NY Times Article on Legislation Being Too Late

Great piece by the NY Times.  The point to the article (which is worth reading) is that legislation to help protect borrowers from the dangers of subprime financing is too late to help.  http://www.nytimes.com/2007/08/24/business/24states.html?_r=3&ref=business&oref=slogin&oref=slogin&oref=slogin  A few highlights (for those who like the executive summary):

"The Mortgage Bankers Association reports that 550,000 homeowners with subprime loans began a foreclosure process over the last year, and specialists say that the number could double in the next couple of years."

"In some states, officials were hesitant to help bail out people who had made bad decisions for fear this would only encourage more risky borrowing...State governments are beginning to take modest action in part because the federal response has been slow."

"Lawmakers in a handful of states - including Maine, Minnesota and Ohio - have passed measures to tighten restrictions on subprime lending. Illinois, New York and Massachusetts have formed task forces and held meetings involving members of the mortgage industry, lenders and consumer representatives to figure out ways to rework problem loans. Minnesota is acquiring some foreclosed properties to resell to low-income people."

Here are my thoughts.  This industry is already over-regulated...but I think with all the failed attempts at protecting borrowers (namely TILA and RESPA), we've created a system that hurts more than helps.  Legislation to curb irresponsible lending is a good idea, but comprehensive reform is probably the only way subprime protection-type legislation will work.  And don't forget, states who pass their own unique brand of protection (which surely is a Federalist issue, and one that I support) also make it more costly for multi-state brokers or lenders to do business, because compliance with the federal rules and regs is one thing, but the 50-state compliance check for individual state rules and regs is a whole other (and much more expensive) story.