Skin in the Housing Game By Arnold Kling

Recourse mortgages with significant down payments will stabilize the housing market, prevent speculative bubbles from forming, and limit taxpayer risk.

In the late 1980s, housing finance regulation focused on avoiding a repeat of what took place during the Savings and Loan crisis: government bailouts of institutions that had become insolvent by taking on too much interest-rate risk. Unfortunately, the new system, dominated by securitization, succumbed to the other major risk in mortgage lending, namely, house price risk.

Mortgage default risk is closely tied to the behavior of house prices. As long as house prices are not declining, mortgage defaults will be rare. If a borrower whose house has increased in value runs into financial difficulty and cannot pay the mortgage, it makes more sense for the borrower to sell the house and pocket the profit than it does to default on the mortgage.

Defaults on appreciated homes almost never happen. Thus, in an environment of rising home prices, underwriting standards tend to become lax, and other risk-management measures tend to be loose. When house prices are rising, lenders are not punished for poor judgment, mistakes, or even for making loans based on fraudulent claims by borrowers regarding their income and financial situation. As long as house prices continue to rise, borrowers either keep up with their payments or sell their homes and use the proceeds to pay off their mortgages.

When house prices are rising, the only real risk to the lender is from lending more than the value of the house to begin with. During the housing bubble, one observed ads for mortgage loans for 125 percent of the value of the home. Clearly, any lender who does this is asking for trouble. Also, any lender that is careless about appraising the value of a house for a refinance transaction where the borrower increases the loan amount is asking for trouble.

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The Idiocy Conspiracy By T. Scott

With severe medical problems limiting use of this marvelous machine of mine, I was afforded time to really think about some of the issues bothering most Americans – that is, those who are actually capable of creative, constructive thought and what I observed is, well, shocking – to limit my words to those that will be able to see print.

Sandy – a terrible storm that has damaged many and yet, our marvelous Congress has taken it upon themselves to lard up what should be a single-purpose bill with so much pure pork that original costs estimated are nearing three times the real amount needed. There is pork from just about every identifiable sector and from both sides of the aisles in both houses of Congress. This storm caused immense damage to many – and Sandy didn’t care whether those who lost property were of this party or that one – Sandy damaged them all and yet, Congress cannot manage to see the urgent need for quick action and in typical Congressional malfeasance,has taken this relief bill as an excuse to reward their own faithful.

Balderdash !!

The shame of the Congress is magnified by the inept manner in which the media are not dealing with the issue at hand – and that is only to help the people in the affected states. PERIOD !!!

So, I will propose a very logical, orderly, and urgent solution to Congress penchant for delay.

Every attachment to the initial relief bill will be listed by the affected state, by the sponsor ( s ) by the type of pork added and by the amount.

That’s it – a very simple listing that all Americans can see. A listing that will pin the proverbial tale right where it belongs, on the larded rear ends of those in Congress, on both sides of the aisle and( perhaps ) in both houses. These people will not be able to hide their deliberate actions. These people will be known for the varmints they are and they will justify the disdain with which honest, hard-working Americans regard them.

It is time that those in Congress who do not stand for usual American values be publicly named and my suggestion here will do exactly that. ( Aside, I will also take side bets that as soon as many find out that this list is being compiled, that they will scurry like the rats they are to remove their actions.) If those who create the desired lists allow any to escape – shame on them…in fact, it might be more interesting to add an asterisk after their names if and when they try to hide their actions so that all Americans can see how their Congressional people react when forced to face their own indiscretions.

Won’t that be a glorious day for America !!

Rahm Emanuel Out of Excuses for Chicago’s Murder Rate

Chicago’s per capita murder rate is three times that of New York City.

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Related

Call the Orkin Man: Another first for Chicago

Chicago has moved to the top spot of a list no city wants to be a part of: the most treatments for bed bug infestations.

Pest control company Orkin said Tuesday it did more business in Chicago than any other city last year. Chicago had been second on the list in 2011 behind Cincinnati.

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INTERESTING OBSERVATION: Balls

1. The sport of choice for the urban poor is BASKETBALL..

2. The sport of choice for maintenance level employees is BOWLING.

3. The sport of choice for front-line workers is FOOTBALL.

4. The sport of choice for supervisors is BASEBALL.

5. The sport of choice for middle management is TENNIS.

And…..

6. The sport of choice for corporate executives and officers is GOLF.

THE AMAZING CONCLUSION:

Balls

The higher you go in the corporate structure, the smaller your balls become.
There must be a boat load of people in Washington playing marbles!

Rocky Mountain Elk Foundation Video by Scott McKinley .