Ranieri Says Tight Mortgage Lending May Be Worse Than Crisis (How About Borrowers??)

Confounded Interest ^ | 10/28/2013 | Anthony B. Sanders

[whitedog57]

Mortgage-backed securities legend Lew Ranieri made an impassioned plea for regulations to loosen credit standards on home loans at the Mortgage Bankers Association (MBA) annual conference in Washington D.C.

The U.S. mortgage market has experienced an “irrational restriction” of credit as lenders and regulators overreact to the loose lending during the bubble that burst in 2007, mortgage-bond pioneer Lewis Ranieri said.

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“If this legacy persists the consequences will be more profound for the country than the economic losses” caused by the bust, Ranieri said today at an annual conference hosted by the Mortgage Bankers Association in Washington.

Ranieri, the chairman of Uniondale, New York-based Ranieri Partners, helped expand the mortgage-securities market in the 1980s at Salomon Brothers Inc., where he was vice chairman. His firm’s investments include Selene Finance LP, which targets soured debt, and home lender Shellpoint Partners LLC.

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Tight credit and foreclosures pushed down the U.S. homeownership rate to 65 percent in the first half of this year from a peak of 69.2 percent in June 2004, according to Census. Most lenders no longer offer borrowers the ability to qualify without fully documenting their incomes and assets.

Starting next year, qualified mortgage rules, known as QM, will expose originators to higher legal liabilities on loans carrying risky features or when payments exceed 43 percent of the borrower’s pay.

Irrational? How about the DEMAND side from borrowers?

Real median household income has been declining since 2000 (with a blip during 2005-2007).

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Borrowers took a beating after the housing bubble burst. Household owner’s equity in real estate is increasing again, but have not regained the loss.

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Mortgage purchase APPLICATIONS continue in a stall pattern indicating lower demand for mortgages (as in 1995 levels).

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What if they loosen credit standards … and nobody shows?

wingsye5

[whitedog57]

That's it. Recommend massive easing of mortgage credit and repeat housing bubble disaster. All so Ranieri can rake in billions more.

[Da Coyote]

Let libs lend their own ***king money to the losers.

I’ll keep mine.

But, we all know that’s not how it works.

[DonaldC]

I think they over tightened and with all the QE stuff going on, there is o incentive to lend, they just play the markets.