Posted on: 21st Dec, 2009 08:28 am
We may have a new watchdog soon for the mortgage industry. The House of Representatives recently passed the Wall Street Reform and Consumer Protection Act on December 11, moving that bill to the Senate for its review. Interestingly, the vote in the House was split exactly between Democrats and Republicans, with no swing votes whatsoever. The vote was 233 (D) to 202 (R).
I suppose that means that some feel a need for reform and some do not - fascinating statistics. I guess we need to be thankful that Lieberman's not in the House; but then again, his time is coming up on this one in the Senate. Do I have to take pride in the fact that he is one of my Senators?
If the bill makes it completely through Congress and gets signed into law by President Obama, we can probably be safe in saying that the no-money down, no documentation, negative amortization, over-appraised loans will be a thing of the past (except in certain quarters, of course). Wall Street, of course, will be affected as well, inasmuch as mortgage-backed securities will be far less evident under the plan - especially the gimmicky stuff we've seen and suffered through of late.
The bill creates a Consumer Financial Protection Agency, charged to oversee all of the consumer-safety features of mortgages, home equity loans and lines of credit, that are offered to the public by the wide variety of lenders now extant.
Regulations would affect those loans with teaser rates, adjustable rates and payments, negative amortization, and the so-called "option" type of payment that lets a consumer choose how much to pay in a given month. These are all most dangerous to consumers and have proven to be causes of the "crisis" in the mortgage market in these last few years.
There's much more to be hashed over, and of course Lieberman and the 99 others in the Senate will get their chances to adjudicate, masticate and renovate the bill. It's going to be interesting.
As we watch over this, there will also be more to report.
I suppose that means that some feel a need for reform and some do not - fascinating statistics. I guess we need to be thankful that Lieberman's not in the House; but then again, his time is coming up on this one in the Senate. Do I have to take pride in the fact that he is one of my Senators?
If the bill makes it completely through Congress and gets signed into law by President Obama, we can probably be safe in saying that the no-money down, no documentation, negative amortization, over-appraised loans will be a thing of the past (except in certain quarters, of course). Wall Street, of course, will be affected as well, inasmuch as mortgage-backed securities will be far less evident under the plan - especially the gimmicky stuff we've seen and suffered through of late.
The bill creates a Consumer Financial Protection Agency, charged to oversee all of the consumer-safety features of mortgages, home equity loans and lines of credit, that are offered to the public by the wide variety of lenders now extant.
Regulations would affect those loans with teaser rates, adjustable rates and payments, negative amortization, and the so-called "option" type of payment that lets a consumer choose how much to pay in a given month. These are all most dangerous to consumers and have proven to be causes of the "crisis" in the mortgage market in these last few years.
There's much more to be hashed over, and of course Lieberman and the 99 others in the Senate will get their chances to adjudicate, masticate and renovate the bill. It's going to be interesting.
As we watch over this, there will also be more to report.
regulation can be a very healthy thing, but regulating to try and cover up for simple bad decision making is not likely to produce great results long term.
The subprime crisis was fuel by too much cheap credit being doled out to bad risk borrowers. Security was insufficient for the loan amounts meaning banks essentially lent too much to bad risk borrowers against properties that weren't worth as much as they had to be.
This is more or less just bad decision making on a huge scale which eventually came home to roost and bit a lot of people on the backside. Sadly the colateral damage has affected millions more.
while there may certainly be a need for some regulation, exactly how it comes out in the end will need to be carefully weighted.
The subprime crisis was fuel by too much cheap credit being doled out to bad risk borrowers. Security was insufficient for the loan amounts meaning banks essentially lent too much to bad risk borrowers against properties that weren't worth as much as they had to be.
This is more or less just bad decision making on a huge scale which eventually came home to roost and bit a lot of people on the backside. Sadly the colateral damage has affected millions more.
while there may certainly be a need for some regulation, exactly how it comes out in the end will need to be carefully weighted.
Thanks for sharing such an important news with the community, George.
It will indeed be a great benefit for the borrowers/buyers if the Consumer Financial Protection Agency (CFPA) comes into being. I feel it's quite essential to have an authority which would look into and evaluate the consumer-safety features of mortgages and equity credit lines. The needs has further increased after the severe crisis which the mortgage market has gone through in the recent times (the effects are still ongoing).
The CFPA, when it comes into effect, will take over responsibility for the Equal Credit Opportunity Act and fair lending programs. It will turn out as the agency where the borrowers will be able to report unreasonable and misleading trade practices in the financial arena.
Take care.
It will indeed be a great benefit for the borrowers/buyers if the Consumer Financial Protection Agency (CFPA) comes into being. I feel it's quite essential to have an authority which would look into and evaluate the consumer-safety features of mortgages and equity credit lines. The needs has further increased after the severe crisis which the mortgage market has gone through in the recent times (the effects are still ongoing).
The CFPA, when it comes into effect, will take over responsibility for the Equal Credit Opportunity Act and fair lending programs. It will turn out as the agency where the borrowers will be able to report unreasonable and misleading trade practices in the financial arena.
Take care.
good analysis, rise. there are more layers than you mentioned in this crisis, and even more than any of us can likely imagine - lots of fraud, too, that entered into this mess. but you're at least partially right in that legislating upon legislation that's already in place isn't necessarily the way to solve these problems.
still, just as sara feels it's a good thing, i can't help but think that a "watchdog" specifically charged with looking over these areas will be a benefit to "the american people." and how many chief executives have used that phrase in an effort to charm the populace?
still, just as sara feels it's a good thing, i can't help but think that a "watchdog" specifically charged with looking over these areas will be a benefit to "the american people." and how many chief executives have used that phrase in an effort to charm the populace?
