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  by Anonymous |

  Apr 02, 2008(about 1 month ago) |

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  too much interference may have bad consequences.
  
  There are several instances in different states where a
  ( http://www.nycourts.gov/reporter/3dseries/2008/2008_28032.htm )
  foreclosure proceeding was decided to be in favor of the defendant and the mortgage returned because the loan was found to be 'predatory' in accordance with State Banking Laws.
  
  The buzz is that this bill might result in higher interest rates, and that would stall the purchase market; people on the sidelines that are contemplating their first home because the prices are low and the rates are low. Once rates are higher, it is perceived as too risky and too expensive.
  
  In the spirit of the FDR days, I humbly suggest setting up subsidies for commercial real estate investors / developers that have the ability and experience to renovate / create affordable housing facilites, include expansion of job placement (preferably counselors reporting to work in the lobby of each facility) and also provide public works projects in the vicinity.
  
  Yes, allow the foreclosures. The ramifications of burning the investors will further diable the credit market, and potentially destroy good will in the future.
  
  Also, as mentioned by R- Frank, it is too large a task to distinguish the savvy investors from homeowners caught up by accident (reward one, punish the other catch-22).
  
  It is a shame when people are forced from their homes, but this is not a time to pretend we can change the past. Loans were made on the same criteria:
  
  Credit
  Collateral
  Income
  
  the credit issue is debatable, beacuse we rely on models based on undisclosed algorithms we don't really understand. But in essence, if someone has a habit of not paying their bills, chances are they are a risk.
  
  Collateral: When everything goes up value-wise, towards a 2-5x multiple of median income for an area, someone needs to step in and cap the LTV's (Loan to Values) ahead of time. That should be written into State Banking Laws.
  
  Income:
  Debt-to-Income. Allowing a loan to pass muster where 60% of borrowers' is spoken for is purely insane. Not verifying that income in addition is asking for it.
  
  It is not the individual homeowners' fault these programs existed, but again; we cannot go back and re-write history.
  
  The best solution may be painful but the closest opportunity to turn the real estate market around while at the same time avoid the same mistakes is to have lower rates on stable mortgages (15 20, 30 year fixed rates) to convert current renters into homeowners. Property tax subisidies for 5 years for first time home buyers in high-cost markets is also advisable.
  
  

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