Lenders trying to shake responsibility

04/28/08 09:09 AM
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Well for once the Federal Government is right...rules on mortgage lenders need to tightened. The poor loans they made are largely responsible for the mess we are in right now so new regulations are needed. Among the new regulations proposed by the Fed are regulations requiring lenders to explain the "hidden fees" as well as ensuring that people who get the loans can afford the loans. You would thing that the mortgage industry would embrace this proposal but you would be mistaken.


The lenders are now saying that the increase in paperwork would result in higher costs and as the additional regulations of ensuring people can qualify for loans would mean that a lot of people would not get loans. Well DUH !!! Excuse me but isn't the lenders who are partially responsible for creating this mess by giving mortgages to people who could not afford them? How about ensuring that nobody gets a mortgage when their payment is more than 40% of their take home pay. How about not counting on employee bonuses when calculating if someone can afford a home because bonuses are not guaranteed?

If you listen to the smart economists they are all saying the same thing: the housing market will come back and people should be willing to ride out the storm. The levels of the housing market resurgence will greatly be regional however based upon inventory and demand. Again..duh !

Now back to the lenders. I cannot believe that they have the balls to fight these new proposals from the FED. This is greed pure and simple. They want to continue to make bad loans because frankly that's where the money is. The same for the credit card companies who are fighting new rules and regulations around new disclosure statements for cardholders.

When someone signs on the dotted line they need an explanation of just what they are getting into. This is especially true when it comes to mortgages because at closing you usually spend an hour or so signing your life away. We need to ensure that people who want to live the American dream can afford the American dream because when they reach too far for that star the crash can effect all of us.
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