Wednesday, July 12, 2006

CRC:Mortgage biz is broken

Today's BrokerUniverse newsletter carried the story of the Federal Reserve Board of Governors meeting to hear the concerns and grievances of community groups in California about predatory lending practices. Chief among the aggrieved was the California Reinvestment Coalition.
Kevin Stein, associate director of the California Reinvestment Coalition, said, "The mortgage market is broken, and we need the Federal Reserve to clamp down on predatory lending that unfairly targets people of color, the poor, seniors, immigrants, and their neighborhoods."

Yeah, right.

Remember, we're talking about a market that is, for the most part, a little strip of somewhat arable land sitting between the desert and the Pacific Ocean on one of the world's largest and most active fault systems. More than a quarter of its population was born in a foreign land and of the 13% the population grew between 1990 and 2000, nearly 70% immigrated from another country. They have no credit history and uncertain incomes. With the median price of a home in San Francisco (where the meeting was held) at $720,000 in the first quarter of 2006 (or as close to the top of the bubble as I can imagine it going) the CRC would like all of you mortgage lenders to quit focusing so much on risk and start lowering those mortgage interest rates.

Either that or admit that you're predatory lenders.

Or maybe we could just accept the fact that many of the citizens of California can't really afford to live there anymore and they need to relocate to an area where land isn't selling for such a premium and where lenders don't face the same high risk of falling property values.

What do I know? My mother's maiden name was Soto. We lived in Simi Valley, Calif. when I was born, just outside of Los Angeles. But not for long. The high cost of living, even back then, drove my parents out of the state when I was four years old. And we never looked back. I strongly recommend it as a course of action for anyone who feels like they're not getting a good enough deal on a million dollar, 3-bedroom ranch in Silicon Valley.