I really enjoyed Lenn Harley's article below and wanted to share it with you. Lenn is with Homefinders.com, MD & VA Homes and Real Estate
Via
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate:
FINANCIAL NEWS TODAY. If one of the things that happened today was listening to the business news and hearing that the President's new plan to help stabilize the financial markets is to require that when Wall Street designs an investment product to sell to the public that they will have to keep "some skin in the game". Interesting because the public probably didn't know that when Wall Street designed complicated financial instruments such as MBSs, CDOs, and plain vanilla CDSs were sold and traded by Wall Street investment houses who had "no skin in the game". The securities sold by the Wall Street Gangs were often insured against default (credit swaps) by AIG who did not require that there be any "skin in the game" from anyone or any entity.
SHOULD HOME BUYERS HAVE SOME SKIN IN THE GAME WHEN OBTAINING A MORTGAGE LOAN? We often hear that home buyers should have "some skin in the game" when they finance a home purchase. Of course the mortgage on the property is secured by the real property. However, with no equity there is no "skin in the game" if the home owner defaults.
WHICH IS THE BETTER RISK? The American Home Owner or the Wall Street Securities Broker?
If the home owner defaults on their mortgage, they lose their home, their equity and their credit.
If the Wall Street investment banker sells securities that become worthless, they lose nothing. In fact, the government may lend them money at zero interest or pump several $Billion Dollars into their bank to "tide them over".
Wouldn't it be nice if the government treated the American Home Owner as well as they treat the Wall Street Gangs?
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-mail.
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