What do you do when your legislative proposals are stone-walled by even your own party in the Congress? I guess it is time to rule by fiat. Just do what you want to do to pander for votes. Spend the money that isn't there. Rewrite the basic rules of economics and sensible underwriting.
Refinance More Than Current Value For Lower Rate
How can we forget that policy like that is what got us here? The Community Reinvestment Act back in 1995 mandated that mortgages be given to folks with lousy credit ratings and little or no proof of income. The feds would guarantee the paper through insurance from Fannie and Freddie. Jack up values of loans beyond value of the home then fuel a market for unaffordable McMansions. As long as homes appreciated we ignored the realities of risk.
Bundle the bad paper, re-emphasize that the Feds insured it, and you keep the whole mess going until one day an accountant at Countrywide says OMG!
So what is the Bamster's solution? Let's do it again, only bigger!
2 comments:
It's magic- the art of producing illusions!
Insanity = doing the same thing and expecting different results.
The past few weeks I've heard radio commercials enticing listeners to re-fi their domiciles for "more than 100% of appraised value".
Since I know several [small regional/community] bank directors, who also typically serve on their institutions' Directors Loan Committees, I can assure you that the smaller and midsize banks have no appetite for stupid risks.
So, for the mortgage loan originators to be making these offers - there's someone on the backside indemnifying the deals, which is a nice way of saying the American taxpayers are about to take it in the shorts again.
Just for a little irony, I'll quote Pete Seeger: "When will they ever learn, oh when will they ever learn?"
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