Mark Trahant: America headed toward credit meltdown

Monday, February 19, 2007  

"These are the best times ever. A new report by the Mortgage Bankers Association brags that we Americans are demonstrating 'the greatest and widest availability of mortgage finance in our nation's history, which in turn has made possible record homeownership rates.'

The bankers call it the credit democracy. The wonderful era when nearly everybody could borrow freely with few documents, lighter restrictions and self-proclaimed income.

'In light of the mortgage lending industry's achievements in democratizing credit, the debate no longer concerns whether credit is sufficiently available to borrowers,' the bankers say. 'Rather, the debate now has turned to whether the loans particular borrowers receive are in their best financial interest. Because of claims of lending abuses and foreclosures, some consumer advocacy organizations have recently suggested a 'suitability standard' should be imposed on the mortgage lending industry.'

I rather like the phrase 'because of claims of lending abuses and foreclosures.' It only takes a few words to dismiss the growing data that suggest we're headed for a credit meltdown. If you can find the news beyond strange celebrity behavior, consider that several banks (probably members of the Mortgage Bankers Association) last week reported a sharp increase in defaults on risky mortgages."

Get the Story:
Mark Trahant: Time to get some closure on foreclosure (The Seattle Post-Intelligencer 2/18)

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