Wednesday, March 30, 2011

When will they ever learn

It's like meeting an old friend, getting back to writing in this blog.
They tell me blogging is old-fashioned, that Facebook, Twitter and the like are the in things, now.
Good. I like blogging.
In future blogs, I'll record what happened in the past year. For those who, for reasons passing understanding, am interested in why I am no longer with the New Haven Independent and why I am no longer aloof from political commentary, all will be revealed. Suffice it to say one thing has everything to do with another.

Why start again now?

I've been sitting down for days now, trying to think of what a good return post would be. I didn't want to start on April Fool's Day. And a subject came up that needed my touch.

They'll never learn

We are coming out of a recession that cost many, many people dearly. Mc, too. We are recovering. Our life's savings, pension, and the rest are recovering, but we'll never get it all back.

So, may I ask, why do we want to start it all over again? Here's what I'm talking about.

Proposed mortgage regulations bring back former, and sensible, rules on mortgage underwriting. These are in essence what the rules were before the folks at Fannie Mac and Freddy Mac started sniffing glue or whatever addled their brains.

Under these rules, the proposed borrower would have to put down 20 percent, provide proof that he or she can make the payments required and do other things that make giving them the loan a good bet.

At the same time, banks that didn't want to adhere to these rules would have to keep a percentage of those loans in their portfolios, to have, as it is said, "some skin in the game." Mortgage brokers and bankers would no longer be able to do mortgage deals that were doomed to fail, walk away with their origination fees and let the market worry about the consequences. They would stand to lose if those mortgages went south, so they would be more careful about to whom they made loans. There would not be the "I don't have to outrun the bear; I just have to outrun you" atmosphere that permeated the mortgage game.

The absence of those rules is what started the mortgage mess. People who realistically could not afford to live in anything north of a refrigerator crate were getting mortgages on houses costing hundreds of thousands of dollars. Or people were getting loans on houses that they could afford, but then taking out second mortgages and equity loans to buy cars, take vacations or what have you. Then, when they got sick or lost their jobs, they lost their houses.

In any case, the Wild West atmosphere of the mortgage market was one of the main causes of the recession. Millions of people lost jobs, lost homes, lost hope. It will take years to recover, if we ever do.

You would think the new rules would be welcomed. But no! There are those, do-gooders who say the rules would keep people with limited incomes from buying homes.

They're right. It's supposed to. Not everybody can afford a home. It's too bad, but in a non-Socialist society, that's the way it is. People who had no business buying homes bought them, lost them and took millions down with them. Seniors lost a lifetime's worth of savings. People starting families lost jobs.

Now, these do-gooders want to take us down the same path.

When will they ever learn?

One of the things I want to do this time around is to keep these shorter, and on one subject.

Until next time...