In the past year home foreclosures in North Carolina are up 143% according to the Charlotte Business Journal. There are expected to be even more in the new year as many adjustable mortgage rates are reset to higher rates. Lawmakers addressed concerns about the subprime mortgage rates during the last session and enacted House Bill 817 which makes residential mortgage fraud a crime and House Bill 1817 which imposes restrictions on home loans and mortgage brokers. The danger with the high foreclosure rates and the General Assembly reconvening in May is that even more government regulations may be imposed on this industry.
Hood spoke out on this in a November column:
??.those who would respond to current problems in the subprime mortgage market with new federal or state regulations aren?t primarily interested in ensuring informed lending and borrowing at rates set by free markets. They want to impose price controls and other regulations on the contracting parties. No one should be under any illusions about the likely result of such ?consumer-protection? legislation: it serves the interests of some financial institutions over others, not really the interests of consumers, who typically bear much or all of the costs.?
See also Karen?s recent Free Market Minute for a perspective on how the Federal Reserve plays into the housing market. In part,
“One of the Fed’s primary responsibilities is to make adjustments in the
nation’s money supply. This means that the Fed has the authority and
the ability to ease or tighten the amount of credit available to the
nation’s banks. So while the Fed doesn’t directly control the interest
rates that banks charge in most credit markets, and does not control
mortgage interest rates, its policy decisions have wide-reaching
effects.”
Home ownership is the American dream. The free market and hard work make dreams come true. Government regulations only make nightmares.
