I'm Just a Little Black Rain Cloud....

The mortgage lending bill that I have lambasted in these pages before had drawn some comment from others, and I wanted to point especially to Harry Rodas's excellent blog, where he also commented on it.

The absurdity starts with the federal requirement that lenders make sure a borrower can repay a loan. As if there were any possible incentive not to do that. Stupidity knows no bounds up there on the Hill.

I also want to take just one second to point something out. It's true that credit restrictions were very relaxed over the past few years, and that this allowed more people to get into houses than ever before. It is also true that some of these people are now being foreclosed on. The media reports every foreclosure as a national disaster on the order of the raid on Pearl Harbor, but I want to ask a question: suppose Mary Jones was able to move out of her apartment and into a residential neighborhood, remained there for two years, then found that when her rate adjusted (she hadn't improved her credit in the meantime, so couldn't refinance), that she couldn't make the payment and is now being foreclosed on and forced to move back to the apartment she left. Are you saying she shouldn't have been able to leave her apartment? Is that the contention? Which is worse - having to stay in an apartment forever (and some of these subprime borrowers, ladies and gentlemen, are going to have to do that, especially now), or getting two years of the American Dream, but having to give it back?

I just wonder.

Incidentally, on a $150,000 house, the Fed rate increases over the past 3 years have added $400/mo to the payment of any homeowner with an ARM. But it's my fault, as the mortgage lender, that the homeowner now can't make his payments. Whatever.