July 8, 2008
Protecting Borrowers From -- Loans!
Great bit from the esteemed political philosopher, Emily Dickenson:
The surgeon must be very careful,
When to use the knife.
For underneath his fine incision,
Lays the culprit, life.
(From memory, so don't complain if I missed a comma or something)
Fed plans new rules to protect future homebuyers When I read the headline, a shiver went down to my feet in sort of a reverse Obama-Matthews. Reading the story did not make it go away. Broad new powers for the Fed (expanding our services because we rock so much at our other tasks) to regulate home loans.
Under the proposal unveiled last December, the rules would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.
Government comes up with some hare-brained ideas now and then but I think this one will indeed work. If you make it too expensive or perhaps impossible to get a loan, that should inhibit defaults.
Mortgage crisis solved! I knew getting a Princeton Man in would be a good idea!