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Common Sense
By Daphne | December 19, 2007
The Fed wants to change the way FICO scores are calculated.
The Fed also wants to make sure that people getting a mortgage can really afford the mortgage and other costs associated with a home.
It seems to me that the federal government wants to mandate and regulate common sense.
For many years the lenient credit offers that were given to people have made it way to easy for people to get credit and to abuse it.
Most people have more credit than they can afford. If you have a good credit score it didn’t happen overnight. You built up credit just as people amass a savings (or fortune). Even people with a high income aren’t necessarily good credit risks.
When I heard that the government wants to make sure that people have enough to pay for insurance and taxes when they are getting a mortgage, I had a head shaking moment. Maybe I am jaded, but when I sought out a mortgage the loan officer asked questions and looked over everything that I had. Since I hadn’t owned before I needed to show some kind of proof that I could afford a mortgage and still have some money left over so I wouldn’t be destitute. Since this obviously hasn’t been happening with “no-doc” loans it has added to the mortgage problem. People were not given adequate counseling and didn’t know about some of the additional costs of home ownership.
Easy cash without regard as to how the consumer will repay the loan has gone by the wayside. Thank goodness.
For some this will be a terrible hardship because they have used home equity loans to finance their lifestyle (or unfortunately for some basic necessities).
The credit crisis is not just a US phenomenon, other countries are having their own credit problems. This should speak to us as consumers, both national and global that we need to live within our means, whatever we have.
Common sense shouldn’t have to be regulated. People should regulate themselves and realize that having things are not that important despite what media outlets tell us If you can’t afford it… don’t buy it.
Topics: December 2007 |