Q: Is the mortgage market is over-regulated or is it under-regulated? How do these regulations affect the cost and availability of mortgage loans?
A: First, let me say that some level of regulation in the housing market is useful. However, it is important to strike a balance so that the amount of regulation doesn't place an unnecessary burden on the industry or distort market prices. A consistent challenge here is that lenders are typically much more financially sophisticated than borrowers. For most people, purchasing a single-family home is one of the largest purchases they will make during their lifetimes and, because they do it very infrequently, they are unlikely to become experts in this area.