Feds Set To Stop Mortgage Frenzy
CNN Money reports that regulators are preparing new mortgage rules. "Federal banking regulators are weighing new guidelines for mortgage lenders due to growing concern about risks in the mortgage market, according to a published report. The Wall Street Journal reports that the new guidelines could be completed as soon as early next year."
How's that for swift action. This after we learn that maybe two trillion dollars of interest only loans were done last year. We can't be sure, as none of the private organizations will agree on the numbers.
"'There's a consensus among regulators that we need to be working on this,' said Barbara Grunkemeyer, at the Office of the Comptroller of the Currency. 'There are a lot of issues to be addressed there.'"
10 Comments:
greenie has been raising rates for nearly a year... and now these new rules or regulations or whatever the heck they are won't even start til 2006... i mean how much more of a warning does anyone really need... if you're a speculator or on the edge financially, you really have to be a moron not to sell within the next 6 months.
(The Wall Street Journal reports that the new guidelines could be completed as soon as early next year)
Sounds like they are taking a cue from Greenscam and managing the regulatory process at a "measured" pace. Don't want to put a scare into the mortgage folks. This gives them another 6-12 months to jam as many risky loans as possible. At current rates, that should needlessly create another 500,000-1M bagholders.
From a speculator's perspective, all this talk of regulatory reform should be a pretty loud "sell" signal. The smart ones should be planning on unloading spec property within the next 90-120 days. Beat the rush.
I found it on WSJ forum(Mike)
I finally can afford a home in California. My mortgage broker said he had a new loan that would keep my payments low. It is a 40-year interest-only loan that allows you to postpone up to 10 years (if needed) in payments, making it a 50-year loan. It also has a PAYDAY ADVANCE built in so if you can't make a payment after the 10-year grace period or if you are ever short of cash you can just borrow from your equity and pay it back later. It also has a guarantee that your house will not go down in value. I would be crazy not to purchase a home with that kind of loan. It is almost too good to be true. Is it a dream or a nightmare?
Any one here can improve on this loan ? other than the increasing the period to 100, I mean
(if you're a speculator or on the edge financially, you really have to be a moron not to sell within the next 6 months.)
Don't count on it. Bubbles like this usually are strongest at the peak. So expect another few months of insane action. Speculators and Joe6Pack don't read the papers---except for maybe sports and the funnies. And the ones that do hear about mortgage reform will more than likely be MORE intent on getting in while the EZ money is still available. Blow-off dead ahead.
I just read a recent Gallup Poll: 77% of Americans are unaware that there is a housing bubble or that anyone is even talking about one. So that pretty much confirms that millions of Americans are blissfully unaware of what lies ahead for them.
(It is a 40-year interest-only loan that allows you to postpone up to 10 years (if needed) in payments...It also has a PAYDAY ADVANCE built in so if you are ever short of cash you can just borrow from your equity and pay it back later.)
What equity? This is an interest-only loan. It doesn't build equity unless the home appreciates. Are they guaranteeing home appreciation as well?
I'm waiting for a program like this: bank allows you to pick any home you want and live in it rent-free and mortgage-free for as long as you like. When you die (or move), you simply give the keys back to the bank. The bank keeps all the juicy appreciation and you get nothing. But you get to live free for as long as you want. If the banks are so convinced of appreciation, this sounds like a good program to me.
Greenspan wants to set off another buying frenzy! People may want to get into the mortgages before the they are more regulated.
Can some of us as shareholders of the banks file a national lawsuit to demand thenm to
1. cease and desist from making and marketing problematic loans
2. roll back previously-issued fraudulent loans
We need to get more attention before this goes too far. We need action.
It's like the glory hound Sptizer. All kinds of criminal stuff goes on, but he suddenly becomes interested AFTER the market peaks. What good is regulation if it only makes scapegoats after everyone gets screwed.
If the Feds are taking action it only means the criminals have mostly finsished fleeced their victims. They'll "catch" somebody to make it look like they're not totally corrupt, but most of the ill gotten gains will stay with the guilty.
Any one here can improve on this loan ? other than the increasing the period to 100, I mean
Ya. A free lottery ticket is thrown in everytime a payment is made. That way you have a chance at the American Dream.
Good point Loren.
To me this article clearly shows that the government is stuck in a catch 22. Sure there is some CYA going on, only because they know that there will be heads rolling if taxpayers end up bailing out the mortgage bankers again (For those who remember the S&L crises). Several members of congress were booted out of that one.
What I mean by catch 22 is that, on the one hand tightening lending standards will alleviate some of the fallout but on the other hand the same action will cause the market to implode. Afterall, the entire housing bubble has been caused by EZ credit.
Man, reality is much more entertaining than a three ring circus! I think it was PT Barnum who said, "There's a sucker born every minute." Not much has changed since his time has it?
My favorite parody of how the American system works is the 1974 Mel Brooks classic Rawhide. Mel Brooks plays the "Gov" and totally reminds me of GB. Anyway, a little off topic, but if you can't laugh about how ridiculous the world is then you can only cry. I choose to laugh!
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