Now, that’s a common enough creature, but it’s become extremely common during this recession. Which means, should the normal implications of such a thing, including a negative impact on a credit score, really apply to someone like this? If a person has a spotless record, but because of the hardships we’re all facing finds himself in a default, does this really reflect his risk/credit status?

If a lender decides that a first-time defaulter represents a long term risk, are they really making a smart decision? Does the bank really have more to gain by denying loans and low-interest rates to such people? I think in the current market there’s a strong argument to say that the normal principles need to be suspended.

And as such regulations and guidelines are being worked out, it’s those solid customers who are in the unfortunate position of suffering during this crisis who will find themselves becoming a victim, not once, but three times. Perhaps a new market segment will emerge: first-time defaulters who are still low-risk, high-profit customers for lenders willing to set their sights a little further down the road.

I mean, if the average homeowner is working on developing long term goals for past the recession, shouldn’t banks do so too? And how long will it take them to see that?

Any thoughts?

The rise in rates has been in sharp contrast to the record lows that have prevailed recently. Demands for refinances has slowed tremendously. And, of course, home purchases (if there would be any) are being stalled by the higher rates.

This move is prompted by several factors that the government needs to deal with, and clearly the strength of the recovery of the housing market is not at the top of the priority list. But it is for us!

So let’s keep up demand for purchases as best we can, keep our clients as informed as we can, and lock in those rates sooner rather than later. Have a great weekend!

Among the restrictions is a prohibition on double-charging for origination fees, and keeping them from higher compensation for poorer mortgage products.

A lot of the regulations remove the incentive for mortgage brokers to propose higher interest rates since that has typically meant a higher commission for them.

Moody’s claims that these new rules should be a much better protection for consumers and home owners than they’ve had until now. Also, it will increase competitiveness which will further drive down prices and promote fair practices.

It remains to be seen how things will actually play out. And most of these rules don’t go into effect until next year. But some of the implications of these moves should be felt sooner.

But anyway, the government is of course ready to raise rates again. I mean, how long could they let rates slide the way they have been. So in a closed-door meeting of the Fed, policymakers debated whether to extend a the government’s program to buy mortgage backed securities (MBS). Many believe that were the program to expire, interest rates would immediately begin to climb.

What affect would such a change have on the fragile housing recovery?

The decision to extend the program was by no means unanimous. A few members do think the end date is too soon and that home purchases will necessarily plummet. Others argues for a gradual decrease in government purchases to keep pace with the recovery. They did not recommend a complete cessation, but merely a withdrawal of investment proportional to market growth.

Estimates for where and when the program will end vary. So far, the central bank has purchased 75% of securitized mortgages (over $900b). By program’s end, this number may have risen to 1.25 trillion dollars. And financial institutions were issued an advisory by the Federal Reserve to make sure programs are in place to minimize risks from loan exposure when rates rise.

What do you think a rate hike would mean for the market? Would prices fall? By how much?