Here are five strategies that would help restore confidence and integrity to mortgage financing: ... Restore strict lending practices. Bolster the FHA, Fannie Mae and Freddie Mac. Increase accountability of mortgage brokers and other non-bank lenders. Encourage lenders to restructure troubled loans. Increase mortgage counseling.
I disagree with restricting no doc, interest only, ARMS, 1%, and other practices. They should contain prominent disclaimers and they could certainly be linked to counseling. Leasing a car makes little sense unless one is leasing it for business purposes. A no doc loan might be the only way someone who's on commissioned sales can get approved. 1% make sense for investors doing flips.
Government should not be in the business of restricting the free market--only leveling the playing field and providing consumer protections.
My personal opinion is Lenders have a portion of the responsibility, but the general public knows what they can spend and should have looked at the big picture "Can I really Afford this?"
Not to knock on anyone down on their luck but if you got an Intrest only, arm, any exotic loan it's your own fault for not researching trends and realizing "WOW, intrest isn't going to stay at 5%", or "Um the price of housing went up 50% over the last 5 years, maybe there is a bubble there?". I have some simpathy cause it's the first time in the 40 years of recording realestate has LOST value, but everyone always knows there is a first time for everything.
Oh, Intrest only loans are a good thing for Business owners, Commision Sales, ect. But only if used properly. They were created for those with fluctuating income to have a small minumum payment with the option to pay extra if they could. If you can't afford to pay more than the min payment on an intrest only, then you really shouldn't use that option....
UGGGGG....sorry if I hijacked this thread, this whole deal has planted a huge bug up my butt...