For example:
Interest rate: Fixed or variable
Initial Rate:
Term of Initial Rate:
Maximum Interest rate:
Length of Term, etc.

Just a thought.

The problem is that people want freedom, until they make a bad choice and have to face the consequences. Or course, when such a large number of people made such bad choices, it does tend to have farther reaching consequences… (Maybe you should have to pass a test to take out a mortgage)

Furthermore, let’s leave aside the whole responsibility issue for the moment. I have a bigger problem with how they view ‘unaffordable’ loans. These loans exist because they actually do make sense in certain situations. While I’m betting that most readers here are, like me, pretty conservative with their money, it’s up to the borrowers and lenders to decide if those situations apply.

The whole notion of affordability is dependant on context. Take the case of a recent graduate with little current assets, but a pretty well-defined, upward career trajectory. If he’s willing to take the risk, a 3-year ARM could be a great idea, even if, on paper, the property is way beyond my means. (Again – I personally wouldn’t do something like this, but I also wouldn’t necessarily fault anyone willing to take this chance).

If I’m buying an investment property, and intend to flip within 12 months, then an interest-only loan makes perfect sense. It minimizes the sunk costs and increases the amount available to spend on renovating the property, in exchange for a higher risk premium if you have trouble unloading the property.

Many people aren’t stupid, just ignorant and trusting. Perhaps also too hopeful.

I do support outlawing payday loaning. There’s just no time when that kind of deal is appropriate. People with bad credit might be able to do just fine with a subprime mortgage if they have a good understanding of finance, saving, interest, all that.

I think the most useful legislation the guide proposes is that the lenders provide clear explanations (“meaningful disclosure”) of how the loan will work. This way they won’t overwhelm people who haven’t studied all the industry terms.

It should be that hard to do. I could write a simplified and clear version of my company’s leases for the tenants. I expect people in other industries can do this as well.

Of course both sides need to be accountable. The bank that has an easy money policy deserves to lose their money, but the person who borrows the money knows what they can afford because they have either been renting or are paying on a mortgage already. If they are having problems with their finances now, what would make them think it would improve by paying more? Just because a bank sends you a new credit card, it isn’t an excuse to charge to the hilt, if you are only paying the minimum on your current cards!

Bottom line… people don’t want to be criticized or held accountable for their choices, yet they expect others to tolerate and accept them anyway.

One of the things that makes America great is freedom, and little by little it is being taken away. People make stupid mistakes, and some are more significant than others, and buying more home than you can afford is just a larger dollar amount mistake.

Banks are private companies that can for the most part set their own lending standards. The banks got greedy and wanted to take advantage of the money being left on the table in the subprime market, so they loosened lending standards to tap into it. They are subprime for a reason, they have a higher risk of defaulting.

Well guess what, they willingly took on that risk, and now crying foul. If you’re going to impose strict regulations on borrowing to protect the consumers, you’ll have to impose regulations on people who invest in the market. Stocks can go down, and if a consumer isn’t intelligent enough to make the right choice, they shouldn’t be allowed to purchase that stock or mutual fund, yet most people can throw $100,000 in the market today and lose it all in a few days, nobody is stopping people from being ignorant with investing their money.

Sure, the illegal lending and shady loans should be dealt with, but it is getting out of hand regarding how far people are proposing to go with the issue.