Skip to main content

  • Comment Detail

  • Date: 10/21/14
    First Name: Laura
    Last Name: Louzader
    Organization: N/A
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AA65

  • Comment

    In light of the wreckage left behind by the great credit debacle of the 00s, the proposed policy changes that will loosen credit and reduce the minimum downpayment for Freddie Mac and Fannie Mae-backed loans, seems like a very slippery slope, that will lead to ever-looser credit standards, rampant inflation in house prices, and overborrowing by home buyers, especially first-time and lower-income homebuyers.... and the end result will be, in a few years, another wave of defaults, and of catastrophic loan losses for the banks, financial destruction of fragile borrowers, and many homes and neighborhoods degraded and destroyed by defaults and foreclosures.

    Yes, the lending standards will be tighter...at first. However, as I stated previously, the reduction in the minimum down payment will be only the first step down a very slippery slope.

    Last year, I purchased a condo in Chicago for $67,000, that had sold as high as $130K. The building suffered greatly in the aftermath of the great credit rampage of the 00s, as 6 of the building's 9 units went into foreclosures that took months to years to clear, leaving behind many thousands of dollars in unpaid condo assessments. This situation caused the deferment of essential structural work on my fine old building, which deteriorated as a result. Moreover, in my neighborhood in Chicago and many others, thousands of rental units were converted to condominiums to meet the artificial demand created by extremely loose lending standards, which resulted in many vacant units and deteriorated buildings in the wake of the resulting housing crash.

    In sum, there were no good results. Everyone suffered, from insolvent lenders suffering deep losses, to borrowers completely destroyed financially with little hope of recovering in their lifetimes, to damaged housing stock and ruined neighborhoods.

    There is therefore no good reason to support any policy that would help entrap marginal borrowers in loans they can scarcely afford, and there is surely no good reason to promote inflation in housing prices, as looser lending will surely do.

    Please do the moral, honest, and sensible thing, and leave the current stricter rules and guidelines in place.