Interest Rate Roundup

Wednesday, May 23, 2007

The Mortgage Industry Blame Game

There's a real blame fest going on in the mortgage sector right now ...

Mortgage bankers are blaming mortgage brokers for writing loans for the commissions and not caring one whit about how those loans perform.

Mortgage brokers are blaming mortgage bankers for essentially the same thing. Their argument: That lenders sell most of their loans into the secondary market anyway, so they don't care either.

Congress is blaming the industry for carelessly originating and underwriting high-risk loans.

Consumer groups are blaming them for the same thing.

Appraisers are blaming brokers and bankers for pressuring them to inflate values in order to make loans work.

And you know what? They're all right. Practically every party with an interest in the mortgage sector needs to share blame for allowing this ridiculous bubble to get so out of control. I would include greedy speculators, borrowers, and flippers in the pool of those who need to share blame, as well as the Federal Reserve Board. Strangely, no one seems willing to blast these guys for running a ridiculously loose monetary policy in order to "fix" one popped bubble (the dot-com meltdown) by inflating another in housing. I've had plenty to say about that matter in recent posts, so there's no need to re-hash here.


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