insulting comments, to most everyone. You do it all the time like a bad habit.

Go do some work on your great novel, Petronski. The thousands of hours you spend posting on FR will not feed the dog.

[Petronski]

My intention was humor. I was just joking.

If you say so.

[T.L.Sink]

Is that the astute buyer shown in the doorway of his home?

[VegasCowboy]

LOL! Well done.

[VegasCowboy]

Actually, I'm just a concerned homeowner, like millions of other Americans. I like your threads because 1) they generate a lot of debate on the state of the housing market, and 2) I enjoy your jousts with Petronski.

And by the way, you do have to admit that you can't post a thread without a link to your blog. Is this blog-pimping? Probably. I don't really care, but you shouldn't get defensive about it as it is obviously what you are doing. FR lets you get away with it, so good for you.

[ex-Texan]

In effect, P. got some of his buddies to gang up on me today. His BOHOG games are now almost world famous. (Google it if you are curious). His motive was to censor me because he does not agree with me. He must be living in another world. Most people agree with me. Only 9% of major lenders agree with Petronski. Federal regulators also agree with my position. Either way, P. has taken it upon himself to act as FR's self-appointed censor. I'm not posting here to entertain anybody. All I was doing was exercising my right of free expression.

You know where to find me. Come over there if you want to learn something of value. Otherwise, just hang out here. I'm sure if you do a screen name search you will find P. wildly flaming others as well. Flame games are not my cup of tea. They bore me.