Mortgaged Principles

The subprime mortgage market meltdown has, for the most part, dropped off the news media’s radar, faster than the ink dries on a new mortgage and note.

Senator Christopher Dodd, Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, though, is on the case, heralding from his website that major players in the mortgage market have signed a “Homeownership Preservation Summit Statement of Principles.”

Mere window dressing though this statement of principles is, I will commend Dodd for the following, which was reported by the AP.

Sen. Christopher Dodd, D-Conn., had urged such voluntary action by mortgage lenders and other players two weeks ago when he convened a meeting of their officials and federal regulators to discuss possible solutions to the crisis gripping the market for high-risk loans. Such industry initiatives are preferable, in Dodd’s view, to any government bailout to cover mortgage loans in default.

Voluntary action IS what is required rather than the heavy hand of the state.

As for the major mortgage participants who have inclined their pens to this so called “statement of principles,” I simply must chuckle at the poltroonery of their poseur.

Gobs, and I mean GOBS, of money have been made in the subprime mortgage lending arena, often from the same high risk borrowers over and over again, well at least until their equity has been tapped dry.  This little statement of principles supposedly created by Senator Dodd out of thin air is, in actuality, merely sound business practices that the major mortgage participants should have been following from the very first day they opened their doors for business.  It’s measurably more economical.

If the major mortgage participants would not have mortgaged their principles when the great flood of subprime mortgage lending inundated the lending industry, they would not have had to gather to be schooled by Senator Dodd.

Several players in home mortgage market agree on principles for borrowers in trouble

Posted by on 05/06 at 08:20 AM

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