Posted on 08/04/2007 9:00:24 AM PDT by gpapa
The current troubles in the housing and mortgage markets virtually guarantee that some restructuring of the home-finance industry will occur under the next president. Already there are a number of legislative proposals on the table, with important implications for the ability of young men and women to purchase homes and existing homebuyers to sell. Oddly, in the various presidential debates, the candidates have not been asked about these plans, leaving both homeowners and financial markets in the dark.
One leading proposal is a bill called S. 1299, offered by Sen. Chuck Schumer of New York. Mr. Schumer is a senior Democrat on the Banking Committee and the third-ranking member of his party in the entire Senate, so any proposal he makes should be taken seriously. His proposal represents a regulatory and litigious approach to mortgage-market reform.
The bill requires that each mortgage originator act with "reasonable skill, care, and diligence" and in "good faith and fair dealing." It also requires that all loans are "reasonably advantageous to the consumer." Surely these are noble sentiments. But they are also vague and ill-defined legal requirements that open up the mortgage industry to endless litigation in an environment where juries comprised of homeowners must decide between families in the process of losing their homes and mortgage brokers, investment bankers and other financial intermediaries.
(Excerpt) Read more at aei.org ...
We don’t have any problem getting everyone into a car they can afford, why housing? Because the government isn’t, much, in the car and auto loan, and auto repo business, but it huge in land and housing and housing finance industry.
What ever industry the government is involved with, then you can be assured it is screwed up. Defense, health care, learning....
It's really a binary thing. You CAN afford it _OR_ you CAN'T Afford it.
When people in script based lives are told, "You CAN afford to live in Luxury Shores Executive Estates...if you pay just the interest", of course they can't. This is where the wheels come off.
I mean homeowners, not someone who is going to flip the property.
God, just wish they’d leave us alone.... Those SOBs in DC are going to destroy every chance at making a buck. They are the most arrogant/ignorant bunch of A-holes.
The "problem" is self-correcting. The same people who are having their houses foreclosed on are also having their jetskis, their travel trailers their big screens and everything else they were able to buy because of their ridiculously low (but temporary) house payments.
Now stay out of the way Chuckie Schemer. Home prices are stabilizing.
The problem can be summed up any clearer. If more people would buy only what they could afford their financial problems would stop. I know people that are less than 5 years before retirement and buy new very expensive houses with long mortgages. I think they are crazy. Yes, they are nice houses but in just a few years they will have a fraction of their current income. I am sure most will lose their houses or will seriously impact their retirement.
The author of this article is Lawrence Lindsey, Fred Thompson’s economic adviser.
ANYTHING that Chuck the Schmuck is FOR I would be AGAINST!
The key to getting America out of its current housing and mortgage market mess is to do everything possible to maximize the availability of credit. Credit is crucial to making sure there are buyers. Buyers maintain home prices. Sustainable home prices are key to minimizing foreclosures.Lindsey also cites the advantages of variable rate mortgages, which should enrage some of the knee jerk, holier than thou types here on FR. Up to now I haven't cared for Lindsey, but this is a pretty good article. The one thing he didn't do was suggest that the Fed lower interest rates to be in line with the rest of the market.
Do you know their entire financial strategy or are you making a judgment based on assumptions?
It's said that hard cases make bad law, and if we enact really stupid legislation during the current crisis, it will stay with us during the eventual recovery, and thereafter. I don't want to see any bailouts, but neither do I want to see things enacted to "punish" the guilty which have the effect of making things tougher on honest people in the industry.
Go back to the old regs on mortgages that had certain income, and debt ratio requirements. Unfortunately the banking industry lobbied to loosened the requirements claiming that they needed flexiblility and the mortgage business has changed substantially and the government regs reflected conditions of the 1930’s. Turns out private industry was wrong and the old time government regs were correct. Free market looser reg experiment failed, just go back to the old regs. Schumers approach will make things worst because it is legally vague and will cause more law suits.
If a banker knows that the mortage product has loose debt ratios, minimum docs and much higher risks, why are they enticing people with low incomes to buy high end homes? Legally the burrower is responsible, but ethically the banks need to review their own practices. What the banks have done with loose mortgage requirements is no different from their practice of giving credit cards to college students who have no income just to get them into debt knowing that the parents ultimately will bail them out. But in that time the bank made tons of money off the irresponsible student on interest in a very short time and in the end will also get all their principle back when the parent intervenes into the mess.
The guy lost his credibility with me when he made this statement. Most of us need to borrow in order to own a home, but we also need to learn to save so that we do less overall borrowing. We need to learn to delay our gratification of some purchase desires in order to keep more cash available to make important purchases. The key to Americans getting out of most of their financial messes is in making wiser choices.
While the writer lost his credibility, I agree that Schumer's bill seems wrong. If the description that this guy gives is correct, this change would take more responsibility from individual citizens and try to spread that responsibility onto finance companies. That step is also in the wrong direction.
Bill
Proposed by Chuckie Schumer? You just know it has got to be bad.
The relative says that FICO scores are capricious, senseless and a poor indicator of who will make timely payments. A graduating student with one credit card and a virtually non- existent credit history can have a higher score than a person with a paid off mortgage and, what is deemed, “too many credit cards".
No Federal bailout of the mortgage industry!
“The relative says that FICO scores are capricious, senseless and a poor indicator of who will make timely payments.”
Well..the FICO score thing really goofed US up for about a year..
My husband’s father died.
We bought his house from his father’s estate.
The house needed a TON of work.
We used credit cards to charge the money needed for the work, knowing that we would pay the money back within 1-2 months. We knew that we could do this because we were getting money from the sale of the home we were moving from.
Anyway, we previously had a FICO score in the high 700’s low 800’s (VERY good).
We don’t make very much money but we have NEVER been late on anything.
So...we do exactly what we planned to do.
Charge a bunch of $$$..then pay it off.
Well..our credit score went down by over 100 points.
We were lucky that our loans were locked in (we had 2...a temporary construction loan and a regular 30 year fixed).
But...my CAR INSURANCE went up by almost 400 per YEAR because of it! (WE HAVE NEVER HAD A TICKET OR AN ACCIDENT OR BEEN LATE ON ANY KIND OF PAYMENT TO ANYTHING!)
We are on a SUPER, SUPER tight budget..and the extra $30+ per month just made me NUTSO..
Soo..sorry this is off topic..but the FICO scores are becoming more closely tied to other things as well.
And, although they may be a properly good indicator of how most people manage their money, we were really screwed by it.
(and unjustly in my opinion)
Why does anyone with multiple brain cells think for one minute that the clowns in Washington have a clue how to fix anything? Why do we always look to Washington to solve problems when, in fact, they cause most of them? Geez, people, fix your problems yourself. Each piece of legislation that becomes law restricts your freedoms in some way. If mortgage bankers loaned money to people who shouldn't have had mortgages, those companies will ultimately close. It's the market equivalent to thinning the herd. If you invested in those fly-by-night companies, you did so because they promised you a higher return. Well, with a higher return comes higher risk. You gambled...you lost. Not my problem. Not my gov'ts problem. Nuff said.
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