The general consensus amongst mortgage market insiders it that the whole mortgage mess begin in the 1980’s when the industry was deregulated.  Anyone that could throw up a store front and put together a few thousand were suddenly in the mortgage business.  Being a creative sort, and nowhere near as conservative as most bankers, they begin to put together what at the time sounded like fantastic deals.  It was - for them.  I believe it lead to what is going on today, or is at least a giant share of it.

Now, of course, the Fed is working hard to backtrack on this whole scenario, and try to sort out what is one of the worst mortgage markets since the 30’s.  While researching this article, I see that KB Homes, the large LA based builder, is in a world of hurt, and its earnings dropped $3.30 since the first of the year.  Although KB sees hope in the market, it has a long, tough row to hoe to get there.

California has always been a forward thinking state, with regulations and laws that far surpassed the rest of the country, and I have always admired their stance on such things as strict pollution laws.  Now it appears that California is falling down when it comes to the Fed Reserve action of guidance to federally regulated lenders to tighten lending practices, to assure that borrowers have the ability to repay over the life of a loan.  Even though the Fed realizes that guidance is not enough, and it wishes the states to be proactive in helping to clear the field, California is now leading with its own response to the crisis of foreclosures and delinquencies by waiting for the Fed to do their thing, and then making the minimum effort to follow through.  Senate Bill 385, signed into law last September, gives empowerment to state-regulated entities engaged in mortgage lending and brokering.  It basically extends the little-good power to the companies that the Fed has put in place referencing guidance, which is in all truth no help at all.  California should be more proactive with this, I think, because a great deal of the mess lies there, with over priced properties and a plethora of foreclosures.  Yet the Senate and Assembly play politics, and do little to more than follow like good little sheep.  California, it is time to get off your butts and go for it.  We all look to you for guidance, not playing follow the leader.  Take note of New York, and the strides they have made there.  Give this country a break.