Direct or Indirect, Mortgages Are Flawed
Direct lending is one way that the government could get involved in the mortgage market, but remember: The government is already integrated vertically and horizontally and up to its eyeballs in this business.
For many Americans, mortgages themselves are a bad fit: individuals who might be injured and out of work for six months, or families that could go from two incomes to one, or households entering retirement and living on a fixed income. For these and many other income-sensitive and credit-precarious American families, we need to think beyond the mortgage — not just add the government as another lender. And the current mortgage system already caters to the Americans who can comfortably afford a mortgage, with little risk of foreclosure — the sort of borrowers to whom the government would want to issue mortgages.
For those who are eager to fault banks for messing up the mortgage market, it is worth considering that this country lacks sufficient income and creditworthy prospective residential borrowers to fuel a mortgage market of any meaningful size without significant up-front system-wide subsidies and without life-of-loan default prevention customer service built into the project.
Rest here…
~
Excellent. In other words, design mortgages so they won’t fail. And a question that DC has failed to answer with any meaningful solutions: ” why did banks determine that it was acceptable to shareholder interests to disregard due diligence and other legal standards? “