Posted on 01/10/2013 2:48:30 PM PST by whitedog57
The Consumer Financial Protection Bureau (CFPB), built by Senator Elizabeth Warren (D-MA) and run by “Robo Cop” Richard Cordray (the former Attorney General of Ohio), has issued its new list of mortgage feature bans for the “qualified mortgage.” Kerri Ann Panchuk from Housing Wire has a nice summary in her article.
201301_cfpb_ability-to-repay-factsheet
Here are the features of Qualified Mortgages and what is banned:
• No excess upfront points and fees • No toxic loan features
o No interest-only loans,
o No loans where the principal amount increases, such as a negative-amortization loan; and
o No loans where the term is longer than 30 years.
...
Wow, that is an extensive list of “Thou shalt not …” as if Richard Cordray was Moses (or Charlton Heston).
It is clear that these rules and bans reduce consumer choice back to the pre-bubble days of mortgage lending. But the assumption of the CFPB (and Dodd-Frank) is that consumers and investors are ignorant and foolish. Therefore, big sister Liz Warren and big brother Richard Cordray must save you from yourselves.
How were borrowers hurt by just giving their Social Security number (assuming it was actually theirs) and getting approved for a loan?
How were investors hurt as in “What don’t you understand about no documentation?”
A similar argument can be made for the other bans by the CFPB such as no interest-only loans.
So while some may cheer, I weep at the the government’s continued movement toward reducing individual liberties. Even if the name of financial sector soundness.
Cordray: “Oh God, smite those borrowers who desire freedom to choose their mortgage, smite the lenders in their temples for trying to meet the demands of the borrowers and smite the investors for their willingness to buy mortgage products we don’t approve of!”
(Excerpt) Read more at confoundedinterest.wordpress.com ...
“No excess...”
Physician, heal thyself!
TThis is the stuff that started the whole darn bubble,
Happy, finally,to see that you have to prove you can pay back the loan before you take the money and head to Mexico...
long overdue.
The American borrower is one of the stupidest creatures on the face of the earth, and, short of protective custody, this is about as good as can be done.
My grandmother, GRHS, was a NYC public school teacher for 50 years, 1912-1962. When she heard about the invention of VISA, she was absolutely incredulous. She predicted, in exact detail, the financial future of the United States from that day to this.
If your point is that "consumers" are NOT ignorant and foolish, you got a lot of 'splainin to do.
The mortgage interest deduction has led to a lot of our problems. When they took away all other interest debt deductions away but left the mortgage interest intact they were just begging for folks to leverage their home equity for other loans.
Credit cards, autos, stock market “investing”? No problem! Borrow from your home to finance these at lower than market rates.
long overdue.
A lender and a borrower should must be perfectly free to negotiate the terms of a mortgage without the government's dictating them. Why do you welcome more government interference?
The problem is that Washington will bail out the bank for having made poor decisions. They could have passed a law against that.
But, interestingly enough, they didn't.
DITTO! You never let the conniving groups who control banking invent complex products that no one understands and is used as camouflage for fraudulent schemes. To prevent white collar crimes, keep the system simple. That way regulators understand it and consumers of reasonable intelligence understand it. That way no one can lie, cheat and steal. More important the schemers cannot grow so big and widespread they can commit financial terrorism by demanding government (taxpayers) to bail them out or face economic implosion.
(Tap, tap, tap) You awake in there?
The FedGov forced the banks via the Community reinvestment Act to make loans to folks who clearly couldn’t repay them. Once it became clear Unka Sugar would underwrite damn near anything, the real looting began.
Now, maybe some sanity can return to mortgage lending.
The FedGov forced the banks via the Community reinvestment Act to make loans to folks who clearly couldn’t repay them. Once it became clear Unka Sugar would underwrite damn near anything, the real looting began.
Now, maybe some sanity can return to mortgage lending.
Um, "Tap, tap, tap." Can you think?
There is a huge difference between the government's forcing banks to make risky loans and bank's choosing to do so on their own. Yes. I am fully aware of the pressure put on banks to lend to lousy credit risks during the years leading up to the financial crisis.
It is not, however, the role of the government to forbid banks to lend to lousy credit risks, either. Can you not see the difference?
Government should stay out of it altogether. Applauding bad legislation because it aims to fix previous bad legislation is not sensible.
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