PHOTOS, PAGE 1

       Editor and prime reporter is Doug Terry, a veteran television and radio reporter in   Washington, DC, (details below)

Your Federal government has been working hard at correcting the giant mess that caused the mortgage meltdown of 2008. No one is going to jail, no one is paying fines (for the most part), but, hey, their workin’ on it, you know? They’ve come up with a solution and that is to blame the people who took out the loans. The solution is to make it almost impossible for most people to buy houses in expensive cities like Washington, DC, San Francisco, New York, etc. Here is a clip from the WashPost with a link below:

Consumer borrowing is so rampant in America that most people who took out a mortgage last year to buy a home ended up spending more than a third of their income to pay that loan and other debts.

Now, a federal proposal would target these borrowers by making it tougher for them to get the cheapest mortgages. The initiative is part of a broader measure that aims to prevent another foreclosure crisis and could confront borrowers who do not meet certain conditions with higher interest rates and fees.

More on this Story (in The Post)

• Federal proposal would toughen debt restrictions on mortgages
• Foreclosure settlements divide states
• Home prices hit lowest level since 2009
• Average rate on 30-year loan drops

The debt restrictions are on top of other conditions, including a requirement that borrowers pony up a 20 percent down payment to qualify for the cheapest mortgages.

While the down payment condition has captured the public spotlight since the government unveiled its plan in March, experts who track the housing industry say the proposed debt limits could be just as onerous for borrowers.

“The debt limits are far and away the most binding constraint,â€� said Mark Zandi, chief economist at Moody’s Analytics. It’s probably the one thing that will knock the largest number of borrowers out of the market by keeping them from getting the most favorable rates.

TERRYREPORT NOTE: The lead sentence in this story is rather misleading. Rampant borrowing? A better word would be desperate, because house prices remain so high that people have to go into deep hock to buy one. The lead sentence implies that, once again, people buying houses are making foolish mistakes. That might or might not be, but the story itself is about what percentage of income spent on housing and other debts is appropriate. The lead suggests the judgment has already been reached.

Doug Terry, 6.7.11

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