Sunday, March 29, 2009

History repeats

A recent article in my local paper (LI Business still awaits feds’ mortgage aid - Newsday) contains the seeds of repeating the entire mortgage fiasco. A complaint from the owner of a mortgage company is that “bank lending is the way it was 20 years ago.” He means that potential borrowers now actually have to a down payment, prove their income and have a good credit history. He is correct; that is exactly how it was twenty years. That was when there was no financial issue with mortgage lending. In the interim, Freddie Mac, Fannie Mae and Congressional leadership changed the standards so that everyone could own their own home. They encouraged mortgage brokers such as these to make loans to anyone who could fog a mirror with the result that we are where we are. This guy apparently wants to do the same thing all over again. He gets a few points per loan and everyone else pays for it. Another guy, a “senior loan consultant”, complains that the required credit scores have been raised. Good. If loans had been made to credit worthy people in the first place none of this would have happened.
This one-sided tripe is an insult to your readers. Everyone who was interviewed has a vested interest in lending to any credit risk that knocks at their door. These guys are either stupid or greedy. Business articles should have some level of balance.

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