The Mortgage Manifesto!

So the story continues…

Lenders have been offering mortgages with an astonishing array of attractions: Adjustable rates, flexible terms, quickie appraisals and no money down, rates as low as 1% - hmmm ;-o

Teasers like these were part of the mortgage boom of the last few years. Lenders - who mostly weren't banks at all, but unregulated brokers funded by Wall Street - raced to write as many mortgages as they possible could. Get it while it is hot, they say.

Those loans were then sold to investment banks, where they were bundled, sliced up and resold to investors around the world.

Mortgage-backed debt securities are now a major global investment vehicle, just like corporate stocks, municipal bonds and commodity futures.

Widespread access to credit not always good

This was an interesting article that was in the USA Today, on March 30, 2007.  Let’s see what happens now with congress and where they go with this information.

WASHINGTON (AP) — Troubles plaguing lenders and borrowers with risky mortgages may challenge the notion that widespread access to credit is always a good thing, Federal Reserve Chairman Ben Bernanke suggested Friday.

Bernanke's comments came as he talked about a decades-old law, called the Community Reinvestment Act, that aims to make sure that banks serve all their customers, including those in low- and moderate-income communities.

The Fed chief said the law, enacted in 1977, has produced some benefits, including helping to bolster homeownership rates among the poor, "but the results are not uniform."