Money lending — government, banking and us

Posted By on September 29, 2008

moneylendingMoney lending … this wouldn’t be the first time society gets carried away with borrowing more than realistically we can pay back under the terms of a contract — what started it and is there a solution? Was it the Fannie and Freddie backed loans to those without the incomes to borrow during the 1990s? Was it the ‘market driven’ unrealistic price increases for homes and property seen over the past 10+ years? What about the excessive borrowing encouraged by lenders, either with or without enough collateral leveraging the value of a home. Some see much of the blame can be tied to these creative “pay-option” ARMs and forward looking lending based on continuing increases in home values?

I doubt it is as simple as “what ONE thing started it” or easy to point the finger at one group. Banking is certainly at fault, but then so are those of us who borrow too much and trust those we elect to oversee the banking and mortgage industry. We are where we are and the three groups need to come together and find a band-aid in hope to avert a national panic and give the banking industry time in order to restructure and get their house back in order. Going forward, even with a bailout, most homebuyers and businesses will find capital much more challenging.

mr mortgage
Here’s an interesting look from the mortgage industry and valuation collapse in one of the hardest hit areas — California real estate. David Faber of CNBC talks with 20 year mortgage veteran Mark Hanson (his blog) from Oakland California; he offers a look into the practices that moved toward this inevitable situation.

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Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.