Three Barriers to Solving the Mortgage Crisis
Author: Aubrey Clark

In late 2006 the economy was showing indicators that pointed to
a looming mortgage crisis that would ultimately disrupt the flow
of business in the secondary market. Investors, who are
essential to the flow of money, basically ignored the warning
signs but began trading more cautiously. What they ignored was
the "perfect storm" as it relates to our secondary mortgage
market. The housing bubble burst, sub-prime loans began
adjusting, investors stopped trading, and mortgage companies
were left holding mortgages that were not worth what they paid
for them.

A by-product of the housing boom was an addiction to credit
largely funded by the rising equity in our homes. A large
portion of our economy was deeply invested in this boom. The
chain of industries that profited from and helped propagate the
boom is endless: builders, real estate brokers, investors,
appraisers, surveyors, paint stores, home supply chains, lumber
companies, marketing companies, architects and of course
mortgage companies. In a financial game of musical chairs it was
the mortgage companies who were the ones left standing.

The mortgage companies, fueled by their own greed and an
economy that demands the continuous flow of goods and services,
invented new ways to "move money" to a larger segment of the
public. As competition between banks escalated, new lending
products were invented to capture a larger share of this market
until they were basically handing out loans to anyone that could
fog a mirror. Banks, who had an endless supply of money via
their investors on Wall Street, sold the loans for a profit only
to reload to do it again. The problem was that these loans were
ticking time-bombs with short fuses, each dependant on rising
house values.

As we all know that ship has sailed, leaving our economy in
shambles in its wake. The problem that we are faced with is not
"who's to blame", but rather, who can fix it. The most obvious
answer is our legislative group and the banking industry.
Unfortunately, those who would be involved with the recovery
have either a political agenda or are just trying to stay afloat
but it is the public that's suffering. The writers at
Lendfast.com, a nationwide home loan services company, have come
up with what they feel are the three main reasons we can't solve
the current mortgage crisis:

1) Politics – In an election year, neither side is willing
concede a point of view that could possibly allow the other side
to claim victory in solving the crisis. The "haggling" approach
to passing legislation allows each side to claim victory on the
local news; however the "local news" in an election year is now
the national news. If a bill is passed, it is likely to be an
ineffective and will have to be revisited in the future by the
judicial branch.

2) Lobbyists – Legislators are supposed to be representing
their constituents, meanwhile the lobbyists are representing the
banking industry. Throw millions of dollars into the equation
and a hand-full of representatives that spell mortgage
c-o-u-n-t-r-y-w-i-d-e and the chances of getting real help for
the "average Joe" is either impossible or a long time away.

3) "Baby with the Bath-water" – It is almost certain that a
bill will pass this year, and as mentioned earlier it will
probably be ineffective or an over-regulated nightmare. It is
politically convenient to punish the "unscrupulous" lenders by
enforcing regulations that sound good on paper. However, like
most people, the extent of most legislators' knowledge of the
mortgage industry was learned at the closing table. It is
pointless to pass regulations that restrict banks from lending
money to the very community they're trying to help.

America must solve this crisis by holding our representatives
in Washington accountable for their actions or lack of actions.
There is one advantage to the election year, and that is we get
to vote. We can throw the "babies out with the bath-water" as
well. If you want real change look past Democrats or Republicans
and vote for the best candidate to help you.


About The Author: Aubrey Clark is a syndicated writer and the
managing editor for http://lendfast.com, a nationwide home loan
services company,and Direct Banc. His expertise ranges from
mortgage advocacy to helping people find good credit cards for
fair credit. He lives and works in Atlanta Georgia with his wife
and four ch