Tuesday, July 15, 2008

Today's WSJ ...

Sorry I'm a little short on time today, but some odds and ends from this morning's WSJ:

1. One of the new requirements that Bernanke is imposing on mortgage lenders, is the novel idea of requiring that the mortgage lender actually take steps to verify that a borrower can repay the loan. I wonder if certain members of Congress are going to be as outraged over this proposal as they have been over other recent events. Don't worry about a sudden dearth of homebuyers ... the new rules wouldn't take effect until October 1, 2009!

2. IndyMac has suspended home foreclosures, saying it (the FDIC) wants to help as many people as possible remain in their homes. As you will recall, IndyMac was at the forefront of the no-doc jumbo loan market. So now that you and I own IndyMac (or at least its liabilities via the FDIC), there are unlimited resources available to keep the folks in homes they perhaps couldn't afford in the first place.

3. Unrelated to the new Fed rules, lenders (including Fannie/Freddie) are now requiring borrowers to have an adequate downpayment, credit history and demonstrated ability to pay, or in the alternative, requiring borrowers to obtain mortgage insurance (from one of the likely insolvent mortgage insurers). At the same time, the mortgage insurers are scrutinizing the borrowers to make a similar inquiry into the borrowers ability to repay the loans. This will likely increase the cost of borrowing, reducing the amount folks can borrow, and reducing the pool of possible buyers for the mountain of inventory out there.

4. Another aspect of the Feds new requirements for mortgage lenders, is the return of the impound account for taxes and insurance.

Now if they would only enforce the thousands of rules and laws already on the books ... sigh.


No comments: