Posted by: realtormarkpalace | September 30, 2010

Mortgage Study Critical of 30-Year Fixed Loans

The reason for the housing meltdown wasn’t limited or no-documentation mortgages, it was poor underwriting, says a study by Michael Lea, director of San Diego State University’s Corky McMillin Center for Real Estate.

Lea also is critical of pre-payment penalties, which he says force borrowers to pay a premium for the option to pay off the mortgage without a penalty.

He adds that if the U.S. persists in supporting 30-year, fixed-rate mortgages that the government will soon be required to play a role in offering investors a guarantee so they will buy these loans in the secondary market.

Source: The Wall Street Journal, Nick Timiraos (09/27/2010)

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