Many years ago the menu items available at most restaurants did not have much variety. Let’s consider raw oysters for example. Oysters were not everyone’s cup of tea. But as popularity grew, more and more restaurants began serving raw oysters. And as demand for oysters grew, more oysters needed to be harvested from the sea, and shipped great distances.

Everyone knows we need to be careful about the quality and freshness of something you’re going to eat that hasn’t been cooked. (Something about the months that have an “R” in them.) But we also tend to rely on the restaurant and/or supplier to protect us from bad oysters. And what about the waiter who notices a batch of mollusks that don’t particularly look or smell good? Should he tell his customer not to order them? The other waiters are serving them. The restaurant kept them on the menu. Would he lose his job if he discouraged folks from ordering this popular menu item?

And what about people who bought oysters and other “fresh seafood” from a guy in a truck parked beside the road, or who drove up unsolicited to the house selling “discount oysters”?

Over time, it was discovered that certain people were allergic to oysters. Others, based upon their DNA were susceptible to illness that didn’t show up for several months, or years. Not all oysters caused issues. But many did. And ultimately an oyster illness pandemic broke out. Somebody should do something about this! And so the FDA steps in, with the help of Congress, and regulates the sale of oysters. Absolutely no more oysters are to be sold to the American people.

Whew! Thank goodness the Federal Government stepped in and protected us from this menacing menu item, right?  But what about the oysters that were harvested, shipped, and prepared correctly? And the folks who really liked oysters? I guess the common theory is that it’s better to protect the masses by eliminating these darn things altogether than figure out how to make sure only good ones are served.

Well, I am a mortgage banker. So this must have a point somewhere. Who is responsible for oysters causing a pandemic and no longer being available? What if oysters were “non conforming specialty loan products”. And the waiter was a loan officer. And the restaurant was your local bank, or mortgage company. Then replace the supplier/harvester with the large lenders, Fannie Mae/Freddie Mac, and bond houses who made this “menu item” available. What if the guy pushing oysters unsolicited up and down the street was the unknown mortgage company sending postcards to you and all your neighbors?

Who is responsible? The many people who bought oysters from someone they didn’t know? Shouldn’t they have known better? The waiter who served something on the menu? The restaurant who was making a menu item available that was highly popular? The supplier/harvester who was keeping up with demand? The answer is yes – and no (and very hard to pinpoint). And, no doubt, there are still those professionals who know how to do things right, and have everyone’s best interest and safety at heart.

The next round of tightening standards for mortgage lending is coming after the first of the year. Government rules will cause some borrowers to be denied loans who would today be approved. And it is very possible that many lenders will remove some products from their menu. (More on this later.)

In the mean time, let’s keep an eye on what we’re being protected from. What’s next? Mahi Mahi? (30 yr fixed rate loans?)  Swordfish? (The ability to purchase a home with less than 20% down?) How far does the pendulum need to swing before we all feel safe?