What Happened to PMI? (Or: Where's Toto When You Need Him?)

I've been reading quite a few of the AR comments and some of them suggest that the banks/lenders don't know what they're doing. And how they got us into this "mess."

I tend to disagree. I think the "mess" was when buyers got in over their heads, saw "everyone else doing it," (i.e., cashing out on home equity lines of credit, pretending they didn't understand what their ARM meant, getting 125% loans, getting seconds and even third mortgages). We can all point fingers, but I'm NOT a lender. I wasn't approving these things.

I always tell my clients that the UNDERWRITERS are the "Mighty OZ" -- Just like The Wizard of OZ -- they are behind the curtain, calling all the shots (underwriting all the loans), and we never see them.

The Underwriters were / are / supposed to be the "checks and balances" of the lending system . . . or, at least, so I thought.

Until the dog, Toto, runs up to the curtain and pulls it back to uncover the whiney little man. Blowing smoke up everyone's arse . . . and THEN they all figure it out.

What troubles me, and I've not heard anyone with any sound answers, but what happened to PMI?

Property Mortgage Insurance / or Private Mortgage Insurance . . . hmmmmmm . . . that was typically a stipulated "insurance" policy that buyers had to obtain, per lender instructions -- and PAY FOR -- when they weren't coming up with large down payments.

Where is the "insurance" on the mortgage? Wasn't that supposed to protect the banks/lenders in case of buyer default?

And . . . what happened to the stream-lined HUD homes? That was a good system with FHA coming in and acquiring the home in a "quicker then this" system. And HUD homes sold quickly. Of course, one had to be "approved" to sell a HUD listing -- and by the way, am I using too many "'s??

Anywho, just wanted to say that this is a HOSTILE takeover of the financial industry, and it's done with the ink of the pen of the Presidents -- whomever he may be.

Shakespeare was ABSOLUTELY CORRECT -- the PEN is mightier then the sword!

Banks have been chomping at the bit to get into real estate and sell and make more profits. Keep in mind folks, that the majority of people are still paying INTEREST for the first 7 years of the life of the loan before real amoritzation starts to break-even and begins to reduce and take off the principle.

And who designed that system?

Hmmmm . . . the banks/lenders?

You don't say?!?!?

Hmmmm . . .

The banks/lenders know exactly what they're doing. Too bad Realtor(r), real estate agents, buyers and sellers aren't picking up the scent.

Toto . . . here doggie, doggie, doggie

P.S. Did Pres. Obama name their family dog yet? If not . . . how 'bout TOTO!