[Rhodes22-list] Economics

[Hank]

Dave,

I agree with your points about tightening the lending requirements, but the
current administration cannot do it.  If they tried, they would just be
giving the Dems more ammunition to criticize.  Can't you just see the
headlines "Bush makes it harder for the working class to obtain a home" or
some such nonsense.  Which is really a shame because this issue is truly
bi-partisan.  Unfortunately, politics so polarized right now, that either
side will use anything they can to bring down the other side, even if it is
good for all.

Hank


On 3/28/07, DCLewis1 at aol.com <DCLewis1 at aol.com> wrote:
>
>
> Wally,
>
> If you take the average person and stand him up against a team of high
> pressure sales people, the sales people will sometimes win.  If you've
> been
> through a time-share sales experience you know what I mean.  So to say
> it's  the
> purchasers "fault" (as per Brad in his rare lucid moments) is not enough,
> I
> think there needs to be some regulation.  I don't think the
> existing  lending
> disclosures I'm aware of begin to address the issue - they just give
> you  a lot
> of numbers when what's needed is advice on what you, the purchaser, can
> afford.  I suspect a lot of home purchasers have taken the position - if
> I  can't
> afford this house they won't give me a loan - which of course is wrong;
> mortgage originators will give anyone a loan and then promptly sell it
> to  someone
> else who will be left holding the bag.  I think lenders and  borrowers
> both need
> some protection from originators who have originated  clearly bad loans,
> mis-represented them when they were sold, and then moved on  down the
> road.
>
> What I'm trying to say is that there are 2 losers in this melt-down: the
> borrower and the loan holder.  The only winner is the loan originator
> who  can
> pack up and get out of town ahead. From my perspective this is not a
> constructive arrangement.
>
> With regards to your point that what was done was perfectly legal: I'm
> sure
> that for the most part you're right.  But I think the financial system has
> good ways to deal with legal but overly risky things that appear to be
> getting
> out of hand.  There's no reason why Treas, HUD, or the Fed - or all of
> them
> together - couldn't have called a meeting with the principal lending
> institutions - which are all subject to state and federal regulation -
> to  publicly
> convey their concern and ask/require that lending standards
> be  tightened.  There
> is precedence for this, the Fed did it with the  derivatives market and it
> worked, I think it could have worked with mortgage  originators.   This
> doesn't
> take new laws, just call a meeting -  again, it's worked with derivatives.
>
> Finally, as a nation we've been down this mortgage fiasco road before
> in  our
> lifetime.  There's no good reason why the people paid to regulate the
> mortgage markets shouldn't have been on top of  NoDoc, NINA, and negative
> amortization loans from their start.  I do blame the regulators.  If
> I  saw this coming
> and you saw it coming, they should have seen it coming, and I  think they
> should have tried to do something about it.
>
> Dave
>
>
>
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