Wednesday, March 21, 2007

Barney Frank on home ownership

Rep Barney Frank holds true to the general liberal mentality of "it ain't *my* fault". Rather than blame buyers who deliberately lie on loan applications, predatory lenders, lenders who practice mortgage fraud with deliberately deceptive loan practices, Frank believes that Wall Street and secondary mortgagors should assume some of the liability.

Not only that, those poor homeowners who defaulted were also "victims", per Frank.

Homeownership is a good thing and we should promote it when it makes sense,' Frank said. 'But not everybody can own a home ... One of the reasons we have the subprime crisis is because we pushed some people into homes.'

"Pushed" people into homes?? uh... try again, Barney.

It gets even better... in
Subprime Lending Takes Center Stage on Wall Street appearing today on the Mortgage News Daily website, Frank clearly demonstrates what he knows about legal lending practices and the loan application process wouldn't fill a thimble.

In the regulatory area, House Financial Services Committee Chairman Barney Frank, D-Massachusetts, speaking before an international banking conference on Monday said that there should be a national law regarding subprime lending. Frank said the law should ensure that banks, "don't lend people more money than they can pay back."

Perhaps Mr. Frank should be educated to a few facts. The application process for loans is already filled with legal mandates and penalties for applicants who lie, and lending professionals who abet those lies. These mandates carry over to others in the process, including but not limited to real estate agents, and appraisers who help misrepresent not only the financial status of the applicants, but also the value of the property they are attempting to purchase.

Loan fraud has been on the rise for quite a while, and there are already laws in place to deal with such. However enforcement of loan fraud has been slower to step up to the plate.

The borrowers, of course, are not completely blameless. It is hard to believe that anyone in America today has not heard the old cliche about free lunches and you also have to know that greed played as large a role as naivete. But could the lenders pay better attention.

Bottom line, borrowers take the first line of responsibility for assuming payments on home loans. Purchasing a home is the quintessential American act of responsibility. And it does not take a rocket scientist to figure out if one can afford the monthly payment, property taxes, mortgage insurance and homeowners insurance. That data is all laid out in black and white before anyone signs on the dotted line.

Add to irresponsible (or mortgage scam artists) buyers the influx of inexperienced loan officers who flooded the industry during the boom over the last few years. Most of these positions are "commission only". No loan deals, no paycheck. Yet they, processors and underwriters are all also held liable for loan fraud.

Wall Street and secondary mortgage market purchasers should not be assuming the liability of deliberate mal'intent or inefficiently of the buyers and lenders original application errors.

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