Wednesday, December 15, 2010
FGMC Mortgage Chairman Publishes Book about Mortgage Meltdown
“The Story Behind the Mortgage and Housing Meltdown: The Legacy of Greed” is a thorough but easily understood explanation of the events that brought about the crisis, and Clark feels it is important that everyone understands its message. He describes it not as a “business book” per se, but rather a book about the business for mainstream readers.
“If the average American can understand the reasons it all happened, it will greatly minimize the chances of something like this ever happening again,” says Clark, a mortgage lending professional with more than 20 years of experience making residential loans. “And much of the information in currently available books is barely comprehensible to most consumers. Ask ten people what caused the crisis and you’ll get ten answers. Some feel it is all on the lenders, others feel it was all about Wall Street, and many blame the government."
Clark says he wrote the book because he felt it was time to face facts and recognize the real structural defects that precipitated the downfall of the best housing finance system in the world. Those defects were a long time in development, Clark feels.
Clark spent most of his career making FHA loans and was nearing retirement when the alternative, or “Alt” lending programs took root in the mid-2000s. When he became alarmed about the way his industry and company were relying on loans he deemed unsafe, he returned to active management and steered his firm away from the riskier lending practices.
“These alternative loans were very lucrative for lenders and there were plenty of people that wanted them, because getting into real estate was a sure-fire way to build wealth – or so it seemed,” Clark recalls. “But the trend was unmistakable for those who could look beyond the money that was being made.”
Among the systemic issues that had eroded the industry’s foundations over time, Clark feels, is the reliance on credit scoring and other technologies that took the place of human judgment in lending decisions.
“Our mortgage system enjoyed generations of stability and liquidity, even making loans to people whose credit wasn’t perfect,” Clark explains. “But with volumes going through the roof and Wall Street clamoring for even more loans, good judgment was sacrificed in favor of three-digit credit scores that ultimately had no meaning. As predictors of default, credit scores did far more harm than good, and they are still being overly relied upon today.”
Clark elaborates on these and other serious issues that threaten the future of the mortgage finance system in his book.
“I wrote this book to bring some easily understood insights to lawmakers and regulators, as well as to consumers," Clark said. "The government’s role in helping us work our way out of this mess is a critical one, but elected officials are seldom more expert in financial matters than the average citizen. They need to read the book, too, in order to gain the perspective they need to govern properly when it comes to the nation’s most important industry – housing.”
More information about “The Story Behind the Mortgage and Housing Meltdown: The Legacy of Greed” is available now at www.KennethEClark.com and at popular ordering web sites, such as Amazon, Barnes and Noble and others.
Disclosure: I don't represent this book or its author and will not be compensated for clicking on the link.