Letters to the Editor

Re: 'Fed proposes new restrictions on subprime, alt-A loans' (Dec. 18)

Dear Editor:

Another knee-jerk reaction fixing things that are not problems, assuming we are too dumb to make our own decisions, the Fed is proposing more legislation to "fix" a problem that it in part caused by its excessive rate increases over the last two years. Much of this article you may not "get" just because of the lingo used, and the fact you are not in the mortgage industry. But know this -- if this passes YOU will have FEWER CHOICES.

Perhaps you have a long-term plan and exit strategy, or know you are going to inherit money in a couple of years, but you have hard-to-prove income, a substandard credit score (which it looks like most people will have once we start to emerge from these foreclosures and short sales). TOO BAD! The Fed says you are too stupid to take advantage of a subprime or alt-A loan with a prepayment penalty, or without points to the lender or broker (resulting in a lender-paid yield spread premium).

This is already on top of the knee-jerk reactions a few years ago, resulting in cities across the country and counties and states passing a dizzying array of "predatory lending" laws, such as the one the city of Oakland, Calif., passed, which caused many lenders to more or less redline those cities, as the laws were so overreaching.

I agree more disclosure is essential to make sure the consumer knows what he or she is getting into, but taking away all choice is short-sighted and will cause further damage.

Jan Farley
Associate broker
Windermere Pacific Coast Properties
La Mesa, Calif.

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