Part of the massive reconstructive housing bill that was passed by congress in late July included conventional mortgage loans to be converted to FHA government financed loans to help troubled borrowers. Lenders from major companies testified in front of congress today to express their views of the new legislation. The programs call for lenders to voluntarily refinance delinquent borrowers into a FHA insured 30 year fixed loan and also write down their current balance of the mortgage to 90% of the value of their property. FHA would receive 5% of the loan balance back from the lenders as compensation. Lender representatives were not overly enthusiastic about the program and would prefer to handle the troubled borrowers with their own techniques. I think lenders are wrong by interpreting that this is not the right solution. Lenders are clearly to blame for the massive default and foreclosures the housing industry is facing. The government should have made this mandatory that the borrowers get the right treatment and have the ability to successfully get a mortgage that they can pay and afford. It’s the irresponsible lending practices that have led to the majority of the housing problems. I can remember back in late 2005, where we had a handful of lenders allow buyers to purchase homes with $0 money down and 580 or higher credit scores. If you had a bankruptcy or late payments on consumer debt, they would still look the other way. 95% of these loans were written with an adjustable rate rider attached to the loan were it would adjust or balloon two to three years from its origination. This was clearly a ticking time bomb that lenders should be held responsible for.