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Politics : View from the Center and Left
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To: Sam who wrote (228966)8/8/2013 11:18:34 AM
From: Bread Upon The Water  Read Replies (2) of 542677
 
The trick, IMHO, is how to bring responsibility to the home mortgage market. Obviously Freddie and Fannie were not up to the job partially because of the mandates congress imposed upon them about having to make loans in unsafe (redlined) areas, and to have to loan to people who by normal banking standards would not qualify.

Easy mortgage money was one of the factors that helped bring us to the brink of financial diaster. How do we fix this without throwing the baby out with the bath water? I don't specifically know, but it has to do with requiring banks to take on more risk with their own money and still participate in the mortgage market for less desirable loan prospects. In other words, requiring a balance of risk vs reward on the part of the banks who want to play the mortgage game--in fact the price of admission to the game would be that the banks agree to the new restrictions.

Realtors (Koan) will not like this transition in lending practice because the banks will be more careful when playing with non-government guaranteed loans and it will be little harder and take a little longer to get a loan, but IMHO this is one of the things the US financial system needs to insure against financial meltdowns.
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