Rolfe Winkler

Democratic Congresswoman Laura Richardson of California was recently the victim of foreclosure, according to Capital Weekly. She quickly issued a statement “clarifying” the story; she says the house is not in foreclosure and that her loan has now been modified.

Reading her statement, which begins with a non-denial denial, it seems to me she probably moved to “modify” her loan only after this news hit the papers.

I just find the facts hilarious. She managed to get a zero-down mortgage, likely an Option ARM given the Neg Am that’s piled up, in January 2007….just as the housing bubble began bursting.

100% LTV on a $535k house; the report says she now owes $578k in total.

The story would be even MORE ironic if she’d voted in favor of the various House measures to aid “distressed” homeowners. Sadly, no: she claims to have been absent from the House when the crucial votes were taking place.

(more…)

Does anyone remember when Fan and Fred were still thought to be “prudent” lenders? Relative to the CFCs and WMs of the world they may always have been, but they still have far more risk in their portfolios than they should given the taxpayer guarantee backstopping their balance sheets.

The WSJ reported two days ago (sorry I’m getting around to this late) that Fan and Fred have decided to scrap a rule that required higher down payments for mortgages in markets that were experiencing especially large price declines.

Why the change in policy?

The change comes in response to protests from vital political allies of the government-sponsored provider of funding for mortgages, including the National Association of Realtors, the National Association of Home Builders and organizations that promote affordable housing for low-income people.

Those various groups have said the policy is hurting an already feeble housing market by shutting out too many potential buyers.

Too many overlevered and unqualified borrowers were the problem that expanded the housing bubble in the first place. When lenders require no down payment and are offering low teaser rates, it makes sense for borrowers to take on debt to buy a house. Their mortgage amounts to a free call option on continued house price appreciation.

(more…)