News Around The Nation

May 3rd, 2008 @ 3:42 PM by Alden Smith

There is a growing opinion that the housing market can only turn its way around by programs aimed at turning unaffordable mortgages into affordable ones on a large scale. Although you have to think that this is equitable, it gives reason for pause. The old axiom caveat emptor should rule here, as it has always done. It is not the responsibility of the lender to educate the buyer – it is up to the buyer to know what he is getting himself into. This does not mean that I condone unethical practices. The way I see this is if you haven’t a clue as to what goes on when you sign away your paycheck for the next 30 years, then take your lumps as you should. I DO believe that a lot of people have gotten themselves in the mess they are in now because of unethical practices on behalf of lenders. But trying to sort out who’s who is a task that even the government can’t take on. I have seen situations where buyers have borrowed the entire amount of the loan, and have gone elsewhere to borrow money to cover closing costs, and to me that is pure foolishness. In an imaginary world, where things are as they are supposed to be, then that might be okay. In the real world, however, there are so many people out there willing and able to take your money that it is pathetic. And to get yourself in this kind of money situation borders on setting yourself up to fail.

Speaking of failure, Countrywide is in a snit because several of the ratings it is receiving. On Friday, Standard & Poor’s cut Countrywide’s credit rating to below investment grade. This will seriously hamper any effort that Countrywide may make in getting it all back together. Countrywide’s filings to the SEC reports that a cut in rating will make it very hard for them to access cash for making loans. All this comes after BOA has made the offer to buy. From the looks of things, Countrywide is still in for a bumpy ride.

In other news, President Bush said on Friday that “I know it’s tough times, and I know you’re having to pay more at the fuel pump than you want. But this economy is going to come on. I’m confident it will.” I am wondering when the last time is that Bush had to pay to fill his tank and drive to work. Somehow, though, I don’t quite think that would bother his wallet too much!

The FTC is looking into the advertising practices of dozens of mortgage companies. Lydia Parnes, Director of the Bureau of Consumer Protection for the Federal Trade Commission, said “In the past decade, the FTC has brought 22 actions focused on the mortgage lending industry, with particular attention to entities in the sub prime market, alleging that mortgage lenders and servicers engaged in unfair or deceptive acts and practices. Through these cases, the FTC has returned more than $320 million to consumers. Many of these cases have challenged deceptive advertising and marketing practices.” I have to think that if the FTC had been on the ball during the past 2 years, we would not be where we are today. But that is just one man’s opinion…