There’s always something to howl about.

HR 3915: Exploring the Minds of the Enablers

HR 3915 is referred to as the Mortgage Reform and Anti-Predatory Lending Act of 2007. It was introduced by Congressman Barney Frank of Massachusetts. I explored some libertarian thought about the bill here. I spent the last few days, perusing supporting messages, to discover if I might be mistaken. This is what I found:

The Center for Responsible Lending encourages support of this bill. Here is the letter they want you to write to your Congresspeople:

I am deeply concerned about the plight of 2.2 million families who have lost their homes to abusive subprime loans, or who will lose their home in the near future. Without stronger protections against predatory lending, the same conditions that led to this disaster will inevitably come up again. The Mortgage Reform and Anti-Predatory Lending Act of 2007 (H.R. 3915), which is based in part on existing state laws that have been effective, would help prevent another subprime disaster in the future.

Hmmm, well they fired a biased shot across the bow by referring to subprime loans (in general) as abusive. It lets you know that they despise any loan that isn’t an “agency” loan. The CRL also predicts that (a) more people will lose their homes (b) the disaster, left unchecked, will happen again. What they don’t tell you is that the innovative lending products added some ten million NEW homeowners to the ranks this decade. While 2 million foreclosures suck, a net gain of 8 million homeowners is nothing short of astounding.

The bill addresses many abusive lending practices that directly contributed to today’s foreclosures crisis, including reckless loan underwriting, abusive subprime prepayment penalties, and direct incentives for mortgage brokers to steer families into excessively expensive and risky loans. Basically, the bill would allow consumers to have greater confidence that subprime lenders will refrain from reckless lending and assess whether complex loan products are truly affordable for the families that receive them.

Ho ho ho! Reckless, abusive, and steering! Underwriting is to protect the lenders, not the borrowers. Here comes Big Momma to tell me I can’t hand out MY money to THIS homeless guy because he’s not deserving of it. When we seek to protect the irresponsible few by punishing the responsible majority, we encourage vigilantism.

Disclosure to borrowers: $350,000 IS a lot of money and you ARE expected to pay it back. Ask an attorney for an interpretation of that disclosure.

I urge you to co-sponsor this important bill, if you haven’t already. In addition, I urge you to support making the bill stronger for families who are victims of abusive subprime loans. When Wall Street demands riskier loans for higher returns on investments, it must accept its fair share of accountability. Stronger remedies and “assignee liability” provisions would ensure that victims have access to effective legal remedies, regardless of who owns their loan. Without adequate legal remedies and enforcement, the market will have less incentive to make real changes, and many of the protections included in the bill could become much less effective in preventing predatory lending practices.

Wall Street IS accountable for yield reaching; ask Stan O’Neal or Warren Spector. Failure is always the best disincentive.

H.R. 3915 includes common sense protections that responsible mortgage lenders have always used. Please make a decision to combat predatory lending and boost our nation’s economy by promoting sustainable homeownership.

Good grief! If there was ever an ode to victimization, this letter would be it. Irresponsible borrowers account for less than 5% of the households in America. We bandy about the phrase, “predatory lenders” too much. Predatory lenders are criminals- enforce the laws against fraud and throw those bums in jail. Irresponsible borrowers got drunk on the liquor of materialism. Let them suffer the malaise of foreclosure so that the principles of abstinence or moderation will prevail the next time they are tempted to borrow.

I’m not passing the buck- I’m laying the blame squarely where it belongs- on the pie-in-the-sky borrowers whose financial plans were based on third grade math and the greedy investors whose model relied on first grade math. Messrs. Miller, Watt, and Frank would do well to stop meddling in markets; 95% of the American public will suffer for the greed of the feckless few.
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