By The Bakersfield Californian
Six years after the near-collapse of the U.S. economy, a financial disaster fueled in part by an out-of-control "subprime" home lending market, some housing advocates are pushing for a new type of loan designed to help those with low incomes or poor credit get back into the market.
The new loans have a nice-sounding name: "dignity mortgages." "But it has another name," the Los Angeles Times reported last week. "One that's become more of an epithet since the housing crash: subprime."
Backers of the plan, which include Bob Gnaizda of Berkeley's Greenlining Institute and Operation Hope's John Bryant, have been trying to convince lenders to jump on board.
Lenders, at this point, do not appear too thrilled with the idea, and neither are we. Home lenders still face multitudes of difficulties lingering from the most recent mortgage crash, including potential payments of billions of dollars in damages, new, supposedly stricter mortgage lending rules from the Consumer Financial Protection Bureau, and loan standards put in place by banks that are more stringent than the loan-writing requirements of the FHA or Freddie Mac and Fannie Mae.
"Dignity mortgage" proponents say they will be loaded with safeguards to protect the lenders and homeowners and prevent a repeat of the devastation that crippled the economy just a few years ago.
That may well be the case. But given what we went through, especially in Bakersfield and Kern County, we can't get that dirty word out of our head. If "dignity mortgages" are to become a reality, we have some advice for all involved, especially the regulators: Let's be careful out there. Those who cannot remember the past are condemned to repeat it.