Comments on: CW is Scummy and So are the Brokers Who Peddled This Crap.

By: Commercial Realtor

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By: JacMac

JacMac — Thu, 22 Nov 2007 09:25:35 +0000

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!

By: JacMac

JacMac — Thu, 22 Nov 2007 05:54:48 +0000

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.

By: Dave

Dave — Thu, 22 Nov 2007 00:07:43 +0000

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.

By: JacMac

JacMac — Wed, 21 Nov 2007 17:58:43 +0000

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.

By: John Doe

John Doe — Wed, 21 Nov 2007 10:59:01 +0000

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…….?

By: Moe

Moe — Wed, 21 Nov 2007 09:45:48 +0000

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.

By: Anna

Anna — Wed, 21 Nov 2007 07:02:43 +0000

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.

By: Matthew

Matthew — Tue, 20 Nov 2007 23:53:33 +0000

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.