This title might suggest this is a militaristic column or worse, as in terrorism of some sort. So let me put your mind at ease and confess this is only about the mortgage industry, which in reality makes the first two topics G-rated in comparison. In the first two topics, you simply identify the good guys and have them take care of, or eradicate the bad guys. Hint: the good guys generally wear white hats. In the mortgage market, the good guys are readily exchangeable for the bad guys, hats and all.

Let me explain. First we have the politicians: Barney Frank, Chuck Schumer and Andrew Cuomo.

All guys who will insist they only wear white hats. Barney was the congressman activist who championed the CRA loans (Community Redevelopment Act) which helped bring more people into home ownership, unfortunately, probably a few more people than should have gotten there. But have no fear that Barney might be castigated by his peers. In no time, not only did he profess innocence, he also was no longer able to spell Fannie Mae.

Chuck Schumer was so concerned that people could be hurt by the weakening condition of IndyMac Bank that he wrote a letter to the Office of Thrift Supervision, telling them of his fears about IndyMac. They weren't moving fast enough for his taste, so he sent the letter to the media and simply caused a run on the bank, making his prophecy come true. When pressed about that, he dismissed the criticism by showing that the bank was indeed defunct.

Andrew Cuomo felt that we hadn't put enough safe guards in the appraisal process in this country, so he designed and promoted a "pin the tail on the donkey" method of appraising. This has worked so well that several congressman are authoring a bill to end this silliness after one month of a trial period. The National Association of Realtors pointed directly to the new appraisal "game" as the reason more homes didn't sell: the appraisals came in too low.

The above examples were simply three of the literally hundreds of examples of political buffoonery that we must smile through on a daily basis, and not what some people would feel are examples from the fringe of the industry to excite the reader.

Now let's look at the companies who are the backbone of the mortgage industry. Fannie Mae and Freddie Mac at one time were Government Sponsored Enterprises (GSE) and are now owned by the government. They purchase about half of all the mortgages in this country. Therefore, you can expect nothing but the best from these two behemoths. What we got was everything but the best, as they have gone out of their way to make up for all of their losses by surcharging the weakest among us. If you have a credit score over 740, or a loan under 60% loan-to-value, you are fine. If you’re not fine, put simply, you are in a world of hurt! Continued...