“You want to kill the mortgage market for years? - get the government involved...”
NO!
You don’t want the government involved.
The government is CAUSING this problem.
A Sarbox for Housing
How to restrict lending to the poor for years to come.
Tuesday, November 6, 2007 12:01 a.m. EST
Throughout the 1980s and ‘90s, Congress prodded, even strong-armed, banks into making more mortgage loans to low-income and minority families. Washington enacted anti-discrimination and community lending laws with penalties against lenders for failing to issue riskier mortgages to homebuyers living in poor neighborhoods or with low down payments and subpar credit ratings. And so it was that the modern subprime mortgage market was born.
Now, and for a variety of reasons, some two million of those loans have gone sour, and the same politicians are searching for villains. Leading the charge is House Financial Services Chairman Barney Frank, who is accusing banks of “predatory lending”—by which he means making loans to the very group of borrowers that Mr. Frank and his colleagues urged banks to serve.
As early as today, Mr. Frank plans to hold a committee vote on his Mortgage Reform and Anti-Predatory Lending Act of 2007, which would impose new rules and financial penalties on subprime lenders, while providing new lawsuit opportunities for distressed borrowers. “People should not be lent money that’s beyond what they can be expected to pay back,” Mr. Frank says. Now, there’s an idea. Why didn’t the bankers think of that?
Mr. Frank’s proposal is a trial lawyer’s dream. It would forbid banks from signing up borrowers for “overly expensive loans”; require banks to make sure that the consumer has a “reasonable ability to repay the loan”; and insist that loans must be “solely in the best interest of the consumer.” This kind of murky language would invite litigation from every borrower who misses a payment. If it becomes law we can expect to see billboards reading: “Behind on your mortgage? For relief, call 1-800-Sue-Your-Banker.”
Also for the first time, banks that securitize mortgages would be made “explicitly liable for violations of lending laws.” This is a version of secondary liability that holds the bundlers and resellers of mortgages responsible for the sins of the original lenders. The reselling of mortgages has been a boon both to housing liquidity and risk diversification. So to the extent the Frank bill adds a new risk element to securitizing subprime loans—and it surely will—the main losers will be subprime borrowers who will pay higher rates if they can get a loan at all.
...
But for all the demonizing, about 80% of even subprime loans are being repaid on time and another 10% are only 30 days behind. Most of these new homeowners are low-income families, often minorities, who would otherwise not have qualified for a mortgage. In the name of consumer protection, Mr. Frank’s legislation will ensure that far fewer of these loans are issued in the future.
http://www.opinionjournal.com/editor...l?id=110010826
“You want to kill the mortgage market for years? - get the government involved...”
Sorry, I mistook your reply.
It’s an election year ... and all the socialists will flock together to show they “care” and “feel your pain” and dumb people down MORE and more them MORE irresponsible. If need be, let both the mortgage company and the consumer LEARN THE HARD WAY to THINK and not FEEL and be GREEDY living beyond their means.
I second that. A major cause of the problems we are experiencing today is government.
The dirty little secret right now, is that subprime mortgage products are already gone.
There are some who wish to crash the housing market and our economy; that is a bad idea and will hurt everyone in the nation.
“You want to kill the mortgage market for years? - get the government involved...”
Well, the government has been involved for many years. That is what people must realize. Fannie Mae, Freddie Mac, the failure to release up-to-date financial statements for these GOVERNMENT SPONSORED ENTERPRISES, a Federal Reserve System that happily accomodates politicians’ wishes, pressure from government to loosen lending standards for borrowers who have a sketchy credit history, and the list of government involvement goes on and on...
So why does the American taxpayer, especially one(s) raising a family, buying a home now, is frugal, saves, and budgets need to foot the bill? Anyone thinking that those affected are entitled to a bail out the builders and the wages paid to the illegal construction workers with no Workman’s Comp bennies paid to the states by their employers (but free medical if hurt on the job), plus the salaries of the real estate agents, mortgage lenders, and dividends to the stock investors for nothing but a simple “GREED RUN”????