Your Lender, Your Friend

'"We don't believe it is appropriate or possible for the lender to identify or dictate the best mortgage product for individual consumers," said Diane Casey-Landry, America's Community Bankers president and CEO."

Read that again people... Apparently when you go to visit your lender and tell them your financial situation and tell them how much house you would like to buy... and they present some options for you... they are NOT identifying or recommending appropriate options for your individual needs.

"Efforts by regulatory agencies to rein in so-called exotic mortgages have met with opposition from major bankers' organizations. The mortgage bankers object to the guidelines' implication that all alternative mortgages are risky in and of themselves. The community bankers reject the suggestion by regulators that lenders tell borrowers whether a loan is appropriate for them."

"New guidelines were issued because regulators such as John C. Dugan, the comptroller of the currency, were concerned that these nontraditional mortgage products had novel and potentially risky features."

"Rising prices created the market for alternative (exotic) mortgages, which make houses more affordable for less-affluent buyers."

"The term exotic mortgages refers to the interest-only and option adjustable-rate products (known as Alt-A's) that are being used by many first-time buyers, among others, to purchase houses in high-priced markets."

"The concern among housing-industry officials and regulators is that a large concentration of these loans in the highest-priced real estate markets could result in a tidal wave of defaults and foreclosures - and a highly regionalized "bubble."'

"Why did the riskier products catch on so quickly? On the lenders' side, they have sustained loan volume as higher interest rates have ended the refinancing boom. On the borrowers' side, they have made expensive houses more affordable."

"Dugan and other regulators were concerned that the availability of these alternatives not only boosted prices but also created a demand for even more of this kind of financing."

"Both the Mortgage Bankers Association of America and America's Community Bankers say the guidelines proposed in December by the Office of the Comptroller of the Currency and other agencies might limit innovation. Both groups presented comments in letters sent to regulators before a March 29 deadline."

"The letter from America's Community Bankers also maintains that the guidelines aren't necessary, even though the group understands the rationale behind them."

'"The American consumer could suffer greatly from any guidance that imposes unduly restrictive standards on the use of these mortgage products," said Diane Casey-Landry, the group's president and CEO."