It looks like we let the "Fox in the Hen house" Am I the only one to see through this mess. The Federal Reservve caused this mess, yes the Federal Reserve.
Back in the last Quarter of 2005, Chairman Greenspan had the chance to re-correct the market to a slow and soft landing by stopping the quarter point increases in the Fed Funds Rate. It takes normally 6 to 9 months for the market to react, instead the FEDS Choose to stop raising rates well into 2006 and took a wait and see attitude for well over a year plus several months to make a move to lower rates to counter act and the market.
The Feds found themselves chasing the market with large moves to lower rates back in September of 2007,the market got out of control, to complicate matters, the other entity that controls Fannie Mae and Freddie Mac was to blind to see that the Conforming Loan Rates did not reflect the market value in which those entities purchased loans from the primary mortgage market, thus many lenders got caught with their pants down, because the GSE and the Federal Reserve were not in sync, coupled with the SEC and the Supervision in both Houses of Congress failed meserably.
Now a new Federal Reserve Chairman, New Treasury Sectrary and a New President all are making it worst. If you want to fix it, lets not overly regulate and already fragile system. Lets look at the underline problems, Banks, MBS, and Collateral Debt Obligations.
Many lenders have foreclosures that can be salvaged by turning these mortgage related instruments that are non performing assets and converting them to producing assets by simply leasing out these problem REO's on their books to tenants, who want to buy using lease with an option as a method of buying in the future.
Give them a credit for their Down payment, while they are paying a higher than market rents to be applied when and if they exercised their option to buy in 2 or 3 years from now. Values would move upward and they would have time to clean up their own financial situation if credit and down payment was an issue, obviously that would be conditions to the credit. But that works.
Carlos R. Arvizu Sr.
thedon1950@aol.com
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