Upside Down Mortgage

Posts Tagged ‘lending’

Predatory Lending Legislation

Question: Does anyone else find this curious?

Here is a link to an article from the NY Times... dated September 30,1999.

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1

Bill Clinton was still President.

Please note who is "applying pressure" in the third paragraph.

But that isn't the best part...

Take a look at the eighth paragraph. Here we have Peter Wallison already talking about how a bailout will be necessary when the subprime market inevitably collapses.

I know the Bush administration proposed legislation to fix the predatory lending situation, but was stopped by the Dems in Congress. Although I admit I don't have all the details on that particular issue.

Thoughts? Does anyone have any more information on this?
Artguurl: What about the talk of the bailout in 1999? That is the part I'm more interested in.

Answer: The Bush administration never proposed legislation to fix the predatory lending situation. He never did anything to stop it. He supported it by helping deregulation the business even more. You're right, you don't have the details on that particular issue. You don't even have the facts.

February 23, 2004: Instead of heeding warnings, Federal Reserve leadership promotes non-traditional mortgages over fixed rate products in a speech to the Credit Union National Association annual conference. "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.the traditional fixed-rate mortgage may be an expensive method of financing a home." [Remarks By Federal Reserve Chairman Alan Greenspan, 2/23/04]

October 8, 2003: Bush administration objected to a proposal to have an independent regulator of Fannie Mae and Freddie Mac be an independent unit of Treasury, much like financial regulators housed in the agency that oversee banks and thrifts. The Bush administration also objected to a proposal to have the Department of Housing and Urban Development have oversight over the companies' business activities. The independence provision has broad support from committee Democrats and Republicans. The HUD provision was pushed mostly by Democrats but had been accepted by Oxley and Baker as a compromise needed to move the bill forward. [Washington Post, 10/8/03]

February 24, 2004: At a Senate Banking Committee hearing, Norman Rice, President and CEO of the Federal Home Loan Bank of Seattle questioned having low-income Americans use ARM's to finance their homes. In addition, Senator Sarbanes questioned the Federal Reserve's promotion of alternative mortgage products over traditional fixed rate mortgages:

* Norman Rice: "Particularly if you're talking about serving an underserved constituency. Adjustable rate mortgages for a low income constituency is a nightmare."

* Senator Sarbanes: "[The Federal Reserve] is pushing adjustable rate mortgages.and throwing this risk back on the consumer." [Senate Banking Committee Transcript, 2/25/04]

June 30, 2004: After encouraging the use of non-traditional mortgages, many of which re-set with rising interest rates, the Federal Reserve begins to raise rates-17 consecutive, 25 basis point increases that take the Federal Reserve Funds rate from a 46-year low of 1 percent in June 2004 to 5.25 percent in June 2006. [Market News International, 4/29/08]

October 26, 2005: House of Representatives passed regulation reforming the GSE's. The bill passed the House 331-90 (Republicans: 209-15; Democrats: 122-74), and would have given the new regulator broad authority over setting capital requirements and limiting portfolio size. Senate Democrats picked that bill up and offered it, but the Administration opposed that legislation. According to Mr. Oxley, the White House gave Congress and the GSE reform legislation "a one-finger salute."

* "We missed a golden opportunity that would have avoided a lot of the problems we're facing now, if we hadn't had such a firm ideological position at the White House and the Treasury and the Fed," Mr. Oxley says." [Financial Times, 9/11/08]

February 7, 2007: Federal banking regulators released their voluntary Guidance on Nontraditional Mortgage Products for mortgage lenders. However, the guidance did not apply to subprime mortgages. [Senate Banking Committee Transcipt, Prepared Statement of Martin Eakes, 2/7/07]

March 22, 2007: Senator Dodd laid out how the Federal Reserve was responsible for the "perfect storm" sweeping over American homeowners. At a Banking committee hearing Dodd said, "By May of 2005, the press was reporting that economists were warning about the risks of these new mortgages. In June of that year, Chairman Greenspan was talking about "froth" in the mortgage market and testified before the Joint Economic Committee that he was troubled by the surge in exotic mortgages." [Senate Banking Committee Transcript, 3/22/07]

August 6, 2007: At a White House morning press briefing, in response to a question whether the housing market is correcting or in crisis, President Bush says that the economy is stable: "[I]t looks we're headed for a soft landing." [Remarks By President Bush, 8/9/07]

November 15, 2007: Senator Reid asked unanimous consent to pass the FHA Modernization Act, but Republicans objected. [Congressional Record, 11/15/08]

December 4, 2007: In response to a question about whether the Administration was too slow to recognize the subprime problem, President Bush said: "We've been working on this since August." [Remarks By President Bush, 12/4/07]

December 6, 2007: Senator Reid asked unanimous consent to pass the FHA Modernization Act, but Republicans objected. [Congressional Record, 12/6/08]

October 4, 2007: At a news conference on Wednesday, House and Senate Democrats outlined a plan to help low- and middle-income families keep their homes." [New York Times

Congressman Kanjorski on Anti-Predatory Lending Legislation on House Floor

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Mortgage Relief Options

Question: Are there any rules governing primary residence rental and overseas DOD deployment?

I bought my home in 7/07 with an interest only loan, as my primary residence with the intent to refinance to a conventional as rates fell again. Unfortunately, I was immediately ordered overseas with DOD and had to rent the home out. I want to refinance and my mortgage to a conventional however, my broker is telling me it will result in an INCREASE my interest rate as its now a rental property.

This seems pretty unfair to me and the Fed has exempted deployed USG employees from the 2 out of 5 year requirement.

I want to refinance to a 30 year conventional but I dont know how much longer I'll be deployed. Is there any relief for my situation ? What are my options ? .

Answer: If I was in charge of Veterans benefits, trust me, our taxes would be sky high I would give them so much...we really appreciate what you guys do...so...don't shoot the messenger, but this is how the military views it:

The military usually will discourage the purchase of a home because of possible deployment, b/c you don't get special benefits if you make that choice.

Understand that for everyone, not just soldiers, if you are not living in the house it's an investment property, and therefore, subject to higher interest rates.

It was like that before the bust and it's still like that.

Just be glad...that you can refinance it at all...most can't.

My advice, is to sell the house, even if you break even.

If I lived in your area, I would do it commission free on my end. I always do that for soldiers who can show proof of involuntary deployment overseas.

Mortgage Relief Talk with Jason Cardiff

Predatory Lending Policy

Question: How will Obama's Robin Hood Economic Plan fix the problems associated with predatory lending?

With all of these duplicitous lending companies going bust, how will Barack Obama's policy of tax the well-to-do to create social institutions to protect the middle class even begin to help the stock market?
To those who have already answered, and who have yet to answer.
Reregulation will not help the stock market, and both candidates are promising that. Neither will assigning blame either to Bush, or the Democrat Controlled Congress. What I'm looking for are solutions, not blame or future preventative measures.

Answer: As a mortgage lender for the last 22 years I have watched the mortgage business change dramatically! I think it will take another 18 months before the market corrects itself. I personally have never done any of the sub-prime loans and they aren't being done anymore. The reason they happened was because everyone wanted to be able to buy a home- the American dream. The housing values were increasing so fast that lenders felt they could lend 100% to people who had at least a 580 credit score (very low). They figured even if these people couldn't pay, with the values increasing so fast they would still get all their money even if the loans were foreclosed on. The biggest problem was that most of these loans were adjustable- so after 2-3 years the rates go up sometimes 3%! It was a bubble waiting to bust. In Feb. 07 it did. With all the properties that were suddenly on the market the values started to drop & people started walking away from their homes because of the adjustments. The last of the sub-primes will adjust between now and Feb. 09- so we will continue to see foreclosures as the rest of them adjust. After that the market will finally come back to normal. Hopefully we will have learned our lessons by then. Adjustable rate mortgages are always a gamble- just not worth the risk. The market is still good for those with a decent job, and decent credit & should continue to be so. As a matter of fact it is better this week than it has been since January. This is really a 50/50 problem- half of it being greedy mortgage companies- the other half being people who bought more house than they could afford never worring about their adjustable rates. I can say this, anyone who said they got an adjustable rate & didn't know it- that is not true. All of the loan docs were very clear, it was regulated. I'm sure some loan officers didn't go into detail like they should have- but the attorneys who closed the loans had to. The Leman Brothers of the world are getting their just deserts now. As for solutions, this will work itself out- no candidate- either Dem. or Rep. can do much other than to wait it out. I certainly don't agree with the government bailing them out!

Senator Schumer on Predatory Lending