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New CFPB rules aimed at protecting consumers and investors from themselves as well as bankers...

New CFPB rules aimed at protecting consumers and investors from themselves as well as bankers could over time eliminate half of the country's mortgage market, suggests CoreLogic's Sam Khater. The good news: Any loans that can actually get made will have virtually no risk. 
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Comments (2)
  • Jake Huneycutt
    , contributor
    Comments (1360) | Send Message
     
    This is only true if you assume that underwriting risks are the primary risks. I'd content that they are not.

     

    Bubbles don't happen because banks weaken underwriting standards. Rather, underwriting standards become weakened as a consequence of Federal government policies (including those by the central bank). These policies have a "free money" effect, so long as lenders can find people to lend out to.

     

    Forcibly strengthening underwriting standards will not stop bubbles. It will merely deprive a large chunk of the middle class the ability to purchase housing.
    12 Feb 2013, 03:13 PM Reply Like
  • Whitehawk
    , contributor
    Comments (3129) | Send Message
     
    "Consumer protection" and moral hazard: two major outcomes of gov't intervention in markets, affecting every investor. Central planning for lunch; wealth transfer for dinner.
    12 Feb 2013, 03:15 PM Reply Like
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