Mortgage Reform…. Politics
by Jim Blaine
Sure you feel that this has gone on way too long with little result. Sounds a bit like the current state of our National political system – much talk, much arguing, much posturing, but not much movement nor progress.
Let’s try one more shot at seeing if we can agree on reform:
The State Of The World As We Now Find It!
(…. and yes, “life is not fair”.)
- Borrowers love and prefer 30-year fixed rate mortgages. OK?
- 30-year fixed rate loans are a dangerous “investment” for a financial institution due to IRR. We witnessed what can happen if you “book” lots of them with the S&L Crash. OK?
- Most prudent institutions, therefore, sell excess 30-yr fixed mortgages to Fan/Fred, which in theory have the sophistication to evaluate, monitor and guarantee the mortgages purchased, relying upon rating agencies, economists, and honest mortgage brokers to assist. OK?
- Fan/Fred are “bankrupt”, because “things were not as they seemed” in the mortgage market . Many of the players in the mortgage process were not honest – including some individual borrowers and perhaps some credit unions. OK?
