MBA: Increased use of 'creative' mortgages

Submitted by
CalculatedRisk on Thu, 10/27/2005 - 12:57pm (6 comments)
Vader wrote on Thu, 10/27/2005 - 8:54 pm

Quicken loans are advertising their no interest loans tonight.

OldVet wrote on Fri, 10/28/2005 - 2:41 am

It beggars imagination that the mortgage lending industry is taking note of what it has been promoting. Making risky real estate loans brought on the S&L collapse in the 1980's. These mortgage people are simply herd animals who plan to run over the cliff and land on the US Taxpayers.

If the two federal bank regulators and the state bank regulators were acting with any integrity at all - even a shred of prudence or foresight - they would be increasing the reserve requirements of banks and lending institutions.

Instead, we have FEMA-clones.

dc1000 wrote on Fri, 10/28/2005 - 4:47 am

my recollection of the SnL crisis was that b/c the banks had lent at fixed rates (not so risky right? or is it??) and borrowed short rates, thats where the crunch came.

the inherent risk in fixed vs variable depends on your interest rate environment doesnt it?

Mark Sullivan wrote on Fri, 10/28/2005 - 6:42 am

The real SnL losses came when desperate small town bankers started to make riskier loans with potentially higher returns after the borrow-short-lend-long game went bad, didn't it? Not to worry. The regulators were asleep at the wheel back then.

Lord wrote on Fri, 10/28/2005 - 10:29 am

Everyone with equity should have a HELOC as an emergency backup whether they need it or not. It is too late when you are ill or unemployed.

Nicholas Weaver wrote on Fri, 10/28/2005 - 12:49 pm

Question: How much has the moral hazard of securitization made this problem worse?

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