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More Action RE: Subprime Lending and Mortgage Regulation

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At the end of June the five agencies that regulate federally chartered banks and their subsidiary lending corporations issued final guidance to those institutions regarding subprime lending, particularly the so-called exotic or non-traditional loans that are threatening to bring down those lenders who haven't already filed bankruptcy or shut their doors.

While they were called "guidelines," compliance with the new underwriting rules is, if not mandatory, at least highly recommended on the part of institutions under the supervision of the five agencies.GOOGLEAD The Federal Reserve, Office of Thrift Management, Federal Deposit Insurance Corporation, Office of Comptroller of the Currency, and the National Credit Union Administration.

Posted Jul 17 2007, 07:00 AM
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Comments

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RCM
on Tue, Jul 17 2007 7:00 AM
Recognizing they don't have the mechanism to impose underwriting guidelines through the front door, the feds are using the club of secondary marketing to bring them through the back door. Not a judgment, just an observation.
Sandra Doss
on Tue, Jul 17 2007 7:00 AM
What is forcing people to escrow going to do? I think making people add their T&I to their monthly payment is just going to make it harder to make payments. Most people have a plan on how they are going to pay their taxes and are responsible enough to save the money on their own. They dont need a bank investing their money for them when they can do that themselves. Mortgage professionals should be very scared right not bc the govt is steppng in and that cant be good.
Bryan
on Wed, Jul 18 2007 7:00 AM
RCM hit the nail on the head with uniform standards needed to apply to the bulk of brokers and lenders who fall outside federal regulation. Fortunately, CSBS announced they will be working with states to adopt similar guidance. Folks should also know about a new site dedicated to helping national bank customers http://www.helpwithmybank.gov. It focuses on frequently asked questions, helping folks determine if their bank is a national bank and who to contact if it is not.
Bill Nevell
on Wed, Jul 18 2007 7:00 AM
I think the enormous loan problems we have now were caused, at least in California, by the change 4 or 5 years ago which allows real estate agents to also handle the loans and make a commission on each. It has led to real estate agents squeezing people into a loan simply to benefit the real estate agent in also being the loan agent. Not all real estate agents do this but I think the practice is a conflict of interest and should never have been allowed. I wonder how many states permit it.
cjh
on Wed, Jul 18 2007 7:00 AM
Back door tactics never helped a thing. It seems the answer that most politicians and legislators want is whatever is easiest to cover up an unconcienable wrong. Never mind that thousands of families have been screwed out of the only home they will ever be able to obtain. Just what are the people to do that have been stripped of their equity and had their homes ripped off? When is anyone going to undo this wrong?
Anonymous
on Fri, Aug 10 2007 7:00 AM
Question: What is the correlation between the fraud at Fannie Mae and relaxed regulation around subprime lending? Were the rules loosened to offset the $10B+ scam? Has the fraud been swept under the carpet because it could potentially expose both Republican and Democrat alike?
PurpleFlash
on Tue, Aug 14 2007 7:00 AM
First - There is no correlation between the sub-prime crisis and the scam at Fannie Mae. Fannie Mae is really not involved with Sub-Prime Loans. Sub Prime loans exist(ed) becasue Fannie Mae would not do loans like them (low credit scores etc.)
PurpleFlash
on Tue, Aug 14 2007 7:00 AM
Second - Thousands of people are not getting "Screwed out of the only home they will ever eable to obtain." The problem is that most of them never should have been able to obtain them in the first place - they could not have obtained them with correct and traditional underwriting guidelines. And to say that they will never ever again be able to purchase a home is downright stupid and not understanding of America (opportunity and personal responsibilty go hand in hand). Anyone can get ahead.
PurpleFlash
on Tue, Aug 14 2007 7:00 AM
Thirdly - Making people escrow their taxes and insurance has been going on for years. (in case you don't know, Fannie and Freddie require this) thi is down not to hurt people but to make for SAFER LOANS. It is done to protect the lenders investment(and those who back them be it fannie or freddie or the secondary market) Not escrowing Taxes and insurance was done first by B&C Lenders (now called sub-prime) make it easier to close the (more risky) loans,more risky
Connie Jackson
on Thu, Aug 30 2007 7:00 AM
There is a simple solution to subprime borrowers. Simply give the money back!!! I laugh each time I see the NAACP whine about tougher standards. Don't they know what higher standards will do. Do they really want unqualified borrowers out of the market??? That will be great for all credit worthy borrowers, regardless of race or ethnic group. If a borrower does not have income to pay aeloan under a true amortization, then there should not be a loan. What a novel idea!!!!!!!!!
Regina
on Tue, Sep 18 2007 7:00 AM
Why is it that it is ok for white people to screw up on a loan and everyone wants to write new laws, if black people screw up in the same way it"s considered whining. As proof the new article about a white family signing away their house to free up money. Black people go for the same deal they get told next time buy a house regular. When I bought my house there was a section on the loan doc that told you what the payments are for 30 years so your lying if you say you don't know. They knew.
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