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<p>[QUOTE=&quot;medoraman, post: 1361764, member: 26302&quot;]&quot;I don&#039;t think there is any evidence that your assumptions are true. More likely is that banks will tighten their underwriting standards and stop lending to people who can&#039;t pay. Interest rates aren&#039;t going to 15% on mortgages or student loans because there wouldn&#039;t be any.&quot;</p><p><br /></p><p>Well, I already said banks would stop making loans, like you said. As for evidence, its a fact that CA pays higher mortgage rates because of a state law that allows the borrow to not be responsible for a deficit between what a repossessed house sells for and what is owed. This premium is just because of this small exposure to principal amount. Increase the exposure to 100% of the principal, and the premium would go through the roof. I spent a few years working for the nation&#039;s largest private mortgage company Cloud, I am not just making up stories or wild thoughts. </p><p><br /></p><p>You are right it would be seen more that the loan would not be made because the interest that would be required would make the home unaffordable to most borrowers. The real affect of such a law would be 50% or more down payments required, and millions of Americans simply being told no, they no longer can aspire to the american dream.</p><p><br /></p><p>I am not trying to be sensationalistic, in fact if anything I feel I am being subdued in the effects. Also remember we cannot just say, &quot;well just make US banks eat it and loan anyway&quot;, when 90%+ of all of our mortgages are sold to international investors. They will not put up with such laws, and basically most of the money americans buy their houses with will be gone.[/QUOTE]</p><p><br /></p>

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