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The Cause of This Mortgage Crisis – and the Next One |
| Published: May 21, 2008, 11:16 am |
| Tags: usa, corporations, money finance |
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That it is silly season in the mortgage industry cannot be denied. Of course, it's been silly season for an awfully long time, but now the weather's changed from greed to fear. It's a well worn complaint that banks have led to the un-creditworthy, but now in a knee-jerk over-reaction, many of them are withdrawing perfectly reasonable mortgage products left, right and center. The thought seems to be that pulling products that allow for lax checks of a person's ability and propensity to pay will fix the cause of the lending crisis. This is wrong. It can only at only some of the symptoms. The real cause doesn't get much of an airing, but it is fundamental and rather simple: the very idea that the verifiability of income and FICO scores alone, or even primarily, constitutes a sensible basis for assessing ability and propensity of meeting the obligations of a mortgage is wrong-headed, lazily corporate, and due for a change. Some of the most self-defeating [ Full article ] |
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