August 03, 2007

And then governments wrote new laws to stop mortgage fraud and stupid lending (thus limiting the pool of buyers even more)

Only one question: Who's gonna buy all these damn houses now?


Mortgage industry's wild ride ends with new laws

A trio of new laws aimed at protecting Minnesotans from reckless mortgage lending go into effect today, demarcating the end of an easy-money era when anyone who could fog up a mirror could get a mortgage.

The new laws make mortgage fraud its own felony punishable by up to two years in prison, restrict adjustable rate mortgages and outlaw stated-income loans - so-called "liars' loans" that came to symbolize the era's lending excesses.

While housing activists cheered the regulatory crackdown, it is expected to knock out a sizable chunk of the mortgage lending business in the Twin Cities, affecting consumers and business alike. Just how much is hard to say since a sagging housing market and tightened lending standards due to the crumbling subprime mortgage market already have cut into business.

"It's going to slow the industry down," said Louis Olsen, president of River City Mortgage and Financial, a mid-sized lender in Eagan that has stopped making stated-income loans. "I think everybody has pretty much succumbed to the fact that everybody has to do business the way we did 10 years ago."

13 comments:

Anonymous said...

California needs to outlaw the liar's loan.

And FHA should not go looking to make it easier to by an overpriced home. Instead of accomodating the lunacy, let qualified buyers buy homes that are affordably priced. Stay out of the way and housing can become affordable!

Daniel said...

News on our favorite short:

IndyMac Bancorp Inc. is joining rival lenders in making ``very major changes'' to home-loan standards and charging higher rates because of a slump in mortgage securities, the company's chief executive officer said.

The market for mortgage bonds has become ``very panicked and illiquid,'' CEO Michael Perry wrote in e-mail to employees yesterday.

[I wonder if his word choice is a subconscious nod to HP!]

Full story:
http://tinyurl.com/2ldm39

Anonymous said...

Hey, looks like we might have a twofer tomorrow:

Both AHM and LEND have very bad news to report.

http://tinyurl.com/2fcrjr

http://tinyurl.com/yw4mml

Anonymous said...

Please Dear God let every state pass laws like Minnesota's- and while you're at it, get rid of Fannie and Freddie. Amen.

BTW, our old friend, Senator Dodd, responded to the Indymac panic with a panic of his own: "How can we help you???!!!" Dodd's at it again, he wants every American taxpayer to pay through the nose bailing these immoral, ignorant, despicable lenders. Anyone have the link?

Anonymous said...

Mortgage fraud a felony punishable by two years in jail?

I predict the next big bubble will be in the prison industry!

Anonymous said...

When the gov't must tell the banks to be more responsible with money to others, its like the pot calling the kettle black and the world is just turned on its head, but I agree its very necessary to take us back to a time when mortgages were not something you were sold like asking if you want fries with your burger.

Anonymous said...

Wait a minute. For along time you have been whining like a little bitch that standards were too loose.

Now they tighten standards up and you complain?

There's just no pleasing some people.

mi hunglo said...

More laws = more prisoners = more jobs for cops. See there IS job growth.

SPECTRE of Deflation said...

It's a real be-atch to have to be a responsible realtor or mortgage company. This is what we have sunk to folks. Dr. Housing Bubble just wrote about a lawyer who lived through the Great Depression. He cites numerous passages out of the lawyer's piece, and it is so familiar to anyone who has a brain as to be scary.

That all this will end very badly is a given, but the piece puts a very personal touch to the pain that is yet to come. Things never really change when it comes to human nature.

Everyone needs as best they can to get their financial houses in order. The system will chew you up and spit you out before you even know what's happening when the ball really starts flying downhill.

Anonymous said...

it's all about minimizing lawsuits now.

Anonymous said...

Wait a minute. For along time you have been whining like a little bitch that standards were too loose.

Now they tighten standards up and you complain?

There's just no pleasing some people.


Who's not pleased????

Anonymous said...

"Please Dear God let every state pass laws like Minnesota's- and while you're at it, get rid of Fannie and Freddie. Amen."

ROTFLMAF!!!

westwest888 said...

If you're watching cable news today, the stock options backdating scandals are now going to trial. These were a big deal LAST summer. Just one more thing for Wall Street to worry about. Better hope those prosecutors don't whip out evidence that they were also writing down fake numbers on some other pieces of paper - the balance sheet and the income statement. But whatev, we can probably say with 100% confidence that someone who lies about one thing (backdated options) would not be likely to lie about other things investors care about. Right?? (nervous laugh) They've had a year to prepare and every hard drive and piece of paper in the building of these companies. heh.

So maybe 2008 for investigations and 2009 for trials featuring the executives of BZH, CFC, LEND, AHM, etc. Oh yes, this housing crash will take years to pull apart. It's like that New York State lottery scratch off called Bingo that takes you 30 minutes to play and 1 second to figure out you lost.