Reginald P. Smithers III, Esq. wrote:
Eisboch wrote:
Help me out here.

I hear the economy is frozen. Banks won't lend. No mortgages.
Hoarding their bailout money.

Yet, virtually every commercial break on MSNBC or CNN features at
least one pitch from a major bank or a mortgage company (Ditech comes
to mind, which is a GMAC subsidiary) offering low interests
mortgages, loans and "we have money to lend" announcements.

So, why aren't they lending? Seems to me that this would be an ideal
time for people to re-finance for lower rates, etc.

Economics confuses me.

Eisboch




Loans are available for anyone with good credit. They are being
selective on who they make loans to. The problem we had with Fanny Mae
was making loans for more than the home was worth, to people with bad
credit, and who were not putting any money down. It was a govt. plan to
allow everyone to own a home. The problem is, without a down payment,
the homeowner had no more invested in the home than when he was renting
an apartment.


The "problem" with the home loans is just a teeny bitty bit deeper than
that, and had mostly to do with the packaging of loans into investment
instruments for resale to others.