Have Underwriting Standards Become Too Tight?

catherine at 00:04 2010-06-16 said:

with the world blaming underwriting (many on this site) as the biggest cause of this whole mess (don't forget those evil mortgage people), that of course was the fix, right? can't fix a problem when you start with the wrong premise, can you?

that underwriting was the problem could be sold when subprime failed, (jobs and medical were the reasons then too)

but how can you blame underwriting and greedy mortage people when now "A' borrowers who put 30% down have been walking for over a year............. Sure there was fraud (10% in every industry on the planet) and people that didn't qualify (government shoving the poor into some houses) but those numbers are minor compared to DEPRESSION ERA UNEMPLOYMENT...............

and like the s and l crisis we had tons of foreclosures but they weren't securitized, the house failed the bank failed...............but wall street securitized mortgages up 10-1000 times and sold the crap around the world. We overbuilt housing and bad loans were needed to get bodies into those houses.............add the final knife when you have an oversupply of anything the value drops...........and so now we have huge securitization of asssets tied to failing chainsaws........

we have no idea where it stops but I said 50% value drop in 07 but I could never imagine the damage the government was going to do, I think values could fall 65% now (since they are getting more tax money to BUILD BUILD BUILD) and like after the first Depression housing didn't come back until the baby boom in the early 50s.

So we fixed the wrong problem, and we listened to the wrong people and we got our underwriting nice and tight............but we still have huge supplies of homes, millions of homes that need bodies................and those bodies are not anywhere near "A" paper borrowers. So now the government will do all the subprime they need to do (FHA) to get butts in those houses..............big circle to nowhere..............except 384 companies lost their employees and anyone who did mortages was trashed...............

no more building for 8 years...............and jobs jobs jobs and we will turn this mess around............but alas, people that ignore the depression era unemployment in their faces will see it clearly when the oilybama spill doubles and triples unemployment.............then we will see crazy stories written about how the experts just can't understand the high foreclosure numbers in AL, LA, MS or FL..........just like the one out of Delaware the other day :roll: Permalink