The Occasional Observer

Better late than never. The Fed is proposing new regulations that will prevent another wave of bad loans from wrecking the real estate market and, as a result, the economy in general. Here's a quick synopsis from the internets that I found at Drudge:

It would restrict lenders from penalizing risky borrowers who pay loans off early, require lenders to make sure these borrowers set aside money to pay for taxes and insurance and bar lenders from making loans without proof of a borrower's income. It also would prohibit lenders from engaging in a pattern or practice of lending without considering a borrower's ability to repay a home loan from sources other than the home's value.

A step in the right direction, but it doesn't seem to hit on what I view as the main problem: the disconnect that exists between who is approving the mortgages and who is bearing the risks. If mortgages are going to be securitized, packaged, and sold, the issuing firm should be required to maintain some exposure (say, 25-50%) to the loans they originate.