Learning from the Past

Sarasota Herald Tribune, January 21, 2012 | Go to article overview

Learning from the Past


The secondary mortgage market may seem esoteric to home buyers, but without it, they couldn't get loans. What is needed, say experts, is reform.Leslie Morgan can't remember how many times her mortgage was sold. "Three or four, I think," said the Atlanta homeowner. "I didn't care, as long as I knew where to send the check."That was from the late 1990s through the mid-2000s; in 2006, Morgan sold her condo to move in with her boyfriend. Recently she looked into applying for another mortgage on a different condo and was shocked at the hoops she was asked to jump through: pay stubs, bank statements, several years of tax returns -- far more documentation than she'd been asked for before."It was endless," she said. Then there was the down payment, which was "bigger than I could really afford."That mortgages are hard to get -- harder, in many cases, than they were before the real estate boom ever hit -- is not new news. In large measure that difficulty stems from the fact that most mortgage issuers want their loans to comply with requirements that allow them to be sold on the secondary mortgage market.Blame Wall Street greed, lax regulators, careless bankers or irresponsible home buyers for the secondary mortgage market crisis that signaled the real estate bubble's burst and a subsequent credit tightening. No doubt there's plenty of culpability to go around. Yet the reality is that the secondary mortgage market -- where millions of loans like Morgan's are sold and bought -- is here to stay.And, many say, in dire need of reform."If we go back and start doing the same things we did before, we're going to recreate the same chain of events in the future," said Coldwell Banker Realtor Lynn Robbins of Sarasota. "We need to look at our history and avoid making the same mistakes."National Association of Realtors President Moe Veissi urges a Congressional solution "that protects U.S. taxpayers" from another bailout, "while continuing to allow Americans access to the dream of home ownership.""Any new secondary mortgage market model must ensure that mortgages are affordable and always available to creditworthy buyers, especially in times of economic distress; ensure that taxpayer dollars are protected; require sound underwriting standards; and provide for rigorous oversight," said Veissi, broker-owner of Miami-based Veissi & Associates.According to Veissi, the NAR supports the Mortgage Finance Act of 2011 introduced by Sen. Johnny Isakson (R-Ga.) in early December. "We commend Sen. Isakson for putting forth this legislation," said Veissi, who added that the bill seeks reform of the secondary mortgage market.A primer: The secondary mortgage market is the sales platform for investment securities, for which the value of mortgage loans is collateral. The loans are grouped and sold as securities called collateralized mortgage obligations (CMOs). Theoretically at least, the risk of any individual loan is spread among many investors, who receive payments according to the "tranche," or risk class, to which their "slice" of the security belongs.The secondary market comprises primary lenders, including mortgage bankers and savings and loan associations, securitizing entities, such as Fannie Mae, Freddie Mac and large private investment institutions that buy the mortgages from the primary lenders, and the investors themselves.If Isakson's act is passed, it would establish a limited-term Mortgage Finance Agency (MFA), which for a fee would guarantee pools of qualified residential mortgages (QRMs). The fee -- paid by secondary mortgage market securitizers -- purportedly would protect the agency from the risks of guaranteeing the performance of mortgage-backed securities by putting money into a "catastrophe" fund for use in the event of a future market collapse. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Learning from the Past
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.