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Sunday, October 15, 2006

Comments

esl

Sounds like this wasn't enough to prevent the resulting subprime fiasco.

I wish the Fed hadn't bailed out Bear stearns. let all those finance guys who cooked this up along with the mortgage brokers who knowingly pimped these products go to jail!

JeffSovern

That's interesting. Are there any other references to "anti-predatory lending" in the solicitation?

Ted

You'll be amused (or horrified) to know that I got a mortgage refinancing solicitation in the mail today from Solstice Capital, http://www.solsticecapital.com , offering me an interest-only mortgage. But it's okay! Because on the very top of the solicitation, it explicitly says "ANTI-PREDATORY LENDING" with a beautiful logo of a house with a bite out of it. Of course, that's just a trademark owned by Solstice Capital...

Sic 'em.

Ira Rheingold

Just one more additional caution about the Guidelines. In regulating the "exotic" mortgage products, the Fed and the other bank regulators may have failed to address the most dominant and potentially the most damaging type of mortgage in the subprime market: the 2/28 or as I like to call it the "exploding" ARM. To learn more about the dominance and dangers of the exploding ARM, you can look here: http://www.responsiblelending.org/press/releases/page.jsp?itemID=30373130

Jeff Sovern

A fair point, though the Guidelines themselves seem more focused on disclosures. Notice that I said "suggest" and "support" rather than "establish." Of course, the predictions could come true based on any number of causes.

Ted

The predictions are based at least in part on the change in underwriting requirements. Even without this, one could predict a decline in the use of such mortgages; they make far more economic sense in a real estate market that is rising with regularity than in one that is static or declining.

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