Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
UK EU Election Results, Brexit Party Victory, Labour and Tory Bloodbath, UKIP and ChangeUK Die - 27th May 19
The Three M's of Hyperinflation : Milosevic, Mugabe, And Maduro - 26th May 19
Global Multi-Market / Asset Charts Review - 26th May 19
An Oil Shock Could Be the Black Swan That Finally Drives Gold Higher - 26th May 19
Brexit Party Forces Theresa May to Resign, Boris Johnson Next Tory Prime Minister? - 26th May 19
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Meet the New U.S. Housing Market Mortgage Rules – They’re the Same as the Old Ones

Housing-Market / US Housing Oct 24, 2014 - 10:15 AM GMT

By: Money_Morning

Housing-Market

Shah Gilani writes: And you thought the federal government was getting out of the mortgage guaranteeing and backstopping business.

In fact, the feds are not only not getting out of the mortgage business, but they’re already blowing up the next bubble.

As a result, the Great Recession – spawned by the credit crisis, easy-money mortgages and low interest rates – is going to make a comeback.


We already have artificially low interest rates, so check that box. All we have to do now is start dishing out easy mortgages again.

Well, we can now check that box, too…

Private Money

Now when I say “federal government,” I mean asinine legislators directing equally asinine regulatory agencies.

And here are a few of those “august” agencies now.

The U.S. Federal Reserve, the U.S. Securities and Exchange Commission and the U.S. Department of Housing and Urban Development all just signed off on new mortgage rules.

Originally, in the aftermath of the mortgage meltdown, here’s what was supposed to happen.

Lenders in the private-money mortgage origination and securitization game (“private” meaning not guaranteed by the federal government in some way) were going to have to demand a 20% down payment from borrowers. Or they were going to have to retain 5% of the mortgages they made on their own books if they wanted to securitize those loans and sell them to investors.

However, here’s what showed up in the final version of the long-awaited mortgage rules.

Our stalwart government lackeys bent over backward on behalf of banks and said, “Fuhgettaboutit! You don’t need to get a 20% down payment, and don’t bother keeping some of that crappy risk you’re taking on your books.”

Basically, here are the new rules: Check the borrower’s ability to repay (which means check for a pulse and a job), and make sure they don’t have more than 43% debt-to-income levels. Then, have at it all you want.

Of course, not everyone in government is an idiot or on some bank’s payroll. Two out of five SEC commissioners voted against the lenient rules. Republican commissioners Daniel Gallagher and Michael Piwowar strongly objected.

Gallagher said, “Today’s rule-making takes the untenable housing policy that injected irrational exuberance into mortgage lending and, as a result, caused a catastrophic financial crisis and chisels that failed policy into the stone tablets of the code of federal regulations.”

Now, the private-money mortgage game is a tiny slice of the whole game. Last year, private mortgages amounted to $27.8 billion out of $1.58 trillion in total mortgage loans (including refinancings).

The idea was to tighten up rules in the private (nongovernment-backed) market first and then get the government out of the mortgage business.

So much for that idea.

Public Money

Legislators and regulators caved in to lenders on these rules, in part, because they’re seeing the housing market start to slip again on account of heightened lending standards. And the way to strengthen the housing market, of course, is to make it easier for people to borrow to buy houses.

The private mortgage market isn’t ever going to replace the public market as long as the government keeps growing its backstopping engines: the Federal Housing Administration, Freddie Mac and Fannie Mae.

You remember Fannie and Freddie. They were the private companies (with lots of stockholders and bondholders)/government-sponsored enterprises taken over by the government in 2008 before they imploded the United States into a hole we may never get out of.

They guaranteed trillions of dollars of mortgages and bought pools of them so they could reap the interest income from them. That is, until the game came crashing in on them.

Well, they’re bigger than ever. Between Fannie and Freddie and the FHA, the federal government backs (in some way) more than 95% of all mortgages now created in the United States.

That’s right. We’re headed right back where we just came from.

I’m all for loosening up lending standards – but not for taxpayer backing.

Government idiots are all about slathering voters with easy mortgage money avenues, and the Fed is all about slathering banks with profit-making opportunities.

Together, they are cooking up another you-know-what stew.

Source : http://www.wallstreetinsightsandindictments.com/2014/10/meet-new-mortgage-rules-theyre-old-ones/

Money Morning/The Money Map Report

©2014 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules