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traditional ways of approving home loan

traditional ways of approving home loan

ckoffend | Jan 11, 2013 07:26 AM ET Remember the politicians! Thanks to them, Barney Frank in particular, Fannie and Freddie were by LAW required to "buy" or "underwrite" more than 50% of their "loans" to high-risk, sub-prime and unqualified borrowers. The politicians always find ways to get involved in the details that they know nothing about - in an effort to get re-elected. The 43% debt to income ratio should immediately be changed to no more than 30% of mortgage debt to income ratio. They can keep the 43%, but that should be of all debt to income and based on all debt being paid off within 5 years, unless it is a mortgage. Of course, intelligent and financially responsible American`s don`t need this legislation, it is only the unintelligent and financially irresponsible people that would carry so much debt%2

giofls | Jan 11, 2013 08:29 AM ET So basically the CFPB has made itself the new Fannie Mae. You can be sure that whatever criteria they establish will be used by Fan & Fred in defining conforming loans. The net effect is to move more loans to FHA, and govt essentially being the only lender. This is a grand power grab, and nothing else.

BaronAstor | Jan 11, 2013 09:21 AM ET Aside from the numerouos typos and poor grammar, there is nothing new in this article, except some additional protection for banks. There have always been lender liability laws which state in laymen`s terms "If a lender made a loan without verifying the ability to repay, the lender is at fault". This is why banks can;t give a cash-secured loan against your CD without verifying your ability to repay. Cash-flow vs net worth. This article goes on to say - there will be lenders that offer terms outside the CFPB guidelines. Duh!

GetRealNow | Jan 11, 2013 12:55 PM ET "The 2010 Dodd-Frank reforms allow lenders to be sued for making loans that a customer cannot repay. This isn`t something that lenders want anyway, of course. But the effect of the law was to create potential legal liability for lenders when a borrower defaulted. It invited judges to second-guess the terms of a deal made between a borrower and a lender." ====================== This is nothing new. The housing bubble burst b/cos many sub-prime loans were repackaged as high rated Mortgage Backed Securities which later defaulted. The MBS were repackaged with prime loans to fool investors leading to to economic meltdown. It follows that lenders are mainly at fault b/cos they are interested only in loans creations, not the quality of loans (lending to qualified borrowers). Lenders%2

GetRealNow | Jan 11, 2013 12:55 PM ET (lending to qualified borrowers). Lenders have the ability to cause more substantial and massive economic damages than borrowers b/cos of their economic powers using predatory lendings, misrepersentation, deceptive advertising, etc. Ever get a flyer that reads "No credit, no problem. Bad credit, no problem".

expat08 | Jan 11, 2013 03:19 PM ET If you make the loan and the borrower defaults the CFPB will sue you. If you don`t make the loan because you believe the borrower will default the Justice department will sue you for profiling. What a wonderful time to be in the mortgage business.

edahsc | Jan 11, 2013 03:57 PM ET From what I can tell by this article, the new law breaks all the criteria I look for in new legislation. 1) it`s unenforceable 2) It doesn`t deal with the problem. The biggest problem was made the loans because they could pass them on to other folks via Wall Street Mortgage Backed Bonds. The other big problem was too big to fail means the banks don`t identify the risk because the government is there to support them. All we need is full disclosure and transparancy. Mortgage backed bonds were AAA rated, which is where the problem lies, rating agencies are in bed with Wall Street, they are not seperate entities without bias.

GenerationX | Jan 11, 2013 04:25 PM ET In other words, they are going back to the traditional ways of approving home loans.






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