The Market needs to regulate itself; and the consumer needs to be accountable

This isn't going to go well if the government feels the need to meddle.

From Bankrate.com. “On April 17, the House Financial Services Committee held a hearing called, ‘Possible responses to rising mortgage foreclosures.’ Of a dozen witnesses, none were mortgage servicers, the people whose companies collect mortgage payments, deal with delinquent debtors and initiate foreclosures. The committee didn’t call any lenders, either.”

“David Berenbaum, executive VP of the National Community Reinvestment Coalition, suggested a…mandated temporary halt in foreclosures.”

“A mortgage servicer might have responded by asking who would pay the accumulated interest payments during a moratorium. The servicer, the investors who own the loan, the borrower? If it’s the latter, is that fair? Or would the taxpayers pick up the tab?”

“George Miller, executive director of the American Securitization Forum, warned that ‘policies designed to further regulate subprime lending or provide relief to borrowers’ could cause investors ‘to shun the market altogether and cut off mortgage credit for worthy subprime borrowers.’”


OneHungMan said...

Sounds like the committee that convened to discuss Imus...no white people.

That One Guy said...

led by Al and Jesse... interesting, Jesse Jackson said he would personally pay the tuition for the chick who ALLEGED the she was raped by the Duke Lacrosse players. I wonder how he feels about that now... SHE'S the one who is the nappy-headed ho.

Those two are MORONS, but here's the thing - so are every one of those AM radio Talk-Jocks. The more people listen to them, the more power they get. Problem is, they are only interested in the sound of their own voice. they do nothing to advance ANY reasonable discussion on anything.

Cameron said...

But what about all those poor home owners faced with foreclosure and possible bankruptcy? "The Market" isn't too kind to those folks, which is why the politicians can't wait to dive in.

That One Guy said...

Cameron: the lenders who own those bad loans have some decisions to make - like Fannie Mae. They have to decide who, in the long run, can deal with the home they are having trouble with, and they will have to decide what, if any, loan modifications will help the deserving borrowers.

I suspect over the next while we will hear more about other lenders who are willing to make note modifications for deserving borrowers who should be able to deal with the (modified) debt load they signed up for. Now that Fannie Mae has come out saying it's something they are going to look very hard at, we'll see others as well. Fannie LEADS the charge on almost all changes in this regard.

Remember, lenders are in the business of selling money, with interest, not owning homes that sit vacant, deteriorating.

That's the market regulation I am talking about - they have to decide a) who is "deserving"
b) can a loan be modified in such a way that allows a lender to keep payments coming - perhaps in some reduced amount?

They REALLY don't want to foreclose. They hate it - it hurts their bottom line and their stock prices. They'd MUCH rather modify a note, especially if it looks like they would have to take a loss to get the foreclosed home off their books.

Why not modify a note? 6% interest income is less than 8.5%, but it's WAY more than a dead house on the books with NO money coming in on it.

And, borrowers who got duped into signing a bad loan, or one about which they were not educated, should have recourse. There was a class action suit approved recently against Ameriquest - one of the worst out there for bait and switch tactics, and fraudulent loan documents.

But besides FRAUD perpetrated against them, borrowers MUST understand what they themselves are signing. It HAS to be that way.

If not, the government puts itself in the position of saving us all from ourselves in this area. They have proven that they can't really accomplish that feat in any OTHER aspect of our lives, and they shouldn't think they can do it here either.

Borrower education is the answer.

OneHungMan said...

OneHung agrees that borrowers must accept some responsibility. Having said that, the lenders who are giving 40- and 50-year mortgages and interest-only mortgages might need to sit back and wonder why the clients who choose these types of loan actually need these types of loans.