tag:blogger.com,1999:blog-7905515.post4777936700032839867..comments2024-03-14T11:09:32.759-05:00Comments on Falkenblog: Bank Lending DilemmaEric Falkensteinhttp://www.blogger.com/profile/07243687157322033496noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-7905515.post-57222871703829512652011-10-27T18:33:00.710-05:002011-10-27T18:33:00.710-05:00"In the US, loans are already 'non-recour..."In the US, loans are already 'non-recourse', meaning borrowers can walk away and let the lender eat most of the loss..."<br /><br />Erm, sorry, not true (or rather not completely true) - see, for example, <a href="http://anthemattorney.com/2011/02/nonrecourse-mo/" rel="nofollow">here</a> or <a href="http://www.forecloseddreams.com/recourse_states" rel="nofollow">here</a>. Only 12 states are non-recourse/anti-deficiency - although "biggies" like CA, TX and Florida are among them. They account for approx. 118 mln people out of the population of 308 million, or 38%. Thus, if you are a random American, or live in a random state, odds are you cannot just walk away from a loan.<br /><br />This nit-picking aside, I agree with your general point.Plamenhttps://www.blogger.com/profile/14209486398849262374noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-22451987884534942302011-10-25T14:33:38.583-05:002011-10-25T14:33:38.583-05:00Along the line of Mark Twain saying, 'Wagner&#...Along the line of Mark Twain saying, 'Wagner's music is better than it sounds.', I like this:<br /><br />'In retrospect it would have been better if financial institutions and those involved in regulating them, especially the Federal Housing Finance Agency, recognised that house prices can go down as well as up, if more rigour had been applied in providing credit, if the government-sponsored enterprises (GSEs) had been more careful in monitoring those originating and servicing loans, and if there had been more vigilance about fraudulent behaviour.' <br /><br />Which is like saying, 'Ya know, Ted Day and Stan Liebowitz were right back in the 90s, to warn against the fashionable idea of lowering underwriting standards; that it would blow up in everyone's faces. Maybe there's a lesson for us there.'<br /><br />And this ought to warm the cockles of Scott Sumner's heart:<br /><br />'The Federal Reserve could support demand and the housing market by again expanding purchases of mortgage-backed securities.'<br /><br />I.e., monetary policy has been too tight.Patrick R. Sullivannoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-30229030921863479532011-10-25T09:52:29.164-05:002011-10-25T09:52:29.164-05:00Larry Summers is either crazy, talking his book or...Larry Summers is either crazy, talking his book or both. There are maybe two sentences in the entire editorial that aren’t flat out false – starting with the first which enlightens us that the way to fix a debt bubble is with more debt. Pay no attention to what your grandparents said about hard work and thrift kids, it’s actually all about consumption and debt.<br /><br />The purpose of FNM/FRE is not to "mitigate cyclicality" it’s to subsidize and (more recently) misprice loan risk.<br /><br />Here’s another beauty: “Statistics suggest the characteristics of the average applicant in 2004 would make an applicant among the most risky today.” Common sense suggests that too Larry but whatever. This would be an inaccurate assessment in his view because housing prices have already fallen 35% and the odds of another 35% decline (based on the good kind of statistics I guess) are pretty slim. Larry, if you don’t have a job, the current mark-to-market of your house has little bearing on your ability to cover the next mortgage payment. And how many tech-bubble stocks stopped going down after a 35% slide?<br /><br />This is a pretty good summation of how the administration views the US residential real estate market and this is why we are nowhere near the bottom in RE or the economy in general.Mercurynoreply@blogger.comtag:blogger.com,1999:blog-7905515.post-53580025026741519992011-10-25T06:54:47.253-05:002011-10-25T06:54:47.253-05:00Is there something wrong with homelending as it is...Is there something wrong with homelending as it is now? I think the headwinds facing the housing market are lack of buyers due to a poor economy and reluctance to sell at current market price. <br /><br />To be clear, I'm not with Summers either. I think that with the current standards, people are being forced to make realistic housing choices.Derek S.noreply@blogger.comtag:blogger.com,1999:blog-7905515.post-88577310090984700342011-10-25T02:49:01.100-05:002011-10-25T02:49:01.100-05:00Why not write a letter to the editor of the FT in ...Why not write a letter to the editor of the FT in response?Dave Pinsenhttp://steamcatapult.com/noreply@blogger.com