I think this is more wrong than right...

[cryowizard]

Fed Approves Plan to Curb Risky Lending

By a 5-to-0 vote, the Fed approved a plan that would tighten provisions meant to protect borrowers and apply them to a far larger share of home loans — whether from banks, mortgage companies or other lenders — than under current regulations.
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In general, the rules are meant to deter unscrupulous lenders from persuading people that they can afford loans that ought to be out of their reach.
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The plan includes provisions that would require more extensive disclosures, restrict advertising and make it harder to lend to borrowers with little or no documentation and a questionable ability to repay. It would also allow borrowers, in some circumstances, to sue lenders who violate the rules.
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The action puts the Fed a step ahead of Congress, which is considering its own steps to tighten restrictions on the home loan industry. A bill put forward by Representative Barney Frank, a Massachusetts Democrat and chairman of the House Banking Committee, would expose mortgage brokers and lenders to legal liability if borrowers are unable to repay.

Umm...whaaa?

If you read what Fed itself has said on the subject (or simply a bulleted list of Fed provisions here) you will probably find that some of what they propose makes sense - more disclosures of hidden fees from lenders to mortgage brokers for high-interest loans, prevention of pressuring appraisers to misrepresent home prices, prohibition of pyramiding late fees and some other provisions.

However, as the wise man said -- the second you make something idiot-proof, they make a better idiot.

I think that if one is stupid, no Fed rules will ever protect him from making awful financial mistakes. No amount of disclosure from lenders will prevent greedy dumbasses from wanting to live a house they can't afford. That's freedom, baby.

And that's where the lawsuits come in. Frivolous lawsuits are currently driving health care industry into the ground. I wonder what would happen if Fed or some other government agency (or a fucking moron Congressman like Barney Frank) opens the door for people who cant pay the mortgage they themselves willingly signed to sue the lenders for not being able to pay.

So far the simple truth was that in most cases if you can't pay your mortgage you lose the property. It's never a happy time but the fear of that hammer strike drives people to find new avenues of revenue - nobody likes to be thrown out of their residence. If people are allowed to sue the lender and scream "it's your fault I can't pay" it would be a circus of epic proportions.

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[rkatsyv.livejournal.com]

Всегдашний прием плохих правительств - пресекая следствие зла, усиливать его причины.
(с) В. Ключевский.