Feds Give Mortgage Guidance to Banks

[TrogL]

http://www.wtop.com/?nid=111&sid=918889

By MARTIN CRUTSINGER AP Economics Writer


WASHINGTON (AP) - Federal regulators directed banks on Friday to properly explain the risks posed to borrowers from interest-only and other nontraditional mortgages.

...

These mortgages are appealing to people who need cash for other expenses or who in recent years have been struggling with rapidly rising home prices.


But these types of loans also expose borrowers to far greater risks. If housing prices drop, their loan could be worth more than their property. If interest rates rise, their loan will become expensive to pay.


Former Federal Reserve Chairman Alan Greenspan issued a number of warnings about these loans last year and other banking regulators have as well.

In a classic case of close the barn door after the horse has bolted (so ironic it even made fark.com), people are finally worrying how the collapse of the housing bubble is going to affect financial institutions.

[OrangeCountyDemocrat]

1. LOL LOL LOL LOL LOL LOL LOL LOL LOL

Well, it's only about 5 years too late.

"We never thought they'd fly planes into buildings."

"We never thought the levies would break."

"We never thought people would get stuck in exotic mortgage loans."

[phantom power]

2. After they're done whining that "nobody could have predicted.."

They'll set up a truly gigantic (taxpayer-funded) bail-out to all the loan institutions. The bail-out itself will be financed by debt, of course, since America doesn't actually have real money to spend anymore.

[OrangeCountyDemocrat]

4. I See The Bailout Coming....

You know it is.

EVERYBODY will pay for this, even those of us who were responsible. It's a FUCKING shame.

This country continually disgusts the shit out of me.

[OhioChick]

3. Too little, too late. n/t

[BlueManDude]

5. Fucking Greenie was the guy who told everyone to get an ARM!!!

I work in the RE/Mort area and I was telling folks to lock in the 5-6 % rates and sleep at night.

[mrdmk]

6. Actually this is the Fed closing down the easy loans

Looking into my crystal ball, if there is a gain by the Democrats, Mr. Bush Jr. will blame the slow-down on the economy by the opposing party opposing him. If the Republicans retain or gain this upcoming election, it will be time to cue the Tax Cuts rhetoric. This will have an effect in between the first and second quarter of 2007.

edit: clarity

[TrogL]

7. They're getting out just in time

They may be planning on losing the next elections on purpose so the Democratic Party can take the fall when the economy collapses.

They will have achieved all their goals; made all their money, got their estate tax break, ruined the economy, destroyed the middle class and bankrupted congress, preventing it from enacting social programs.