"Mr. Potter, you and that Barney Frank can do the hoochie-cootchie every night for all I care, but when you start messing with people's homes I'm gonna do something about it".
Posted on 04/05/2009 5:42:32 PM PDT by Libloather
Congress Takes A Serious Look At Reforming the Mortgage Market
By Kenneth R. Harney
Saturday, April 4, 2009; Page F01
Congress is preparing to take up a comprehensive plan that would fundamentally reform the home mortgage market, starting this year.
Had the same rules and standards been in place earlier in the decade, congressional supporters say, it could have eliminated much of the funny-money loans, slipshod underwriting and Wall Street abuses that distorted the market from 2002 through 2006. The boom wouldn't have been as big, and the bust might not have happened.
The Mortgage Reform and Anti-Predatory Lending Act of 2009 (H.R. 1728) was introduced March 26 by co-authors Reps. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, Brad Miller (D-N.C.) and Melvin Watt (D-N.C.) It is expected to move quickly through the House this month and go to the Senate by May. The odds of passage in some form are high, according to banking and housing industry lobbyists.
The bill is a tougher version of one pushed by Miller in 2007 that passed the House but foundered in the Senate. This year, as a result of stronger Democratic majorities in both houses, "the political climate has changed," Miller said. "The foreclosure crisis has wreaked havoc on middle-class families and our economy as a whole. The industry's arguments for watering the bill down are not at all convincing."
Here's what the legislation would do:
(Excerpt) Read more at washingtonpost.com ...
The new Queen of Mean?
The same people who caused this meltdown think they can fix it.
Pray for America
Probably all you need to know.
However, this doesn't repeal the CRA, and it doesn't change the rules that banking regulators forced upon mortgage lenders to comply with the CRA.
Changing the amount of money that loan officers can make, won't stop the problem. This is just window dressing, and another case of Democrat politicians telling people they make too much money.
Correct me if I’m wrong, but we “reformed” the free market back in the 1930’s with the New Deal regulations. After the S&L crisis, we “reformed” it again. Actually, it’s been getting more and more regulated every year since about 1930. It doesn’t seem to be working. In fact, I would say that the problem is no longer “laise faire” economics, but rather governmental regulation.
Yes, we have regulations that force lenders to make bad loans or face possible litigation.
We have rules that allow food stamps and welfare and unemployment compensation to be used as “income”.
Bye, bye brokers.
This was not "free market". This was criminal fraud. A swindle. A scam.
The Wall Street investment banks contracted with loan brokers to come up with signed IOU's, with as high a stated interest rate as possible, signed by anybody with a pulse be they unemployed, be they an illegal alien or be they a panhandler downtown that claimed a steady job or be they a middle class guy earning $80,000 that bought an $800,000 condo he could never afford because, after the "Interest Only" grace period on his mortgage expired, he expected to "flip" the condo for a cool $1.2 million.
These "high interest" IOU's were then rated "Triple A" and bundled into Mortgage Back Securities with other loans. It was like mixing rotted hamburger with fresh hamburger and labeling it "Grade A".
These toxic Mortgage Back Securities were then sold the the managers of the Mutual Funds in your 401k and he traded your perfectly good Dollars for IOU's that were not worth their weight in used toilet paper.
The bankers made tons of money on the scam.
The loan brokers made tons of money on the scam.
Your 401k got poisoned by the rotted hamburger. The U.S. financial system was poisoned by the rotted hamburger. The stock market by the rotted hamburger and lost all gains since 1998.
That is not "free market".
It is good, old-fashioned, criminal fraud.
Am I defending the Democrats?
Nope. The Democrats, Fannie Mae and Freddie Mac were in on the scam up to their eyeballs, .... especially Barney Frank.
Here is a really interested 89 page outline starting at 1929 of how we fell on up to now. The first few pages are really interesting, Obama is saying the same words Hoover did , right before the crash.
http://worldchallenge.edgeboss.net/download/worldchallenge/books/gods_plan_to_protect_his_people.pdf
**Warning this is written from a Christian perspective and atheist might stroke out.
“Congress is preparing to take up a comprehensive plan that would fundamentally reform the home mortgage market, starting this year”
I fed this through the old Disgronificator and it came out that Congress will further weaken mortgage qualifications thereby setting the nation up for another economic disaster down the road.
I’m starting to see a trend here now by the liberals. Put the type of regulations on business that make it virtually impossible to do business at a profit which thus sets the stage for more government intervention in that sector of the economy.
I agree that it wasn’t a free market, but not because of Wall Street. Wall Street just follows the rules that the government makes. The reason we’re in this mess is that the government tried to manipulate the markets in order to benefit the politicians’ own particular political constituencies. If you subsidize housing to help the poor, or juice the housing sector, then don’t be surprised when you create a bubble that ultimately bursts, causing a market meltdown. That’s not the market’s fault. The market will only swallow so much crap before it rolls over dead. It’s the government’s fault for feeding crap to the market.
That was certainly part of the Big Picture but the deliberate fraud was the dominant cause.
Why would ANY loan broker be dumb enough to lend $400,000 of HIS money to a house flipper earning $800,000 per year to buy an $800,000 condo?
Not a single one would do such an idiotic thing.
However, they were not lending THEIR money. They were getting signatures on worthless IOU's that they then sold to YOU, via your mutual funds, and, each time they did, they earned a fat commission.
Your dog's dog food had more Quality Control protection that the Mortgage Backed Securities sold to your mutual funds.
You’re always going to have deliberate fraud. You can perhaps minimize it by having government looking over their shoulder. However, you’ve got to remember that almost all of these financial institutions already have government looking over their shoulder, conducting periodic bank examinations, etc. It obviously did not stop this. I think that you’ve already accomplished about as much as you can accomplish with that kind of strategy. It’s inevitable that when you have a recession, these kind of schemes and frauds suddenly are exposed. Throw the crooks in jail, and beef up the examinations, but the truth is that for the most part, the problem was caused by a massive real estate bubble. We’ve got a history of real estate bubbles blowing up. You’d think that the guys in Washington would figure out that instead of accentuating the problem with subsidies, the better thing to do would be to either keep your hands off, or repeal subsidies when the market turns up. But they are afterall politicians, and politicians simply cannot make that kind of a decision in an effective manner. That’s why socialism doesn’t work. Fortunately, we had some semblance of a free market to blow the whistle on them. Now, though, they want to abolish the free market. A cynic would say that they want to abolish the free market because it interferes with their efforts to manipulate the markets for their own political benefit.
A cynic would be right.
And, as most government programs demonstrate, it's much easier to defraud the government than it is a private sector entity.
Want more crooks? Give government more power. And they'll multiply on both sides of the transaction...
The bill would also impose a new federal "duty of care" standard requiring loan officers to offer applicants only terms and rates that are "appropriate" to their income and ability to repay.
Full Employment for Lawyers provision
Another full Employment for Lawyers provision
Another Full Employment for Lawyers provision plus the borrower gets all their $$ back w/o losing the home?
Unbelievable!!! Just another example that the patients are truly running the asylum. How Bawney Fwank and his fellow travelers continue to get away with their crimes against the nation I’ll never understand. What is it about his constituents that blinds them to the fact this pervert and moral degenerate is worthy of anything more than being spat upon?
The makings of the current disaster was obvious. I predicted it right here on FR as far back as 2005.
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Why was there a Housing Bubble?
Because every Tom, Dick and Harry was being given $400,000 with every gimmick in the book.
With every burger-flipper at MacDonalds with $400,000 to bid on a house, $200,000 houses were being bid up to $400,000 and $600,000 houses were being bid up to $1.2 million.
It was obviously NOT sustainable.
I knew it in 2005.
"William J. Pulte, founder and chairman of Pulte Homes" knew it in 2005.
The politicians that SHOULD have known it were in on the take.
When any wino surrounded by his own vomit in a downtown alley can sign a mortgage document put in front of him by a loan broker promising that he has income and get $300,000 from a pigeon that was sold his worthless IOU in a Mortgage Backed Security, of course you are going to have the Mother of All Housing Bubbles.
One leads to the other.
No fraudulent mortgage scams = No defrauded investors buying Mortgage Backed Securities = No hundreds of Billions of dollars being handed out to unqualified borrowers = No asinine bidding of $400,000 on a $200,000 house by a MacDonald's burger-flipper = No future foreclosures guaranteed to happen four years after I predicted they would happen = No financial melt down because the collateral on the foreclosed mortgages are worth only a fraction of the idiotic prices paid for the with borrowed money.
This was not a case of isolated instances. This was a total breakdown in accountability. ALL of this could easily have been prevented by:
Requirements for:
1.) Ten to twenty percent down payment on every mortgage.
2.) NO gimmicks such as "Interest Only". The buyer must be required to pay interest PLUS principal from Month One.
3.) Proof of income MUST be provided and verified.
4.) Common sense limits on the amounts that can be borrowed based on the person's documented income. If you can't afford the payments of principal PLUS interest from Month One, you obviously can't afford to borrow that much.
5.) Outlawing loan broker kickbacks for pushing certain types of loans. If the treatment for a medical condition required either surgery or drugs for a cure depending on the case, could a doctor be trusted to advise one choice over another if he got fat kickbacks from the drug company or the surgeon for sending patients their way?
6.) Holding each loan broker PERSONALLY liable for fraud if he approved a mortgage without proper proof of income.
It was that simple.
Most of what Obama is doing now is political agenda driven and that includes improperly trying to shore up Housing Bubble prices.
A lot of regulations are power grabs pure and simple.
Be that as it may, common sense regulations are necessary and, just because we don't want the Government deciding which brands of beer we are allowed to buy at Safeway does not mean that the Government should be asleep at the wheel when the dead animals from the local Animal Control Shelter and half rotted carcasses from the back forty of the local rancher are being delivered each Wednesday to the Safeway Meat Department loading dock two hours before the Safeway butcher grinds up his hamburger.
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