In another example of shutting the stable door once the horse has bolted, the US House of Representatives has voted to regulate mortgage brokers and lenders.  Although this Bill is unlikely to find its way past the Senate and the Presidential veto, it gives an insight to those of us in the UK into how the sub-prime crisis came about.  Some Members of Congress are seeking to force a degree of responsibility upon mortgage brokers, requiring them to select a suitable mortgage rather than the one paying the most commission, and upon lenders to take some steps to confirm affordabilty of the loan.

This commonsense proposal would impose some rather belated order, preventing America's poorest being stitched up with truly dreadful loans, which all but guarantee default in many cases after the 'teaser' introductory rate finishes and higher interest payments kick in.  By this time, however, from the lenders point of view, the loan has been securitised and parcelled off by an investment bank to some 'unsuspecting' hedge fund, insulating the lender from the consequences of its actions.

If there is a crumb of comfort for us over here, it is that these lending practices did not cross the pond to any significant degree, at least for mortgages, and the impact on the UK property market may be different.  Also, residential mortgages have been regulated since 2004 in the UK.  None of this inures us from the effects of the global fallout, however, as the international capital markets struggle to quantify the problems and regain stability.