Saturday, May 14, 2016

It is a Wall Street Journal report, so it deserves some scrutiny.

Private Lenders are changing mortgages (click here)

May 13, 2016
As federal red tape has forced traditional lenders to recoil from the mortgage market, private lenders are filling the gap for lower-risk borrowers, reports The Wall Street Journal's Kirsten Grind. But there are repercussions.
That means a small but growing slice of the mortgage market has shifted from mainstream banks to an informal, loosely regulated corner of property finance. These lenders can earn 8% and more on their money—the catch is they must stomach the risk of lending their savings to borrowers rejected by banks.

Red Tape, no difference than Regulation, is a misnomer for the right wing. Here it is again. That entire mess is what caused the mortgage implosion in the first place.

January 1, 2007
No Red Tape Mortgage, (click here) a Sherman Oaks, CA based wholesale Alt-A mortgage lender closed down today after months of struggling in the now defunct mortgage industry.
After the subprime blowout months ago, Alt-A lenders fell under higher scrutiny, and companies like No Red Tape, a small lender compared to national lenders such as Countrywide and IndyMac, simply couldn’t compete, and subsequently got squeezed out of the market.
Recently, Sterling Partners, a Chicago-based private equity firm bought out and took control of the ailing company, along with parent company Metrocities to keep things afloat.
As a result, No Red Tape responded to market conditions by laying off half of their staff, leaving about 50 employees with jobs....

Every political season the moaning and groaning regarding opportunity for wealth comes front and center. The Republican Party always provides simple wars for their electorate, so screaming about regulation and No Red Tape becomes their mark in history. It pays off for the financial sector, Citigroup Amendment is proof.

Will the corruption ever end? That is up to the voters and their determination to fully understand the dynamics involved rather than simple election slogans. Candidates should be prepared to address the slogans with informed dialogue to end this practice. Whether Republican voters are willing to admit it or not, they really don't want 2008 back again. There were Republicans effected, too. They can be reasoned with when the dialogue addresses the facts and emotional attachment to slogans in a country based in 30 second product commercials in their media.

No American wants to be a puppet. Respectful dialogue can be effective.

This is from 2015.

March 16, 2015
By Thomas Warren and Ryan Hadley
While community banks (click here) are eager to provide more loans to drive economic growth in their Main Street communities, and have the ready capital to do so, excessive government regulations, particularly new federal mortgage lending rules, are holding them back. That’s a consistent refrain heard from community bankers, and one that ICBA (Independent Community Bankers of America - click here) has continually communicated to Washington’s policymakers—first after the Wall Street financial crisis, and then since the complex federal ability-to-repay mortgage regulations were initially released more than two years ago....

... In fact, 9 percent of the 519 community banks that participated in the ICBA survey say the mortgage rules—spawned nearly five years ago by the Dodd-Frank Wall Street Reform Act and put in force in January 2014—have caused them to stop mortgage lending altogether....

Community bankers might be looking for growth opportunity. They have become a good partner to local economies. Their growth demands should be honored, but, there has been exploitation of these banks resulting in their implosion twice in their history; once under H.W. Bush and then again under "W." The regulation of these vital local partners should be heard, but, they need to understand they are the first to implode when a financial disaster hits the USA.

Candidates should have all these financial entities on their radar and not just the egregious "Big Banks." These banks toppled like dominoes in 2008, that is no joke to many of the local economies that also served the greatest stability to that same episode of free and unfettered (otherwise known as financial anarchy) capitalism.

These ambitious community banks could seek review by the Consumer Protection Bureau to provide a case by case decision. It is up to Congress to empower the agency to conduct such reviews.