Posted on 05/14/2014 6:02:50 AM PDT by mac_truck
WASHINGTON—The Obama administration and federal regulators are reversing course on some of the biggest postcrisis efforts to tighten mortgage-lending standards amid concern they could snuff out the fledgling housing rebound and dent the economic recovery.
On Tuesday, Mel Watt, the newly installed overseer of Fannie Mae and Freddie Mac, said the mortgage giants should direct their focus toward making more credit available to homeowners, a U-turn from previous directives to pull back from the mortgage market.
In coming weeks, six agencies, including Mr. Watt's, are expected to finalize new rules for mortgages that are packaged into securities by private investors. Those rules largely abandon earlier proposals requiring larger down payments on mortgages in certain types of mortgage-backed securities.
The steps mark a sharp shift from just a few years ago, when Washington, scarred by the 2008 crisis, pushed to restrict the flow of easy money that fueled the housing bubble and its subsequent bust. Critics of the move to loosen the reins now, including some economists and lenders, worry that regulators could be opening the way for another boom and bust.
(Excerpt) Read more at online.wsj.com ...
Because one subprime mortgage collapse is never enough.
LOL. Here we go again.
Isn’t this the crap that got us in this mess in the first place? Thanks DemocRATS! Once is never enough! Right?
Spin, spin, spin, spin, spin. Spin until you are dizzy and sick. There is no "housing rebound." The entire economy never left the toilet due to Obama loading taxes and regulations onto it, and the suffocating debt that he and Bush loaded onto it.
Yeah, I makes 2.5 million a years and eyes wants ta live in one of dem big Trump hy risus on Park Ave. Sur I kun eford dit. You don’t giv me dis stinkin loan and youse a racist
There is no solution to our international financial crisis. Any real solutions will involve austerity (like thes mortgage restrictions). But they are met with anger from the people, as in Greece and Spain. So they back off.
This leaves the only voluntary solution to be monetizing any debt. i.e. inflation which, due to the size of the problem, will slide into hyper-inflation.
Everything is already getting more expensive, but it will get progressively worse. Imagine where we would be if the fracking boom had not happened.
Spin, spin, spin, spin, spin. Spin until you are dizzy and sick. There is no “housing rebound.”
“The only useful banking innovation was the invention of the ATM.” - former Fed Chairman Paul Volcker (1979-1987)
Only Fed Chairman I admire and agree with. I stand with him and Milton Friedman on the issue of financial markets.
I would put ‘direct deposit’ right up there with the ATM in greatest inventions in banking.
Lather. Rinse. Repeat.
“Isn’t this the crap that got us in this mess in the first place?”
NO.
I do this for a living. Most of my day is spent asking my customers for what seems like useless information to over document a loan file.
Anyone who has gotten a mortgage recently will have found the process to be unpleasant in many cases.
The changes from what I have read actually make sense. Hard for me to admit that something done under this administration would actually make sense; so will have to see.
I haven’t ‘balanced’ a checkbook in 25 years.
I use a ‘no fees’ prime rate VISA for most everything and pay the balance every month.
Stupidity is doing the same thing over and over and expecting a different result.
We’ve been down this road at least twice so far.
Wait, let me guess... the Democrats are saying, “Yes, but this time it will be different.”
Maybe some of the lower income people who had their lives wrecked by this foolishness in the past can testify as to the madness of this.
You are righter than you know. As a 30 year veteran of the mortgage industry both underwriting and as a mortgage broker I can tell you that these cycles are never ending. When rates go up and business slows down the first thing that happens is they come around and tell the underwriters to loosen up. Then the no doc loans come back and the 97% and 100% loan programs. As 30 year rates rise the ARM’s get hot again. Less than perfect credit programs come back.
The one and only thing to remember is that lenders are in business to lend money. If they can’t lend money they go broke.
Cat's out of the bag as far as the quality of mortgage-backed securities based more upon social engineering goals than sound investment criteria, Mr. Watt. Therefore, this will not work with private investors, who have already been burned. It will merely create more bad paper, and guess who ultimately buys it.
For those who are able to do so, at least this ill-advised new bout of easy money should provide an opportunity to get out from under a mortgage in an area or type of residence that no longer works for you. Sell, get to a lower cost of living area. If you're in an expensive market take your equity and buy a small house with productive acreage in a cheap market free and clear.
They need to keep the merry-go-round spinning and I understand why, but I don't recommend being on it. Here's your chance to get off, if you're so inclined.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.