I Knew It! Somebody Knew There was Going to be a Mortgage Meltdown.

Monday, December 1, 2008

I Knew It! Somebody Knew There was Going to be a Mortgage Meltdown.

I may be smart, but I didn't believe I was the only one in the world who thought that one day there would be a mortgage meltdown.

Regulators ignored warnings about risky mortgages. "Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

In 2005 bank regulators proposed new guidelines for banks writing risky loans recognizing ominous signs the housing market was in jeopardy.

-Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.

-Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.

-Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.

-Regulators urged banks to help banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.

Well, there it is folks. The warnings were given, but ignored. This is money were talking about. What if these kind of warning signs were given about saving lives. Would our government ignore them too? Like JoJo's song it could be "Too Little, Too Late." Let me know what you think.