The booming US housing market has led to a worrying decline in standards in the mortgage lending industry, Alan Greenspan, Federal Reserve chairman, has warned.
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I've been bitching about this 'creative financing' for a while. They're getting too many people into houses they can't afford.
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Mr Greenspan voiced the widespread concern within the Fed about the rapid spread of interest-only loans, floating rate mortgages, and other "more exotic" forms of home financing including loans where borrowers do not pay the full interest cost for an initial period and it is added to the principal.
While these kinds of mortgages had their proper uses, he said, they exposed borrowers to more interest rate and housing market risk than standard 30-year mortgages and some lenders may be pushing them inappropriately.
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Please report to the Department of Duh. In this 'fuck everybody but me' and 'regulation is Liberal' world, of course the bottom line is the driving force behind these mortgage companies.
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"They are seen as vehicles that enable marginally qualified, highly leveraged borrowers to purchase homes at inflated prices. In the event of widespread cooling in house prices, these borrowers, and the institutions that service them, could be exposed to significant losses," Mr Greenspan said.
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Read defaults and foreclosures. You know what that means.
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Continued price rises will make it harder for the central banker to engineer a soft landing and avoid any abrupt swings in consumer spending. [my emphases]
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The Bush Economy is nothing more than a pyramid scheme. Eventually the bottom's gonna fall out and these high oil prices might just be the impetus. We're already seeing it at the shop. Folks ain't got the bread to fix their cars when gas costs $3/gallon. Katrina and Rita might just be the two tough broads who knock Chimpy Inc. on its ass.
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