FED TO THE RESCUE.....AGAIN

To start, the city mentioned yesterday was Grand Prairie, not Fort Worth, thanks Paul.

I read an article about the Fed trying to clean up mortgage lending and protecting home buyers from fraud.

http://afp.google.com/article/ALeqM5jRjPX04ZFVg1uLmis-Cb57TwWtRA

Why are they so concerned? Well it is because the US is in a rather deep housing slump. Fed Chief Bernanke explained that “market discipline” had broken down. I had not heard it put like that but “market discipline” I agree did break down not to mention things like ethics, greed, criminal activity and the list goes on.

One thing he is trying to control is sub prime loans. If no one has noticed sub prime loans are gone and not likely to come back so he is probably beating a dead horse on that subject.

He also is trying to get language in the proposed new rules regarding deceptive advertising which frankly I hope he does. It still happens multiple times a day on my radio and TV and it should be stopped. Things like no cost refis, payment rates being represented as the interest rate, and there are more. Good luck on that, if you can’t deceive the consumer who can you deceive? Someone could enforce the current rules already in place; that could help!!

He wants to ban no doc loans. These are loans that require exceptional credit and started out (at least) requiring a large down payment. If you look at no doc loans I am sure you will find the no doc loans that don’t perform are those that were made to people who should not have them in the first place. No money down, loan fraud was rampant etc. He will probably throw the “baby out with the bathwater” on this one if he gets it.

I do agree that the Fed Chief is trying to help and maybe he can, but as government will tend to do they penalize the good guys and still fail to stop the bad guys. The fraudsters will overcome and probably flourish no matter what laws are in place. The big companies with money will get the law watered down in their favor with their check books and keep the ads going.

What we need, and still no one is trying to figure out, is how we qualify people who want to buy homes that don’t qualify under today’s rules. If you have followed my writing it really gets back to somehow bringing those folks back in the market to buy the homes that need to sell. No one seems to really spend any time on that one. What we need are more buyers who have access to fair loans to help start the turn around.

Some of what Mr. Bernanke wants does make common sense, but as we know Government and common sense just don’t seem to go together! Good luck Mr. Bernanke, you are going to need it.

More to come

Lonny