Ben Bernanke, is they guy a lot of people on Wall Street like to hate these days. They blame much of the problems with “future” debt amassing on his shoulders. Weather you like him, or you hate him – there’s no denying he is setting Financial Policy for the future – and he’s impacting mortgage Interest rates.
In his speech at Operation HOPE Financial Dignity Summit in November, he discussed the challenges facing the housing market and mortgage lending. One of the challenges that Chairman Bernanke commented on, was a Mortgage Underwriting Standard that he believes might be headed in a direction that is going to put further pressure on a weak system because it’s become “overly tight”.
“…Some tightening of credit standards was an appropriate response to the lax lending conditions that prevailed in the years leading up to the peak in house prices. Mortgage loans that were poorly underwritten or inappropriate for the borrower’s circumstances ultimately had devastating consequences for many families and communities, as well as for the financial institutions themselves and the broader economy.
However, it seems likely at this point that the pendulum has swung too far the other way, and that overly tight lending standards may now be preventing creditworthy borrowers from buying homes, thereby slowing the revival in housing and impeding the economic recovery.’ [Read more...]