It's a bad time to be a lender, if President Obama has anything to do with it. Negotiations between the current administration and the mortgage industry are focusing around allegations that surfaced last year regarding the fact that some lenders did not follow the letter of the law when processing foreclosures. The problem was that they simply could not handle the volume of foreclosures and resorted, in some isolated cases, to having bank employees sign off on paperwork without a proper vetting.
Even the lending industry itself has acknowledged that mistakes were made and stopped all foreclosures until the problem was fixed but, in typical heavy-handed fashion, the government is now negotiating to have billions of dollars of loan principal taken right off the top and forgiven when it comes to people with upside down loans (the mortgage balance is more than the property is worth).
This is the Obama Slap and makes about as much sense as a grocery store being asked to knock, say, 25 percent off your bill at the checkout counter just because you didn't bring enough money. Yes, the Obama Slap is a great deal for borrowers who willingly took on too much monthly mortgage for their income, but how many time
s can you grind your heel down on the lending industry before it decides the whole business is simply not worth the trouble?
Here's something we all should remember about “evil” lenders. If they can't turn a profit, they're going to stop lending and then you'll hear that giant sucking sound Ross Perot was always talking about in the 1990's only, this time, it won't be all our jobs heading south to Mexico. Instead, it will be the sound of the American economy shrinking so fast it disappears into thin air.
How, pray tell, does the administration propose to generate any sort of economic momentum if they make it ridiculously difficult and unprofitable for lenders to lend money to business entrepreneurs? Think about it. We'll wait.
Here's the Big Point. The lender is not always the enemy.
To read more on the topic, follow to an interesting Wall Street Journal article, then take a moment and share this truth with your friends.
The American Monetary Association
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