Comments on: It’s A Bird, It’s A Plane – Wait… It’s A Jackhammer…

By: Craigg Bryant

Craigg Bryant — Sun, 30 Nov 2008 02:29:50 +0000

If I were the Fed, I’d require that banks and Savings & Loans retain 100% of the mortgages they originate. I think that banks would be a lot more diligent about ensuring borrowers would be able to repay the loans if the banks were forced to keep the loans on their books for the life of the loan.

If I were a banker, I certainly would never lend a penny to anyone who failed to honor their commitment to repay a loan in full. Sure, I believe some borrowers didn’t fully understand the terms of their mortgages…but they still signed it and need to suck it up and make good on their promise. Their ignorance is not an acceptable excuse to abandon their obligation.

By: Marcus Burke

Marcus Burke — Sat, 29 Nov 2008 15:28:57 +0000

I tend to agree – except for #3: With such a huge proportion the country having suffered either a foreclosure, bankruptcy or short sale, the banks (and the rest of society) are going to have to review how they regard these situations. Most of us have already come around to the view that these folk will require individial review in order to determine the extent to which they were culpable.

By: Craigg Bryant

Craigg Bryant — Sat, 29 Nov 2008 04:47:25 +0000

Despite what the Fed hopes to accomplish, I really don’t believe the banks will start lending again until home mortgage lending standards revert back to traditional lending standards:

1) require min. 20% down payment received from borrower’s own savings (not free government downpayment assistance handouts)
2) require min. 780 FICO score
3) require borrowers to have no former foreclosures, shortsales, or bankruptcies
4) require minimum of 2 years steady employment
5) require total monthly mortgage payment (P.I.T.I. and association dues) does not exceed 30% of borrower’s current monthly income.

This was the old school way of mortgage lending crappy FHA, VA, sub-prime, and alt-I lending practices were created to allow more minorities and low wage earners to get mortgages and purchases houses they could never possibly afford to pay for.

By: Mortgage Refinancing - Why the banks need stronger medicine : UpdateMortgage

Mortgage Refinancing - Why the banks need stronger medicine : UpdateMortgage — Tue, 25 Nov 2008 18:47:41 +0000

[...] You know, I kinda figured I wasn’t the only guy who was peeved at Hank Paulson’s sudden decision to re-allocate the Troubled Asset Relief Program .A This week, Congress ran circles around Hank and Ben Bernanke … Continue… [...]