- Car Insurance Scofflaws Raise Health Reform Doubt
- Rush Starts as Holiday Shopping Season Revs Up
- US Markets Bracing for Selloff on Dubai Debt Worries
- US Dollar Falls to 14-Year Low Against the Yen
- ING Prices Share Issue at Hefty Discount
- UK's Darling to Downgrade 2009 Growth Forecast
- Tommy Hilfiger's Estate in Conn. Sells for $20 Million
- Cheap Robotic Hamsters Are Holiday's Unlikely Craze
- Fannie Mae to Tighten Lending Standards: Report
- 4 Thanksgiving Week Buys For Your Portfolio: Market Pros
- There's a 'Great Chance' For a Double-Dip Recession: Strategist
- Revenge of the Gangsta Nerds
- Will TCU See The "Flutie Effect?"
- Retail Earnings and Sales to Improve in Q4: Analyst
- Consumers Catching the Holiday Spirit
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
MOST SHARED
- No Thanksgiving Rest for Retailers in Sales Race
- Banks Play Down Dubai Exposure, Investors Still Wary
- UK's Darling to Downgrade 2009 Growth Forecast
- US Markets Bracing for Selloff On Worries About Dubai's Debt
- More Asia Executives Resigned to Economy Flights: Survey
- Attraction of Switzerland to Businesses
- Acer Launches Android Phone, Says Targets on Track
- ING Prices Share Issue at Hefty Discount
Text Size 
The man credited with developing the financing of the modern U.S. mortgage industry says home values have fallen more than their listed prices suggest but they could hold steady with the help of a bill in Congress.
"I think the actual price declines are bigger than the indexes are showing, since so little is being sold," Lewis Ranieri, CEO of Ranieri & Co., said in an interview on the sidelines of the Milken Institute Global Conference.
Credited as the 'father' of the market for bundling mortgages and selling them on Wall Street as debt investments, Ranieri backs a bill by U.S. Representative Barney Frank, a Democrat from Massachusetts, that would make lenders accept losses on teetering home loans in exchange for government guarantees.
"What he is trying to do is part of what really needs to be done," he added. Frank's bill would allow the Federal Housing Authority to insure $300 billion of home loans. Lenders would erase some of the original loan amount and could even loosen loan terms in order to win the government backstop.
"At this point in the crisis, those of us who are practitioners would take what we can get. I wouldn't turn down less! Because we need a re-performing program, which is what in effect the Frank bill is."
Ranieri said the key to success for lenders was keeping people in their homes and his main concern was to make sure that the relief targeted lower- and middle-income families buying homes to live in rather than helped investors.
The inventory of homes for sale swelled by 40,000 to 4.06 million homes in March, or a 9.9 months' supply at the current sales pace from 9.6 months in February, according to the
National Association of Realtors . Meanwhile, the median national home price declined 7.7 percent from a year ago to $200,700.
Ranieri, who helped create the mortgage "securitization" market while at Salomon Brothers, also favors new regulation of those involved in selling loans.
From mortgage brokers selling loans to home buyers to Wall Street banks who sold the securitized bundles of mortgages to investors, no one in the mortgage industry had a legal duty to work in the best financial interests of the person taking out the loan, he said.
That is in contrast to Wall Street rules on selling appropriate products to investors.
"The whole system could sell (a) person the biggest investment he ever had, his house, in an inappropriate structure, and it was fine. It makes no sense. It is on its surface patently nuts," he said.
Print
Email
- What you need to know.
- Social enterprises are becoming a new asset class for the ethically-minded.
- Ever wished your cab driver would stop nattering and just get to where you're going? Well that moment is near(er).
- Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
- More shoppers than ever plan to comparison-shop this season. Who will benefit?
- It may be the most unusual guide to business you'll read.
Data is a real-time snapshot *Data is delayed at least 15 minutes