Democrats making mortgage lending even riskier

Do these guys ever think about the long run consequences of their actions? With this new regulation, what will happen to lending in these blighted areas? Of course, redlining laws may prevent banks from not lending to these areas. The result then will be higher mortgage rates for everyone. That is one sure way to help increase housing prices, right? From the WSJ:

Chicago's City Council passed an ordinance late last month championed by Mr. Emanuel that changes the definition of a property's "owner" to include a "mortgagee" or his "assignee" and "agent." That means banks, mortgage servicers and anyone else with a financial interest in a vacant property could be held liable for its upkeep—even if they haven't foreclosed on the home and don't legally own the property title.

This is a classic case of treating the symptom and not the disease. Vacant and blighted properties depress neighboring home values, can serve as havens for squatters and criminals, and cost money to fix. Chicago spent more than $15 million last year on the problem. As Alderman Pat Dowell, who introduced the ordinance, told us in a telephone interview last week, that total "doesn't even include the costs for streets and sanitation, policing, evicting squatters out of these buildings, rent abatement, water issues" and more.

But the real culprit here isn't the banks. It's the federal and state regulatory interference that prevents the private market from working. Market-research firm RealtyTrac estimates it takes 504 days to foreclose on a property in Illinois, compared to the 318-day national average. Pile on a wobbly national economy and high unemployment and many borrowers can't afford to pay their mortgage. No wonder borrowers and lenders often give up and walk away. . . .