The U.S. is following the great wizard, Uncle Sam down the yellow brick road to economic prosperity.  We weathered the tornado of almost financial destruction in 2008.  Now before us are rainbows and sunny skies.

In fact, the future is so bright we may need to wear shades.  The housing market is skipping merrily along.  Skilled laborers are back to work; appliance and furniture companies are opening.  Lowes announced net earnings increase of 26% from a year ago and Home Depot 17%.

Instead of shades our great wizard, Uncle Sam, is wearing blinders and refuses to take them off.

The markets yawned when Wal-Mart blamed the economy on their surprise decline in sales (Very original, wish my boss would accept that never-before-used excuse).  After all, Tiffany’s is doing well.

The much-needed upward march in home prices may be curbed by the interest rates shooting up to over 4%.

The National Association of Home Builders stated last Friday new home building slowed in July, down 13.4 percent, causing a pause in buying activity according to HUD and the U.S. Census Bureau.

Resale homes continued to show good numbers with increases in the double digits but not as strong as the months before.

With the glimmers of a slowdown in the housing market, you have got to wonder why the great wizard Uncle Sam is not re-visiting the intent of mortgages.

Two years ago FHA was an excellent alternative for good borrowers.  Now it is the only option for marginal borrowers or those who recently foreclosed had a short sale or bankruptcy.  Credit scores for recent FHA borrowers are the lowest they have been in four years.  How does it make sense to place borrowers in a $270,000 loan with the monthly mortgage insurance of $300.00 a month?   And it can never, ever be removed?  Is Uncle Sam sniffing poppies?

The Qualified Mortgage Act is right around the corner (Can you believe 2014 is four months away?).

The draconian requirements of the act are nine years too late….and do not apply to today’s market.  If the back bone of the American Economy is the housing market, why is the upcoming Qualified Mortgage Act banishing some good borrowers, such as the self-employed, to mortgage exile?  Surely there are other alternatives.  Or there would be, if we did not have winged monkeys putting together the regulations. Careful, they may tear up our yellow brick road.

Diane Gerdes