Agent Responds to: Will Ability to Repay Rules make Reckless Lending a Thing of the Past?

One of our readers recently responded to our story “Will Ability to Repay Rules make Reckless Lending a Thing of the Past?” and we thought we would share his comments with you.

From: Jack Markle


As a real estate broker for 34 years and a loan agent in the savings and loan business for 17 years prior to that, I read your article with great interest.

So much of what we talk about today is spurred on by the financial debacle that we have suffered with since 2008. It is, rightly, to be blamed primarily on the loose lending practices over several years. What is not always right is where the blame for these loose policies lies. Yes, it has much to do with greed of lenders. However, that greed is not necessarily inherent in their practices. No, it has more to do with the process being implemented by federal government agencies or the GSE’s. When I was in the savings and loan business from 1963 to 1980, we had a very respectable and effective underwriting policy that was based upon good judgement without onerous rules and regulations that always come about through government intervention in the private sector. And, yet, we always had a very low delinquency rate and an almost negligible foreclosure rate.

Then came the Freddie Mac and other government agencies. In addition, I think starting in the Carter era, came the policies that encouraged loose lending to assure home ownership for all. That was exacerbated during the Clinton years and was soundly warned about by Bush the younger. His warnings went unheeded and then it happened.

This business about everyone deserving a home is a highly respectable but impossible goal. I’d like to see everyone in their own home but it just isn’t going to happen in our society or any other. There will always be those who cannot afford their own home.

We always underwrote home loans based upon the ability to pay. That ability was measured borrower by borrower with good sense applied at the local level. But, unfortunately, that’s not good enough for the federal government.

Some serious overhauling needs to be done. Back to basics is my premise.

The views I have expressed in this email are those of my own and are not necessarily a reflection of the views of Coldwell Banker nor any of its directors, officers or anyone else affiliated with the company.

jackJack Markle, Broker Associate
CalBRE #00701822
Cell: 408.804.1177 Direct: 408.776.7110
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