Flint, infrastructure, and the mortgage industry

by MPA16 Mar 2016

On the March 14 episode of my Lykken on Lending Internet radio show, guest commentator Paul Muolo brought up the recent water crisis in Flint. Not surprisingly, the inability for homes to get safe water has dramatically impacted the market for loans on those homes. As we talked about this water crisis in Michigan, it got me thinking...

We often hear stories like this about poor infrastructure or environmental hazards in various communities, but we don't have often tie the occurrences to the mortgage industry. We feel bad for victims of natural disasters like what happened with Hurricane Katrina or declining infrastructure (and perhaps local government oversight), and most of us will do what we can to help. But, all too often, we don't see how we in the mortgage industry may also be victims as well.

There's a very real sense that we're all in this together. What the Flint water crisis has shown is that there is no such thing as "them" having problems without "us" having problems too. When homeowners (or potential homeowners) are disadvantages in any way, that all comes back on the mortgage industry. Therefore, we do have a vested interest in ensuring that such situations be avoided where possible and that recovery happens quickly.

If people can't afford to borrow, or if the infrastructure becomes such that the liability is too high, we in the mortgage industry will also have to pay the price. Their crisis is our crisis. We're all in this together.


Is TILA-RESPA a good or bad thing long term?