Mortgage Mess – The White-House Never Learns

Everyone makes mistakes and the difference between smart people and dumb people is that smart people never make the same mistake and dumb people never stop making the same mistake.  Well the Obama White-House falls into the latter category when it comes to America’s mortgage problems.

Remember just a few short years ago when the government through Fannie-Mae and Freddie-Mac allowed lenders and actually encouraged them to give a mortgage to someone even if they did not have the FICO score, loan to value, income, or assets that should all be part of a sound mortgage underwriting program to insure the smallest mortgage default rate possible.

Moreover do you remember the near worldwide financial Armageddon that these loose mortgage-lending practices caused? In turn it led to the bailouts of the same institutions that caused the entire meltdown – Freddie-Mac, Fannie-Mae, AGI, Bank of America and the list goes on and on.

As reported by the Obama Administration wants to reduce the underwriting guidelines that caused the mortgage market to bring the financial world to the brink of collapse.  Let me repeat that – instead of maintaining the more stringent and customary mortgage underwriting guidelines to help prevent default and make mortgage loans only to those that can afford them – this administration wants to return to the loose mortgage underwriting guidelines that put our economy where it is today. You know the one with over 9% unemployment, rising food/fuel prices, and zero job-growth.

I know you’ve got to be saying, “You’re kidding me!” Unfortunately I’m dead serious. Here are some of the guidelines or lack thereof with this new HARP prgram:

1. Absolutely no Loan to Value Criteria – yes you can have a loan to value of 300% or owe 3 times more than the home is worth. Normal Guidelines restrict your Loan to Value to 95-97% maximum

2.  Mortgage late payments allowed – a huge red-flag for lenders is when a borrower is late on their mortgage. Under this program a borrower can have been late on their mortgage within the last year.

3.  No minimum FICO score needed for this program.

As i first stated a wise man learns from his mistakes and does not make the same one twice. Well this is “Round 3” for the president’s HARP program. It’s been a failure the first two times as more than half of those that refinanced under HARP again went into default on their mortgage again. Do you really think scraping the “bottom of the barrell” of mortgage-holders with bad credit is going to change the outcome the third time around?

It’s not just me but even the liberal Huffington Post has this to say about the president’s program:

“While the revised program seeks to lower mortgage payments for underwater homeowners, the program does nothing to address the core problem — owing more than the home is worth.”

Dumb-Dumber-Dumbest is what I have to say about this adminstration’s handling of the mortgage mess.

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