FHA Chief Criticizes Rescue Plan

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I think you would do well to spend some more time on the Adjustable Rate Mortgage issue.
There is a lot of philosophy about what caused the 2008 crash but there are a few undeniable facts.
Here are the most important facts:
1) From June 2004 to June 2006 (2 years) the FED funds rate went up 400%.
2) This caused the prime rate to double from 4% to 8%
3) In today’s terms that would be like having the prime rate go from 6% to 12% in 2 years.
4) This is the primary cause of the tidal wave of foreclosures. No average person can take that kind of financial shock.
5) This may (probably will) occur again so why not ask to have congress outlaw adjustable mortgage rates for single family homes (say 1-4 unit homes)?
6) If there were no adjustable rate mortgages it would have been impossible for the flood of foreclosures because everyone is happy with their locked in 30 year rate.
In summary, adjustable rate mortgages cannot survive in an economy with sharply rising interest rates and we now know that they will destroy the economy when you get these spikes.
This incident is telling us to get rid of them now or we will repeat this experience. What do you think?
Franz Ross
Berkeley, Ca

Franz Ross of CA 1:00AM January 18, 2009

I think the federal government was careless in allowing these "adjustable rate mortgages" to happen in the first place. If the government wants to be helpful, then they should pass a bill to allow the homeowners to keep there houses despite the differences between "past " appraisals and "present" appraisals. Then, they should outlaw adjustable rate mortgages and make sure that something like this will never happen again. I mean, they took steps to insure that the stock markets won't crash like they did back in 1929, so they can do the same thing for the housing market. I think this will benefit the federal and state governments in the long run, because, the more people that own their own homes, the more tax revenues can be collected and the better the benefits for public schools and public services, etc,etc. We need to get people in the Senate and House that actually CARE what happens to their constituents, then maybe, this country will be a much better place to live!

DeeDee Bearings of MI 3:33PM May 23, 2008

Cheers to Mr Montgomery for not endorsing the continuing of the shell game. Hold borrowers to sound standards and make sure the loans make sense for all vested parties.

Kim of CA 9:51AM May 16, 2008