Comments on: Petition to Correct the Wrongs in Current Mortgage Industry http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/ #1 Free Home Loan Modification & Debt Relief Help For US Home Owners - Truths, Facts & News About the Mortgage Industry Sun, 08 Nov 2009 16:51:22 -0700 http://wordpress.org/?v=2.8.3 hourly 1 By: MattJ http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5579 MattJ Tue, 16 Oct 2007 22:50:00 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5579 I will add that my number one priority at this point is avoiding reliving the 30s, not punishing the guilty. If moves like the above will help us avoid mass bank failures, I can live with it. I will add that my number one priority at this point is avoiding reliving the 30s, not punishing the guilty. If moves like the above will help us avoid mass bank failures, I can live with it.

]]> By: MattJ http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5578 MattJ Tue, 16 Oct 2007 22:47:43 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5578 Morgan- the problem I have with the part dealing with borrowers is that getting rid of the tax on short sales and converting all GSE loans to non-recourse for existing loans will let many speculators who put little to no money down get away scot free. If that section was intended to apply to new loans going forward I don't think I would have a problem with it. Morgan- the problem I have with the part dealing with borrowers is that getting rid of the tax on short sales and converting all GSE loans to non-recourse for existing loans will let many speculators who put little to no money down get away scot free.

If that section was intended to apply to new loans going forward I don’t think I would have a problem with it.

]]> By: Aaron http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5577 Aaron Tue, 16 Oct 2007 22:23:40 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5577 -And by government you mean greedy lobbyist that pad the pockets of our most honored politicians. This is just another way that the government can make it look like its doing something for those hard earned lifetime retirement packages. It will work itself out like Russ and you have said, it will only take a lot longer if the gov't is involved. The rules that are there now are enough, now if we can only get people in America to follow those rules. Morgan - your philosophy of consumer protection is definitely at odds with my father and grandfathers "let him touch the stove that way he'll learn" philosophies. I just haven't made up my mind on which is better for our Country now! -And by government you mean greedy lobbyist that pad the pockets of our most honored politicians. This is just another way that the government can make it look like its doing something for those hard earned lifetime retirement packages. It will work itself out like Russ and you have said, it will only take a lot longer if the gov’t is involved. The rules that are there now are enough, now if we can only get people in America to follow those rules.

Morgan – your philosophy of consumer protection is definitely at odds with my father and grandfathers “let him touch the stove that way he’ll learn” philosophies. I just haven’t made up my mind on which is better for our Country now!

]]> By: Morgan Brown http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5571 Morgan Brown Tue, 16 Oct 2007 21:10:54 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5571 Russ - I agree that it would be a sad day when the government starts underwriting loans; but at the same time I do not think the examples of consumer protection are comparing apples to oranges. Government has made (and continues to make) determinations about what is safe for consumers and what is not. Beyond my above examples there are literally thousands more (helmets on motorcycles, clearer warning labels on cigarettes, take your pick..) where the government has determined that certain products and services contain MORE RISK that alternatives; and that risk has to be reduced for consumers who may be susceptible to that risk. Why? Because those risks in total have a cost to society - no helmets on motorcycles means more uninsured ER bills paid for by the state (etc.) - the same goes with aggressive underwriting. Russ – I agree that it would be a sad day when the government starts underwriting loans; but at the same time I do not think the examples of consumer protection are comparing apples to oranges. Government has made (and continues to make) determinations about what is safe for consumers and what is not. Beyond my above examples there are literally thousands more (helmets on motorcycles, clearer warning labels on cigarettes, take your pick..) where the government has determined that certain products and services contain MORE RISK that alternatives; and that risk has to be reduced for consumers who may be susceptible to that risk. Why? Because those risks in total have a cost to society – no helmets on motorcycles means more uninsured ER bills paid for by the state (etc.) – the same goes with aggressive underwriting.

]]> By: Russ http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5555 Russ Tue, 16 Oct 2007 17:48:00 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5555 Morgan: I have no problem regulating against unscrupulous practices, but I have a problem with government telling us how to lend money. Your examples are comparing apples & oranges. Higher DTIs are not unscrupulous. Properly using a stated income loan is not unscrupulous. Regulation should be about ensuring lenders aren't gouging or charging usury rates or discriminating, not telling banks how to manage capital risk. Everyone cannot fit into a box that some entity decides is right for everyone. Lenders need to determine if the risk is acceptable and make loans based on what they feel comfortable with, not based on some government mandate. And like I said, they also shouldn't cry like little babies if they lose their shirts either. I just got a loan approved with a 70% back end ratio. Why 70%? Guidelines won't allow me to use one of the borrower's income since he is still completing his MBA and doesn't start his job until June 08. The REAL ratios are 24%. These people put 20% down, own other properties, and have plenty of money to pay their mortgage. I got it to work as a full doc loan since LP liked their good credit and assets. Under the proposed petition, a bank would not be able to make this loan due to arbitrary guidelines such as 36% DTI that leave no room for interpretation. So if I make a loan with a 28% DTI and then one person loses their job and now the DTI is 45%, shoudl those people be forced to sell their home or should the lender call the loan due? How about lenders put in place a monitoring service that let's them know when people's income changes after a closing? Or better yet, let's allow banks and the government to approve EVERYTHING people spend money on. DTI is not an issue when you have high incomes either. A person with a $1,000,000 income and a DTI of 50% has a lot more disposable cash and they probably aren't hurting financially the same as a person with a $50k income and a DTI of 50%. One size does not fit all and I think it will be a sad day in this country when the Government starts underwriting mortgage loans... Morgan:

I have no problem regulating against unscrupulous practices, but I have a problem with government telling us how to lend money. Your examples are comparing apples & oranges. Higher DTIs are not unscrupulous. Properly using a stated income loan is not unscrupulous. Regulation should be about ensuring lenders aren’t gouging or charging usury rates or discriminating, not telling banks how to manage capital risk.

Everyone cannot fit into a box that some entity decides is right for everyone. Lenders need to determine if the risk is acceptable and make loans based on what they feel comfortable with, not based on some government mandate. And like I said, they also shouldn’t cry like little babies if they lose their shirts either.

I just got a loan approved with a 70% back end ratio. Why 70%? Guidelines won’t allow me to use one of the borrower’s income since he is still completing his MBA and doesn’t start his job until June 08. The REAL ratios are 24%. These people put 20% down, own other properties, and have plenty of money to pay their mortgage. I got it to work as a full doc loan since LP liked their good credit and assets. Under the proposed petition, a bank would not be able to make this loan due to arbitrary guidelines such as 36% DTI that leave no room for interpretation.

So if I make a loan with a 28% DTI and then one person loses their job and now the DTI is 45%, shoudl those people be forced to sell their home or should the lender call the loan due? How about lenders put in place a monitoring service that let’s them know when people’s income changes after a closing? Or better yet, let’s allow banks and the government to approve EVERYTHING people spend money on.

DTI is not an issue when you have high incomes either. A person with a $1,000,000 income and a DTI of 50% has a lot more disposable cash and they probably aren’t hurting financially the same as a person with a $50k income and a DTI of 50%.

One size does not fit all and I think it will be a sad day in this country when the Government starts underwriting mortgage loans…

]]> By: Morgan Brown http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5550 Morgan Brown Tue, 16 Oct 2007 16:59:04 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5550 Mike - I agree there are plenty of laws on the books now that if they were properly enforced would have eliminated much of this mess up front. Mike – I agree there are plenty of laws on the books now that if they were properly enforced would have eliminated much of this mess up front.

]]> By: Morgan Brown http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5549 Morgan Brown Tue, 16 Oct 2007 16:58:12 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5549 Matt - you don't think foreclosure and filing bankruptcy is enough responsibility for borrowers who made bad choices? Matt – you don’t think foreclosure and filing bankruptcy is enough responsibility for borrowers who made bad choices?

]]> By: Morgan Brown http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5548 Morgan Brown Tue, 16 Oct 2007 16:57:32 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5548 Russ - you said: "Limit debt ratios to 36%? Outlaw stated income loans? Is this America or Communist China? If a lender wants to lend to people with higher debt ratios or choose to not verify income, that is there perogative." Can't this argument be made for anything a service provider chooses to offer? If a toy-maker wants to sell toys covered in lead-based paint that's their prerogative? If a doctor wants to try experimental medicine on patients that's their prerogative? If a car maker wants to use thinner steel in car bodies, the list goes on and on. I'm all for capitalism, but consumer protection should be (and is) an important job function of our government. Russ – you said:

“Limit debt ratios to 36%? Outlaw stated income loans? Is this America or Communist China? If a lender wants to lend to people with higher debt ratios or choose to not verify income, that is there perogative.”

Can’t this argument be made for anything a service provider chooses to offer? If a toy-maker wants to sell toys covered in lead-based paint that’s their prerogative? If a doctor wants to try experimental medicine on patients that’s their prerogative? If a car maker wants to use thinner steel in car bodies, the list goes on and on. I’m all for capitalism, but consumer protection should be (and is) an important job function of our government.

]]> By: mike http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5539 mike Tue, 16 Oct 2007 16:02:11 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5539 Congress has too many other more important things to do. The wars, the social security mess, health care, infrastructure, crime, national security and education are just some of the issues they should be spending their valuable time on. Markets correct themselves. Housing prices will continue to increase and decrease until the end of our present capitalist society. The lenders that made bad loans are gone. The buyers who signed countless disclosures before the settlements and at the settlements that bought homes they can't afford will have to move. The investors who trusted credit rating agencies too much are learning their lessons too. There are way too many laws on the books now that are not being enforced. Why creat more? Congress has too many other more important things to do. The wars, the social security mess, health care, infrastructure, crime, national security and education are just some of the issues they should be spending their valuable time on.

Markets correct themselves. Housing prices will continue to increase and decrease until the end of our present capitalist society. The lenders that made bad loans are gone. The buyers who signed countless disclosures before the settlements and at the settlements that bought homes they can’t afford will have to move. The investors who trusted credit rating agencies too much are learning their lessons too.

There are way too many laws on the books now that are not being enforced. Why creat more?

]]> By: Russ http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/comment-page-1/#comment-5527 Russ Tue, 16 Oct 2007 13:31:34 +0000 http://blownmortgage.com/2007/10/15/petition-to-correct-the-wrongs-in-current-mortgage-industry/#comment-5527 About the only thing that makes sense on that petition is not bailing out lenders. No way I am going to sign that petition. The last thing we need (if we don't have enough of it already) is for people who don't know squat about mortgages and lending getting the Government (politicians who know even less than the idiot lobbying consumer groups) to pass some more feel good and impractical laws. Limit debt ratios to 36%? Outlaw stated income loans? Is this America or Communist China? If a lender wants to lend to people with higher debt ratios or choose to not verify income, that is there perogative. It is their capital, they should be able to risk it anyway they feel fit. Of course, if they lose their shirts, they shouldn't be running to the Government (Taxpayers) for help... About the only thing that makes sense on that petition is not bailing out lenders.

No way I am going to sign that petition. The last thing we need (if we don’t have enough of it already) is for people who don’t know squat about mortgages and lending getting the Government (politicians who know even less than the idiot lobbying consumer groups) to pass some more feel good and impractical laws.

Limit debt ratios to 36%? Outlaw stated income loans? Is this America or Communist China? If a lender wants to lend to people with higher debt ratios or choose to not verify income, that is there perogative. It is their capital, they should be able to risk it anyway they feel fit. Of course, if they lose their shirts, they shouldn’t be running to the Government (Taxpayers) for help…

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