The reason I post these stories is because I want to give a voice to homeowners. This blog or my mission isn’t about me but it’s about our mortgage crisis and how homeowners are suffering from these toxic loans that they are stuck in and can’t refinance out of.
It’s about solutions and also the problems. One big problem is the loan industry in general and it seems like brokers and loan officers are getting slammed in the press daily.
The mud slinging has begun and appears that a lot of loan officers that have been visiting this blog blame the borrower for not reading their 2 inch thick paperwork that they pay a licensed professional thousands of dollars to have a fiduciary duty in representing them with utmost care and integrity in their dealings.
I have seen comments that blame the homeowner for not understanding exactly how the loan works, what the implications were if they took the loan, the reset payment, the right of rescission, the reset rate, cap rates, index rates, margin, tax implications, foreclosure implications, prepayment penalties etc. of these toxic loans.
Bottom line is that it is the broker’s and loan officer’s job to explain the inner workings of the mortgage to their client. The facts are that it rarely happened and most of these important factors of the loan were left out of the discussions and left for the borrower to fend for themselves.
The borrowers think that the licensed loan officer that they paid pretty handsomely should have explained all of these factors in detail. The loan officer that just got paid $10,000 thinks that the homeowner should have read all the fine print in the 2 inch thick paperwork.
Here’s what homeowners are saying in regards to my recent post: Worse Than a Pimp on a Corner. I Haven’t Even Pulled My Pants Up.
anonymous wrote:
That was so painful to read. Realtors, loan officers, appraisers, and bankers made a fine fortune in the run-up to the housing peak. I hope they all get what they deserve.
David from texas wrote:
Prepayment penalties should be made ILLEGAL.
What kind of a world has this become where the rich penalizes borrowers for paying them back EARLY?
I am sorry that you were deceived by these unscrupulous SOB’s. There should be protections to guard against crap like that… I will NEVER sign a mortgage loan document until I have a trusted lawyer READ over the entire thing and make sure that there is not ONE item in there that I would disagree with.
There is a special place in hell for these scam artists.
MEMEME wrote:
My life motto is… Never trust anyone who makes a commission off of decision that they are advising you to make. It it doesn’t feel right then it ain’t right!
toby, san diego CA wrote:
I have had a FHA fixed rate CW loan for the past 10 years, and for the past ten years CW has sent me countless solicitations, and in my option MOST of these were designed to confuse or miss- lead a naive borrower. Some were even disguised as government documents saying
a PMI refund was due to me, this is the second notice please call…. I won’t go into to much detail, but let me say this
CW is scummy and so are the brokers who peddled this crap.
But on a happy note, i still have my 5.75 fixed, and CW now sends me CD adds offering 5.5% interest.
alan wrote:
2 Patti and some other shyster LOs: What a stupid LOs. Read the text again, are you 2nd graders who lack comprehension skills ? One of her major issues is that LO concealed PP. Some of you morons conviniently blame the poster for minimum payment option she took without menitoning responsibility of shyster LO to disclose PP showing your solidarity with that crook. I walked off one closing because one of your bastardy brethren was trying to pull a fast one but I can certainly see that few of my relatives or friends can fall prey to some sleazy, slimy bullshitter LO.
Lie by omission is still a lie. Obviosuly you are going to cover your butt saying “She signed it! Not our problem” but that will really show lack of ethics and why shyters like you should be put out of business.
alan wrote again:
She did hire interpreter if you haven’t read it. That LO was supposedly paid from the transaction she is on the hook and now you are trying to say that she should have brought into picture another middleman ? In the end customer who is not well versed in the subject matter must trust that there is someone in the transaction who is actually not lying son of bit.h. It looks like no matter what happens it’s never sleaze ball’s fault.
Stephen wrote:
As a former insider, I know exactly what the lady is saying. Brokers are the lowest form of life on this planet. Terms are modified after signing every day and brokers laugh about it.
No, assholes, the buck stops with the seller of the loan, who misrepresents the product and fraudulently alters it after the fact. And Congress knows it.
{ 15 comments… read them below or add one }
The HOPENOW program requires folks to be current on their loans. This is not the population in crisis. We have a total disconnect. The homeowners need to be considered for a restructuring of their loans that include allowing them to be behind in payments and that also allows them to get a reasonable fixed rate loan based on a principal balance that is also reasonable and based on an unlayering of predatory origination and servicing fees and charges and that also takes account of the systemic inflated appraisal and lack of escrow for property insurance and tax charges which has created a wordl of homelosers with no property insurance, only debt insurance. Many folks are now upside down on their loan to value ratio. This program is a waste of the trees used to send out the notice is borrowers in “default” are left out.
This has been out of control for a long time and I have been in the business for over 21 years. It has sickened me that my ethically based career has gone up in flames because ANYONE AND EVERYONE thought they could write mortgages and they didnt even know what they were doing. Companies would hire a college kid and pay him 2500 a month draw and told them to write it up. I was a closer and a processor before I wrote mortgages and I explained everything in detail to the client. At times advising them NOT to do something. GUESS WHAT…. they would go somewhere else and get it anyway! On top of that the realtor was pissed that I was telling them the truth and said just close it!! Now I am ashamed to admit that I have been in the business for 21 years that I slaved and devoted my life to? And only made an average of less than 1% per loan?? I gave good deals thinking that the client would come back to me GUESS WHAT they would go somewhere else get screwed and come back to me to fix it!! And usually it couldnt be fixed! When I asked them why they would go elsewhere they said that they just signed something in the mail thinking it was a good deal!
Moe and Joe Schmoe are both RIGHT. Not all clients are innocent children and not all loan officers are vicious predators!!
You know it sickens me to realize how many LO’s out there committed fraud on their customers loan documents. I do not understand how they think they would gain anything positive out this. It is amazing how no one has looked at the consequences of their actions until it is now almost too late. Secondly, now that it is a well known fact what these unscrupulous LO’s are doing, what is going to be really done to get these people out of the business for good?
Denise, we must be twins! I feel the exact way you do! I am so big on consumer education because there are so many predators in the world (mainly Countrywide.) I never brokered a CW loan and never will – even if they were the last lender standing! I am 100% for the consumer and doing what is right, but there have been some occaisons when I have spent hours…with a client going over why they need to buy a cheaper house so they can meet the guidelines for an FHA loan …and they went out “shopping” for the broker who would do the loan like the one their cousin has – so they can buy more house. It gets frustrating…because you know there is a broker out there that will do the No Doc MTA loan and your time is wasted and the client is screwed! Denise, keep doing what you do…it will all work out for you in the end. Good Luck!
While there are so many scummy Loan Officers o0ut there that have put people in bad situations, one must always look at them selves first when assigning blame for poor financial decisions. If you make $3000/month and don’t historically pay your bills on time, should you be thinking about buying a $300,000 house with a $1,500/mo IO payment? Probably not… So when I advised people as such…guess what happens, they go to the next guy and get the loan they want. While having a fiduciary duty to these Borrowers, I also have a duty to my family to provide for them as well. So if I explain to them that they cannot afford the loan but can qualify for it, would most likely be foreclosed upon in 24 months and that their credit was not good enough to get them the rate and term they were looking for but wanted the loan anyway, who is to blame? The reality of the situation is that these programs were created for one reason, for Wall Street to make money. And everyone got caught up in the greed. Loan Officers, Realtors, Lenders, Appraisers, Title Co.’s, and even the poor ‘ol “Home-debtors.” Remember, most of these foreclosures are not happening to people who have lived in their homes for several years and were put into a toxic mortgage (although many were), a majority of these foreclosures stem from amateur home speculation, investing in “Boom-Town” new developments (see Elk Grove, CA), greed of having to keep up with the Jones’ and getting a bigger home, and finally just not making smart decisions. So while there are plenty in the industry to blame, the reality is that this is a consumer driven market, and without buyers willing to outbid the next guy for an overpriced piece of crap cookie cutter home, then house values would not have risen, allowing for all the cash out REFI’s. And you can put that in your pipe and smoke it!
veryones perception is exactly that. a PERCEPTION.
its evident that “hating” on the origination side (loan officer/broker) of the problem just shows how shallow of a perception you all truly have. if you want to point fingers… we all need to look in the mirror. i see it as the system of our economy.
so lets just start with the top shall we?
SIV vehicles that created the demand for such loans. wall street. the feds. every non portfolio lender. underwriters. account executives. appraisers. title companies. processors. brokers. loan officers… the list could go on.
but more importantly… BUILDERS. the areas that are being hit the hardest are ones in which the builders are sitting on inventory… being forced to drop the price as they take a loss. you dont see a 40% discount due to an adjustable rate or even a prepay penalty.
come on people… educate yourself. open up your brain a bit. “peoples minds are like concrete.. all mixed up and permanently set.”
break through the concrete… you can do it.
The loans that are causing all these problems are the 3/1 and 2/1 that were originated in 2004 and on that are reseting.
I have been in the real estate business for 30 years and advised my clients not to purchase in 2005 and on. I told them the bust was inevitable.
The lenders I have dealt with over the years are reputable and hornorable.
I hadn’t a clue that these awful loans existed until this year when reading about all the financial problems they ahve caused.
It is deplorable.
Lenders are required to explain the details of a mortgage. To include what negative amortization is. And reputable one’s run amortization schedules for borrowers so they can understand the difference between neg am and normal am.
What I have witnessed is that a bunch of young and inexperienced realtors and loan officers jumped the band wagon when the real estate market started getting hot and played with peoples lives that they had no business doing.
The real estate market is cyclic. And thru all the ups and downs the increase in value ends up being 3% per year over a 30 year span.
Someone like me is in for the long haul. I sold houses when the interest rates were 17% and the market was better than it is today.
I would buy my head in the sand if even one of my customers got mixed up in one of these horrid loans.
My philosophy has always been – if you deal with honest people you don’t have to watch your back. Tried and true.
I feel for the long timers that have been in this business and are suffering. My heart goes out to the legitimate real estate professionals that will have a black cloud surrounding them from the result of others.
You seem like a nice lady Anna and I wish you the best. I think you’ll make it through this cycle just fine.
I couldn’t agree with you more. I have been a loan officer for over seven years and have been my own broker for three of those years and have yet to meet a person that has been foreclosed on, that ever admitted its their fault. Its always the never ending game of pass the buck. Some of these people with their 580 mid scores going hundred percent stated get exactly what they deserve. The lenders too they know better than to lend money to these people that have a twenty page credit report of never paying a bill in their life and not even making them put a dollar down. (can’t get a discover card but can get a 100% home loan) I would like to place the blame on all the hedge fund and REIT investors and there fund managers. These people developed all of these 2/28 and 3/27s and pick a pays that go neg am. Of course if one of these SIVs or CDOs crashes its their actuaries fault. They all knew they could dangle these carrots in front of these rat buyers and long shot speculative investors. But they did not care because they would show their multimillion dollar clients 17% returns on their money. Meanwhile the fund managers are making 2% for servicing the portfolio and 20% of the profit when they sell the portfolio. Then these same fund managers are selling every one of these lenders stock short when the market turns and still making 14% returns. Of course you have to be an accredited investor to be able to invest in these funds. I find this all kind of comical if you look at the soon to be presidential elects holding filings (On both sides). When you happen to notice their Goldman Sachs funds and the many others that are doing just fine. That didn’t seem to crash like the bear sterns REITs. This was all driven by the extremely wealthy. We all took the carrot and that carrot was greed. Now we all will have to pay for it to. Bottom line America; stop living pay check to pay check and don’t buy it if you can’t actually read the 145 pages of paper work and figure out how to pay for it. Heaven forbid if you don’t understand it, take it to an attorney and spend 200 dollars to protect your new hundreds of thousands of dollar investment.
P.S. if you don’t have the 200 to go over the investment paper work, that you don’t understand, guess what, you probaley shouldn’t buy it…….?
The bottom line is this and very simple:
If you are a reputable LO and advised your client of the type of loan they were eligible for, what the risks were, what they truly qualified for, what your professional opinion was as to the BEST loan they should get and the risks involved you did your job!!!
We (all who now find ourselves in the horrible position of being in a toxic loan despite our best intentions and efforts and those who are criticizing the industry) are NOT TALKING TO YOU.
I find it strange that people jump up to refute allegations that don’t apply to them.
This is not to be overly harsh and critical. I would like to hear the reputable LO and others in the industry who are not honest collectively say that those who duped the customers DID.
The issue of clients who were looking to make a buck ignorantly and who made big mistakes is a related subject but not the subject, as I understand it, when a person comes here to say I was defrauded — unless that allegation is that person is lying, that they were told and knew all along, that they were warned and ignored the warnings.
Is that the allegation? That the industry is chock full of honest LOs and brokers, ready and willing to inform the customer, doing all that they can, and these customers are LYING????!!!
That’s not what I’m reading here and all over — that’s not what has caused the crisis in America, I don’t think.
Remember that good old saying, all it takes for evil to triumph is for good men to do nothing.
The long time members of this industry who have conducted themselves in an upright, honest manner in closing loans and advising customers should stand WITH those who are revealing the massive fraud that’s been perpetrated on America and fight for the change that’s necessary — at least that’s my humble opinion.
Yeah, I must admit as an owner of a mortgage company we saw some pretty good times. I made it a part of my firm to explain all products and what people were getting into but with many of my LOs being mostly uneducated and as close to used car salesman as you can get, many of them got caught up in the big money hype. Shouldn’t we take a step back however and try to set some blame on the people who created these products or even go back as far as the fed and Greenspan who lowered the rates to 1% and increased liquidity to an all time high and allowed private banks to create these programs? Is it possible we were simply the messenger for higher powers with greed being at the forefront of it all. Who in their right mind would raise rates consecutively, 14 times in a row. There are much higher forces at work here. Special interests set this in action years before it happened and knew they would be able to buy all this credit back at 50 cents on the dollar and further expand their wealth and further eliminate the middle class. Who controls the fed anyway. Wake up people. Most of you who post probably took 90 and 100% LTV deals and leveraged yourselves to the hilt and lived better and bought bigger homes and cars than you could afford. Did you really think you were being scammed or could you have been caught up in it too. It’s the American way. I know were all not that dumb. Take some responsibility. It is your biggest investment, you would think an inch of paperwork wouldn’t be that big of a deal considering what was involved.
The sad thing is with all of this, “Come on, take some responsibility” advise from the LOs and brokers, I certainly don’t hear the blamers taking responsibility. All I hear are excuses. I think everyone should take responsibility for what they’ve done wrong, and buyers are not responsible for LOs and brokers who lie and mislead and don’t do their jobs. Period.
I thought others might find this interesting. In Countrywide’s Home Loan Application Disclosure Handbook there are 57 ARM loans for a buyer to read and understand, those appear on pages 32 through 98. Pages 99 through 113 contain State specific disclosures.
North Carolina wants buyers to:
“Beware of “negative amortization” loans.
Michigan wants buyers to know that they have a right to:
1)Ask your broker to to explain EXACTLY what the mortgage broker will do for you.
2) Ask question about charges and loan terms that you DO NOT UNDERSTAND.
So it seems clear that ARMs are consider dangerous and buyers are assumed to be unable to understand them.
I am also assuming that by proposing those rights there’s an expectation that a buyer will be given truthful answers.
Countrywide wants buyers to know what the role of Your Broker is.
They write on Page 14, under the heading: “Understanding the Roll of Your Broker, Broker Compensation and Prepayment Penalties: Your broker is not an employee or representative of the Lender. Your mortgage broker and the lender are independent parties.”
They say: “You should look to your broker for information and ASSISTANCE concerning the loan process and any associated fees and costs.”
They say: “Do not hesitate to ask your broker if you have any questions about specific fees or charges.”
They say: “In todays lending environment, YOU AND YOUR BROKER should WORK TOGETHER to structure your loan to BEST MEET YOUR GOALS AND OBJECTIVES.”
They say: “You should review the options WITH your broker and agree upon the terms of the loan (inc. the interest rate, points and fees) & the amount to be paid to the broker.
They say: “You should discuss with your broker how to structure the interest rate, margin and the amount of fees and charges in the way that BEST suits YOUR particular circumstances. ANY QUESTIONS you may have concerning broker compensation and other fees and cots during the loan process can be answered by YOUR BROKER.”
They say with regard to prepayment penalties: IT IS YOUR CHOICE whether or not you wish to have a prepayment penalty. In order to make the right choice for your circumstances, it is important to review WITH YOUR BROKER how the savings associated with prepayment penalty would be applied to your loan transaction.”
None of the above can be done when a broker is a lying, greedy sack of $h!t.
Countrywide ends this beautifully:
“American Dreams Can Come True With the RIGHT Home Loan.
“That’s why borrowers today look to someone who UNDERSTANDS home financing and can GUIDE borrowers through the process STEP BY STEP; an EXPERT who KNOWS your area, the homes, and the available lenders; someone who TAKES PRIDE IN TURNING DREAMS INTO REALITY.”
Funny how I didn’t get this book until AFTER I closed. What a crock!
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