For those old enough to remember, there once was a song "What a Difference a Day Makes" whose next line was "24 little hours". Oh how I wish we could have created a parody to that song and this financial nightmare would have been over before it started. We didn't accomplish that, and now I am sure that other than attempting to destroy a once vibrant industry, we haven't accomplished much of anything else. I believe that the media in this country, innocently or not, have created an atmosphere, or at least added to one, that keeps confidence low and worry high. If you have just awakened from a 3 year sleep, you might think everyone (or almost everyone) in the entire nation is in the process of losing their house to foreclosure or simply walking away. Nothing makes headlines as often as "Foreclosures Up 60%" because saying foreclosures in a given area have increased from 5% to 8% doesn't have that emotional punch. As best as I can tell without contacting all of the almost 100,000,000 homeowners, about 90% of the American population is doing just fine with their house, thank you!
If we (the government) keep developing more ways to spend money… I mean, “help the downtrodden homeowner,” the 90% could easily have another 5% impact: we could drop to 85% of the homeowners doing fine. To counter a popular theme, the mortgage industry didn't just give a mortgage to anyone and everyone who could sign their name. As hard as it is to believe, people actually got turned down for mortgages over the last 2 to 3 years, as they had for decades before. Everyone who is an investment advisor on Wall Street isn't a Bernie Madoff; every governor isn't a Blogo; and every baseball player doesn't take steroids. (I am not as confident on that last one.) The mortgage industry didn't just have 6 or 7 good years before finding itself in this crisis. It has had a lifetime of good years, at least my adult lifetime (my first mortgage was in 1968).
From my perspective, the crisis hasn't done anything to really improve the mortgage market and in fact has hurt it in several ways. I have watched and listened to the politicians talk about the problems in the industry, generally reaching the wrong conclusion from the data, and then move in the wrong direction, in my opinion, with their quick fixes. Therefore, I am going to break down the basis of how a loan is originated and why those who are the most verbose have the least knowledge and generally the worst solutions.
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.
Be the first to read Roger Schlesinger's column. Sign up today and receive Townhall.com delivered each morning to your inbox.