Too Little Too Late Regulators, The Bubble Is In
After hundreds of billions of dollars have been loaned, now the US regulators are warning about home equity loans? "At issue is the fast-growing market for home equity lending, which rose to $881 billion at the end of 2004 from $492 billion at the end of 2000, up 79 percent. Overall mortgage indebtedness nationwide climbed 57 percent, to $7.54 trillion at the end of 2004 from $4.8 trillion at the end of 2000."
Such a delay in action makes this blogger think the 'officials' wanted to pump cash into the system by any means possible, even if it meant poor loans.
"Veteran banking consultant Bert Ely said the warning comes at a time when a growing number of industry observers think the real estate price appreciation bubble 'can't expand further.' He added that whenever home prices rise for a long time, 'some lenders go overboard.'"
"Some lenders do not see a looming problem.'As long as the housing bubble doesn't burst, home equity lines should remain strong and remain safe,' said Scott Stern, chief executive of Lenders One." Chief executive?
Everybody's playing CYA. "The government warning was issued on the same day that the National Association of Realtors called for increased consumer education on the dangers of what the trade group called 'toxic' loans with predatory terms that hurt homeowners'. The group said that banking regulators were doing little to protect homeowners."
"'Consumers are also at risk, and the possibility exists that they could lose their homes' to foreclosure, said JoAnne Poole, president of the Maryland Association of Realtors."