8) Ban or limit high-risk mortgages from being securitized.
The author's comment:
This one sounds really political. I guess it depends on your definition of high risk mortgages. Some nanny state implications here but that’s a discussion for another post.
My thought was that if you cannot securitize them then they may possibly go away. What would the result of that be? Could we go back to a 60's idea of home mortgage... only the good qualify, except for VA and a few other small government programs? In an age where every small town has government housing and all of them are full it does not seem likely to happen. So, what is the actual likelihood if this becomes part of regulation? I'm guessing that either FHA will be expanded into subprime so far that it is hardly recognizable or else a whole new government program will be started.
Like the author, I think that many of the other rules sound reasonable, given the current paradigm.
