Home Loans -- Federal Regulators Warn Lenders to Be More Careful

Federal banking regulators have recently expressed some concern over the housing market as home prices in the United States have risen to record levels. While homes are more unaffordable than ever for many people, the lending market remains strong, mostly because of the introduction of new, ever-more-flexible types of loans. While these newer loan types, such as the interest-only loan, make buying a home easier for some borrowers, they also propose a greater risk to the lender.

The lending market has been quite aggressive during the last five years, as investors and homebuyers have purchased real estate in record numbers. Buyers who are skittish about investing in stocks have put their money into real estate instead, and prices have climbed to record levels. Lenders have been all too happy to accommodate the long line of customers in their offices with an ever-increasing array of products. With hundreds of loan types available, nearly everyone can qualify for some type of mortgage today. The problem, as regulators point out, is that some of the more popular types of loans are inherently risky. Two such examples are the interest-only loan, and home equity loans that exceed 100% of a home's value.

The problem with such loans is that they are both issued under the assumption that home prices will continue to rise. Prices may continue to rise, but if they don't or worse, if they fall, lenders could find themselves in the ugly position of holding liens on property that is worth considerably less than the amount of the loan. As of yet, there's no sign of a crash in real estate prices, but foreclosures are up in both Texas and Florida, and this could be an indictor of more difficult times ahead for the lending industry. The banking regulators didn't issue any orders regarding how high-risk loans should be handled, but they did caution lenders to check the credit scores of borrowers carefully and to eschew or cut back on so-called "no-doc" loans, which do not require full documentation of a borrowers assets or income.

This should be of relatively little concern for the average borrower, who would probably think that such guidelines represent ordinary common sense. Unfortunately, common sense sometimes gets ignored during boom times in business, only to be remembered when buyers start to default on their loans. By that time, it's too late to do anything, and the stockholders are left with the debt.

©Copyright 2005 by Retro Marketing.

Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a Website devoted to debt consolidation information and HomeEquityHelp.net, a site devoted to information on home equity loans.

---

Google News Updated : Sun, 06 Jul 2008 12:55:34 GMT Oil Prices Drive Stocks to Bear Market - Washington Post Calgary Herald Oil Prices Drive Stocks to Bear Market Washington Post - 7 hours ago US stocks fell last week, giving the Dow Jones industrial average a 20 percent bear-market drop from October's all-time high as record oil prices threatened global economic growth. Jobless report, long weekend equal small market gains Denver Post Market down, but not panicky Seattle Times Mail Tribune - The Associated Press - BusinessWeek - Bloomberg all 460 news articles Publ.Date : Sun, 06 Jul 2008 05:50:10 GMT Obama cites faith as key to change - Boston Globe Obama cites faith as key to change Boston Globe - 5 hours ago Barack Obama called "active faith" an obligation of religious Americans and a chief agent of societal change in a speech yesterday at the national meeting of a black church group. For Republicans, the Senate outlook is bad Los Angeles Times Analysis: McCain struggles to regain footing The Associated Press Milwaukee Journal Sentinel - Fort Wayne Journal Gazette - Zanesville Times Recorder - Wall Street Journal all 346 news articles Publ.Date : Sun, 06 Jul 2008 06:58:31 GMT Google's new privacy link - CNET News CNET News Google's new privacy link CNET News - 19 hours ago Google's decision, noted Thursday in a corporate blog and a public policy blog, was an attempt to quell a controversy over the posting of its privacy policy. Google Replaces Google With Privacy On Its Home Page eFluxMedia Google Changes Home Page, Adding Link to Privacy Policy New York Times PC World - Los Angeles Times - TechCrunch - Search Engine Land all 46 news articles Publ.Date : Sat, 05 Jul 2008 16:59:20 GMT Argentine Lower House Passes Grain Export-Tax Plan (Update3) - Bloomberg Voice of America Argentine Lower House Passes Grain Export-Tax Plan (Update3) Bloomberg - 14 hours ago By Eliana Raszewski July 5 (Bloomberg) -- Argentina's lower house of congress approved the government's plan to increase taxes on exports of grains and oilseeds, risking a resumption of three months of strikes by farmers. Export Tax That Angers Farmers Advances in Argentina New York Times Argentina lawmakers approve farm export tax hike guardian.co.uk The Associated Press - BBC News - Reuters - AFP all 149 news articles Publ.Date : Sat, 05 Jul 2008 22:41:30 GMT Jesse Helms dies at 86; NC senator opposed equal rights - Detroit Free Press ABC News Jesse Helms dies at 86; NC senator opposed equal rights Detroit Free Press - 5 hours ago Conservative icon Jesse Helms, the former Republican senator from North Carolina, died Friday. He was 86. Helms, who served 30 years in the Senate, died of natural causes in Raleigh, NC, an aide said. Video: A Look Back At Jesse Helms CBS Helms never changed on civil rights opposition The Associated Press Washington Post - Wall Street Journal - Boston Globe - San Jose Mercury News all 2,343 news articles Publ.Date : Sun, 06 Jul 2008 07:14:24 GMT Taiwan tour operators sceptical about China boom - AFP WELT ONLINE Taiwan tour operators sceptical about China boom AFP - 6 hours ago TAIPEI (AFP) - The launch of regular direct flights between China and Taiwan has been hailed as a symbol of progress and a boon to tourism, but industry workers here are not all convinced. Mainland visitors warmly welcomed in Taiwan Xinhua A Side Competition in Beijing: Island vs. Mainland New York Times AllAfrica.com - International Herald Tribune - Wall Street Journal - Reuters all 933 news articles Publ.Date : Sun, 06 Jul 2008 06:15:38 GMT Google trying to take privacy seriously - ZDNet ABC News Google trying to take privacy seriously ZDNet - 13 hours ago This week was a very interesting week as far as Google and privacy goes. First, a burglary (the same on that affected CNET earlier last month) was confirmed to have affected all Google employees hired before December 31, 2005. Court order on YouTube user data fans privacy fears Reuters • YouTube Ordered To Release User Data Washington Post Slashdot - New York Times - Ars Technica - Wall Street Journal all 921 news articles Publ.Date : Sat, 05 Jul 2008 23:49:42 GMT Add RSS Feeds To My Web Pages Increase Online Traffic

PARLOT::Ebooks, Scripts, Websites, and more...

Adsense websites

How to Find Cheap Home Improvement Loans

If you have home improvements that you'd like to see... Read More

How to Get the Best Mortgage

This is a guide on how to get the best... Read More

Poor Credit Home Mortgage Loans - The Role of the FICO Score

If you have bad credit history and are looking to... Read More

Bridging Loan Basics

A Bridging Loan is a short-term loan used as a... Read More

Bad Credit? Qualify Yourself For A Zero Down Mortgage Loan

I decided to write this article today after closing a... Read More

How do I know what is the best Second Mortgage Home Loan for me?

The information in your credit history helps mortgage lenders decide... Read More

How To Turn Disadvantages Of A Reverse Mortgage To Your Advantage

When it comes to a reverse mortgage, wise consumers weigh... Read More

Home Equity Loans: A Useful Financial Tool

The investment need of an individual varies with time. Thus... Read More

Home Equity Loans Can Provide Cash in a Hurry

Think About the Long Term. Estimate how long you expect... Read More

Refinancing Mortgage Loan - Get The Lowest Interest Rate You Can When Refinancing

Refinancing can be a very simple process. You fill out... Read More

Do Your Homework - Find the Mortgage That Fits Your Lifestyle and Your Budget

You've been looking at houses for months, and finally you've... Read More

What is the PayOption ARM?

Imagine an adjustable rate mortgage that allows you to pick... Read More

Mortgage Questions to Ask Your Lender

Buying and financing a home today can be overwhelming. Here... Read More

Home Equity Loans Online

If you are in the market for a home equity... Read More

Short-Term Interest Rates on the Rise; Adjustable Rate Mortgage Holders Prepare for Increase in Rate

Interest rates are on the rise and many home owners... Read More

Types of Home Equity Loans

There are at least two types of home equity loans.The... Read More

Mortgage-Refinance Loan Can Put Cash in Your Pocket

Do you need cash? Here's a mortgage for you. If... Read More

4 Things to Watch Out for When Choosing a Mortgage Company

We all know that there are a lot of mortgage... Read More

2nd Mortgage - Better Than Refinancing

You have probably received refinancing offers in the mail or... Read More

What is a Homeowner Loan?

If you are a homeowner, it couldn't be easier to... Read More

How easy is it to get a Commercial Mortgage in the UK?

As is the case when applying for any mortgage, be... Read More

Need Mortgage? Alternative Finance Often Masks Predators, Who Want to Steal Your House

So, your bank had just turned you down for a... Read More

Why Refinance Back into a 30-Year Loan?

One of the biggest reasons homeowners refinance their mortgage is... Read More

Home Loans and Mortgages ? Tips to Avoid Foreclosure

Today's real estate market is a volatile one; prices are... Read More

Home Equity Loans ? There?s Gold In That There House

To paraphrase an old familiar quote that goes "there's gold... Read More