Posted on August 9th, 2013

Obama is finally addressing the need to reform the mortgage world, a lead cause of our current financial woes. In my opinion there should be a mortgage lending requirement that all borrowers must have full health insurance to protect the mortgage lender. Being lent money is not a right, it’s a privilege. This same rule applies to someone buying a car: it is mandatory to have insurance if you own a car. Politicians telling lenders that they must lend money to irresponsible people is absurd (isn’t this one of the primary reasons that lead to the recent housing crisis?). Politicians seem to find too many ways to help and reward irresponsible people, which always seems to come at the cost of punishing responsible people. People only learn from mistakes, ie. being irresponsible if their is some form of consequence for their bad choices and actions. No consequences, no learning, thus they keeping acting irresponsibly.

Make all mortgages that are not 100% conforming loans, full recourse that are not bankruptable – like government student loans are. Any mortgage that does not include a 20% cash down payment, or a debt to income (total debt) ratio that exceeds a specified requirement (ie. all monthly debt obligations cannot exceed 35% of monthly income), or a bad credit score (any score between 10-650) would be written as a full recourse loan. This will allow for loosening of standards, but still protect lenders. To many people, this will be punishing the less responsible people who suffer from their irresponsible actions (not saving, over-spending, etc). Surely irresponsible people should suffer for their choices and actions to some degree?