80% of loans were not safe: independent financial advice

      Today’s Wall Street Journal has an article titled “How Many Borrowers Qualify for New ‘Safe’ Mortgage Rules?

    The article said “About one in five mortgages purchased by Fannie Mae or Freddie Mac over the 1997-2009 period would meet the proposed standard of “safe” mortgages that would be exempted from costly new lending rules, according to a federal report published last week.”

     My opinion is that the great real estate, mortgage, and stock bubble occurred during 1997-2007, so if 80% of the lending done then was not safe then that explains why the bubble got so big and why it is so hard for the government to re-inflate the housing market. Since the government is not going to allow the banks to return to the reckless lending standards of that era then the only way the housing depression can be resolved is by prices of homes coming down until they are low enough for new investors (landlords) to buy them and rent them out at a profit. Further, since there is a lot of speculative talk that Congress will take away the mortgage interest deduction, then, if that happens, home prices would have another reason to continue declining.

    I have written about “housing not comparable to the past” and “bearish housing market”.

    This is an example of independent financial advice.

2017-01-10T23:32:33-08:00 April 5th, 2011|mayflowercapital blog|Comments Off on 80% of loans were not safe: independent financial advice

About the Author:

mm
Donald Martin has a B.A. in Accounting and M.B.A. Finance, and has passed the rigorous CFP® exam and met the experience requirements needed to become a CERTIFIED FINANCIAL PLANNER™ professional. He has been employed in the financial services industries for 30 years and has been investing for his own account for 38 years. Donald Martin’s 19 year career in lending prepared him for fixed income analysis, Securities analysis, and macro-economic analysis used for investing. Donald Martin founded Mayflower Capital in 1993 to provide independent financial advice and implementation of advice about loans. In 2005 Donald Martin changed the company’s mission to providing independent financial advice about investments and financial planning and stopped providing loan services. Donald Martin has a B.A. in Accounting and M.B.A. Finance, and has passed the rigorous CFP® exam and met the experience requirements needed to become a CERTIFIED FINANCIAL PLANNER™ professional. He has been employed in the financial services industries for 30 years and has been investing for his own account for 38 years.