Re: Fw: Re: Fw: Fw: Mortgage Crisis

Sometimes I see politicians as that last guy on earth to get a chain email. Everyone knows one of these people. They’ll send you an email with the subject, “This is Sooooo Funny!!!!!” and—against your better judgment—you open it, only to see a joke or story someone sent you three years ago. And again two years ago. And again...

That was my impression this week when I read that HUD Secretary Shaun Donovan was asking Congress’ permission to tighten up the FHA’s lending practices by increasing the minimum amount of down payment borrowers were required to pay so they’d “have more skin in the game.” Yo, Shaun. In addition to invoking that “skin in the game” cliché which I believe became officially overused about two years ago, you’ve come up with an idea that’s equally well past it’s time. It’s about six years past its “use by” date.

Of course requiring more down payment is a sound policy, but it’s a little late now. Had we been using that guideline of loaning money only to people with a clear intent and ability to pay it back instead of patting ourselves on our progressive backs for the idiotically naive Community Reinvestment Act, we’d be living in a different world than we are now.

Yes it makes sense. But it made more sense the first time that email showed up in our Inbox back in 2002 when actual adult politicians were warning Congress of the recklessness of Fannie Mae’s lending policy. But now I can see this move doing far more harm than good. Now that there’s no shame, embarrassment or, for that matter, any long-lasting financial repercussions from walking away from a mortgage, it serves as a bigger deterrent to getting a mortgage than walking away from one. What we need now are more home buyers, not fewer.

Now, forward this to 20 people and you’ll get $100 from Bill Gates. Really.