Are Mortgage Brokers Ancient History in 08?

Honestly, this is very extreme . Where do you get your data from. This is a very biased article with very little factual data to support your opinion.

Kate – it’s an editorial opinion. very little factual data? are you living in a bubble where you do not get out much?

Joe – I knew I would get some brokers saying biz is up, but I already commented on that in this post. FYI – Just have a back up plan sir. Never hurts, even when you are overly optimistic.

Nice insight. Thanks for a great article!

Now you’ve got to be kidding me. Let me guess you work retail? The reason brokers will be around is because we’re smarter than you. We realize that the costs you’ll endure will always make us more profitable obviously depending on scale. I can work from my home with a $800 laptop, $350 all in one, and a couple of online accounts (credit,point,leads). Make $6000/mo selling 2 loans to some small start up regional bank only charging my borrower 1.5% ysp beat your rate by .5 and your costs by .5% or more(average LA 250K). You and all the other retail/bank people just don’t understand that we were 75% of the business coming in up until recently, you can’t believe how many of us kept in touch with our old clients. Is it going to be tougher to find 2 clients a month YES will I still play 4-5 rounds of golf a week YES…Good luck with your PREDICTIONS career, your going to need it.

Mortgage brokers are taking the biggest beating in the shakeout, but will re-emerge. The model just makes better sense for the CONSUMER to go to a broker, rather than to trudge from bank to bank shopping for the right product. And yes, from the CMO managers to banks, the brokers, and the borrowers all are guilty of greedy exhuberance.

OK in that scenario I guess the banks don’t want to make money off of us little guys anymore huh? Filling the chest with loans for the servicing portfolio’s. Getting their small margin on all of the loans they touch before they sell them off. To WHO? I suppose your going to ask. Don’t know maybe the same people the banks sell too. Investors aren’t stupid they want and need us because they surely don’t want all the power to be in the banks..BECAUSE THEY LIKE MONEY TOO YOU MORON.

Sorry Ann I meant Aaron. My bag.

It’s a shame Aaron has no conception how secondary works. And Comicpro’s assertion that “Who knows their own property better than the person that is selling it?” makes me laugh.
However, I’m writing to ask you to tell me more about your theory that non-profits now be the conduit for borrowers and lenders to keep the greed out of the equation.
Thanks for a grimly accurate article.

Robert Brett Curtiss,
I am only assuming you are somehow involved in the industry. I give people the benefit of the doubt when it comes to the ability to learn things on your own. I have a great persistence in seeing things for what they are and not what people make them out to be hence I learned to sell my own properties. So I am going to go on a limb and say a vast majority can sell their own property given correct advice and a good RE attorney. By the way I am a professional comic so your laughing is expected.

Hey Moe,
I’m curious about your theory that the conduit between borrower and lender might be the non-profit organization in the future.
Who would be the players and how would it work?
thanks

Its obvious you were not one of the people in the business who made money in the past. Take your own advise and get out of the business, do yourself another big favor and don’t become a columnist. There’s enough negativity in our industry now without help from “poor me” attitude, bs article.

Most of the Liar loans might have been done by Brokers but the next batch of loans that will be hitting the fan- the Pay Option ARMS- that are destined to take down the OC, LA, SD and Northern California were done by the kids in retail. Kids who had to slap those pre-payment penalties and push the 1% rates to make enough for their 30% split. That is where the Banks will need the Brokers with the experience to get those loans refinanced or finance those FHA transactions that will be sold in what used to be High cost areas.

Moe is dead on with his “opinion”. Don’t beleive it? Just wait 120 days!

If any of you have been paying attention, this has been a clear signal being sent over the past 4 months.

I’m sorry to say, but by the end of 2008 the mortgage brokerage segment of the industry will most likely be a memory.

Good luck to all….

Aaron, what you fail to understand is that you are not going to be able to sell those loans at 1.5% YSP and beat the banks retail pricing because you’re not going to have a place to sell that loan at all. Everone is looking for a scapegoat in all of this and guess who that scapegoat is going to be? You got it, it’s YOU. This has nothing to do with reason or logic, right or wrong, it’s just simply how this country works. Something goes wrong and someone gets blamed and the easiest and really the best target because of a definite history of abuse of the system is brokers. It’s time to face facts, who else is there that’s going to take the blame? Do you think the government is going to take the blame? Everyone knows the government was lax and not paying enough attention to what was going on, and they definitely are a good place to lay blame, but we all know that isn’t going to happen. Do you think the monoline lenders are going to take the blame? They’ve already shut their doors. Do you think the banks are going to take the blame? They have more lobbying power than the pharms industry. Do you think the secondary market is going to take the blame? It barely exists anymore, and the secondary market is mostly seen as the victims of this debaucle despite the fact that without their willingness to buy risky loans the subprime market would never have existed. So, I’m sorry to say, that leaves you. Believe me, I feel for you, I have a lot of friends who are brokers and I was a broker for years until early this year I saw which way the stink was blowing and got a bank job because I wanted to stay in the industry. In closing, good luck with your anger problem and your golf game, I hope you socked away some rainy day money because you’re going to need it.

Too many brokers where made bankers overnight with easy to attain lines of credit, now those bankers will be brokers again or move on to other careers it is just a way of the market correcting itself it will pick up again cause banks can’t handle the volume and most of them will need to consolidate or close in 2008/2009 due to lack of profitability it is sad if mortgage related experienced people can not find jobs due to the housing stigma they are very talented individuals this will be mistake and shameful for Hiring Managers, and remember what goes around comes around, every industry suffers at some point in time.

Moe, this is an excellent article, and not being a mortgage professional I still can see the writing on the wall — or maybe it’s because I am not a mortgage professional and I’m not blinded by my own desperate hope.

However, I do work in the legal industry and believe me, Nick is right on when he says that if there’s going to be a fall guy, and there will be — it won’t be the government or the banks.

Comicpro, I used to have real estate agents come by to show my apartments. They do absolutely nothing. They’d sometimes have the person come by without them and give them the address and then still collect their one months rent, some even asked for 12% of the yearly rental. When it comes to selling houses, it’s even worst.

I think that is why the industry attracted so many dishonest, shady people. Easy sells, easy money as long as a person has the gift of gab, that will always attract the scavengers.

Disclaimer: I am not talking about ALL mortgage brokers, loan officers and real estate agents, just the ones that were guilty as sin. You know who you are

Pointing to other industrys that are dishonest is a poor excuse.

The bottom line is when it comes to the huge loss of money for the rich, somebody is going down. In this case, I think Moe is right, it just might be a whole industry.

Funny, I was watching A Christmas Carol over the holidays and spent some time thinking about the character Mr. Scrooge. Soooo many centuries have gone by, and the money lenders are still considered and regarded as the bad guys.

As a matter of fact, even in biblical times they had bad reps.

I guess it is true, the LOVE of money IS the root of ALL evil!

What happened aftert the S&L Crisis of the early 90’s…than the fallout of the 125’s in the late 90’s and now the subprime Crisis of the mid 2000’s. It is all part of the cycle going up and coming down hard. After the smoke clears and the industry as a whole, banks/lenders/brokers have a chance to put thier thinking caps on, if they have not already started, they will come up with new programs to do one thing. Fund loans. yeah it will be tougher and many of those landscapers may not qualify for loans, but the business is going nowhere brokers included. There are plenty of honest brokers still helping people in this mess of a time in the industry.

One question for all the people who think the banks are perfect. Who came up with those creative programs and paid Commission to thier AE’s to push them to all the brokers and funded those loans. yeah plenty of brokers cheated everyone by misstating income or doing flat our fraud, but if the lenders did not come up with SISA, NINA, NO DOC and all those programs they would not have been there for the brokers to sell. Think about the Professionls selling Neg Ams… Downey Savings, WAMU, World Savings, they crafted those loans and built in the PPP and everything else. Brokers may end up taking the blame but the problem was industrywide. Greenspan made a statement that he could never have really forseen the true impact of the subprime market…BS in CAPS that old man is very smart and the Bush Administration needed some part of the ecomomy to flourish to help fund thier OIL war. Things are much bigger than brokers doing LIAR loans.

Definitely an interesting article. I’ve been in the industry since the early 90’s and have worked as a loan officer, middle manager, and executive over the years from small companies to big banks, from retail and currently in wholesale and as much as I hate to say it, or even admit, but things will get worse before they get better. Am I concerned for the future, very much so. Am I thankful that I can still work in an industry that I love and still pay the bills, definitely yes, but I know so many more that are unemployed and suffering because of unethical practices and no morals. Could I have made more money doing fraud, like so many others did, yes, but at the cost of my conscious, no. I’m glad to see all the fraud cases being pursued and I hope all of those who hurt so many, including all of us who did it the “right” way, go to jail or at the very least, get what’s coming to them. Life has a way of balancing everything out. So I hope you enjoyed it while it lasted.

For those of you that made money and started living the “champagne” lifestyle, lesson learned: save money! As for me, I paid off most of my bills. Yes I have a BMW, and yes I have a nice house in the hills, but that’s because anyone who knows how this industry works and understands it, planned for this “correction.” None of us expected it to be this bad, but you’d have to be foolish to think it was going to last forever. So for all you people that got rich quick with no clue as to how you did it, and now don’t know what to do, sorry, maybe you should’ve learned the business before you started destroying peoples lives for the sake of a commission check. I don’t feel sorry for you. I spent years, 7 to be exact, as a loan officer learning my trade, before I got into management, and to this day, I deal with brokers who have no clue as to what they’re doing. Those brokers will be extinct and soon. Brokers who know what they’re doing and can change with the market, and have ethics, will survive.

For all the good guys out there, I wish you luck and hope you find something soon, or I hope you survive this mess to come out stronger in the end, and when this market does turn, only “true” professionals will be around to reap the rewards, whether they are brokers, bankers, or corporate big boys. Those who know how to survive, will! Those who were here for easy money, see ya, good bye! Go back to selling cars or whatever it is you did before you spoiled an industry that so many depend on.

Happy New Year to everyone. I hope the new year brings you all peace, prosperity and happiness, god knows, we could all use it!

Hilarious… Yes, there have been loans that brokers have done that have gone bad. There are also just as many that were done in the retail arms of Countrywide, Wamu, Chase, Bankofamerica, and my super favorite Ameriquest. While pointing your finger of fraud at brokers, please feel free to point them at these retail outlets as well. Ask any of the loan officers at these “shops” how to get a loan by an underwriter and you will get a huge amount of fraud ideas you never even thought existed. And it still is going on at some of these places. In 2005 the State of Illinois required all of its loan officers to pass a competency test and get licensed. We lost about a third of the loan officers in the state. Funny thing though. The loan officers who didnt pass a basic skills test went to work for the above companies that did not need to be licensed.
So the banks pretty much picked up all the sh*t loan officers and paid them a salary to write fraud loans with no knowledge of what the hell they were doing.

Yes, the banks were there before, but they still dont know sh*t about originating loans. That’s a broker skill.

Wholesale represents over 60% of total production. Subprime represented less than 20% of total production during the past few years. There are plenty of direct lenders with zero or a very limited retail footprint. Are you suggesting that all these lenders will go out of business in 08? TBW, Flagstar, Provident, …?

Vegas..
It was good that you back peddled a bit in the middle of your statement there. Broad generalizations are never a good stance to take. I do agree that there are idiot brokers out there, but uneducated… To be a broker you have to pass the test, granted it is not much more that study by memorization but the idiot brokers you are talking about probably worked for the Broker and did not actually have a license. And if all the brokers you worked with thought that 100% stated was never going away then you chose the wrong brokers to work with, or you were just trying to make money like they were from the begginning.
YSP should be there to help get the borrower a lower rate but it really was for brokers to make more on the back. But banks do price in a spread when they list thier rates, do you think they are giving brokers the rate they are getting from secondary, no they are making thier money too. The Good brokers out there never tried to hit home runs on thier borrowers if they were make a ysp and charging a point at the same time. They tried to make 1-1.5% total on the front and back get a good rate for thier client, call them back and keep in touch with them after the loan funded. Saying that all brokers are crooks and thieves is a harsh statement. There are plenty of AE’s who killed it because they had puffy lips fake tits and short dresses and told you to call thier Account manager when the question got to technical. If a Licensed broker did not know how to read a rate sheet, price a deal, structure a loan that was funded before it got submitted to the lender than they are in idiot. But genarlizing is just being ignorant. And coming from and AE who was not required to pass any tests to do his job is unfair.

Don must be a lawyer…I mean crook.

The banks were going in this direction for many years. The only reason that the brokers have even survived this long is that we have the local connections to people (realtors, accountants, planners etc.) We are the people that drag in customers off the street to do business. Banks wait for customers to walk into their doors brokers go to the customers.
In the last few years the banks have become more equipped to take back the relationship development aspect by creating a accessible conduit through the internet to expand the banks footprint. This was very apparent a couple of years ago. Even as production was falling the rush to get internet appearance doubled. Account execs were even eliminated at some companies, MILA for example, as useless tools (and they were). I told my account execs that this would be the future for originating loans. Why do you think there has been such a push for a paperless process? It’s not about the trees…

In general the last 15 years i have had as a broker have been awesome. even today I still have the network to get a nice volume of loans closed. I always have job offers available to me. I do not have any idea why someone would not hire a loan officer for a different position in another industry.

yes they sure do Dean…And they still get better deals than from certain banks…and sometimes they dont…but not by much…unless the broker is an idiot looking to hit a homerun than he is also out of the business now.

This article is dead on and there are actually 218 companies out of business as 12/17/08. It will get worse until they loosen up the cash flow. Wall Street and the Govt to blame. They knew what was going to happen and let it happen. So the banks won this round by trying to rid all the of mortgage companies to the wayside. I have been in busy for awhile and it will come back slow. The regulation will make worse for the homebuyer. But the idiot politicians can’t see 2 feet in front of them. The Fed are a bunch of losers since they helped create mess and ruined the dollar. The writer is dead on. That is why I started another company so I don’t get to screwed.

Banks make me sick! They act like they are so white and pure like the driven snow. Well I have a news flash for you out there in ferryland! In the last two weeks I have come across two hud-1 from previous loans closed by good old Countrywide retail and when I looked at the origination charged to the client they were both almost 4%! And while I’m on the subject of purity have you seen latley what banks charge the working class smucks for credit card intrest? They are as crooked as they come but they do it with a smile and a suit! They pay there help next to nothing! What everyone at the banks retail level doesn’t pay attention to is the amount of money they sell the loan on the secondary market, because they are not privey to that!It’s about relationships period! Banks do not care about clients and they sure don’t care about employees! Have you seen what some of the exiting CEO’s have taken with them as they left the big banks? This all cost the consumer right?

What exactly was the broker supposed to do? Wall street says “i want to buy loans with a 620 score 100%ltv Stated Income Investment properties” The lenders say “cool, I can commit to 1 billion a month of this product. The account executive tells his 50 broker accounts ” hey, we have a new silly ass program to sell your clients” The real estate agents ask ” Hey broker, do you have a loan with a 620 score Stated Income Investment properties with no money down?” (they don’t know what ltv means). The brokers put the deals together, the bank underwrites the deal, everyone gets paid, and then someone figures out that the housing prices had a ceiling. The buyers, most of them on their first investment property, had no idea how to get a renter in the property. Now the property is vacant and the price is going down. This whole process could have been avoided if the top of the food chain never offered this to the bottom of the food chain. You give a broker something to catch fish with, and we go fishing.

Bank of America has left the wholesale channel before and re entered when they felt the climate was better. Just because they or any other bank ceases wholesale does not mean it is forever.

I say, dont worry so much about material things, enjoy life you only get one, smile every day, treat others well and before you know it this will all be over.

MAKAI…you are right on with everything you’ve stated. Everything.

It’s obvious that the Lenders on here are gonna protect the Lenders, the Brokers are gonna protect the Brokers, and the Lawyers are gonna protect the Lawyers. Everybody wants to bad-mouth eachother and make themselves look good, but, like Makai mentioned, there are very good respectable PROFESSIONAL (in every sense of the word) Brokers and loan officers out there.

The ULTIMATE perpretrator in all of this mortgage meltdown is (drumroll please…)….the people/investors who allowed these programs to exist (SISA, NINA, Option Arms, PPP, 100%, etc.). BOTTOM LINE.

If these programs had never existed none of us would be talking about this and no one would be having to turn in their BMW’s back to the dealer.

Now regarding the people who went to work at Countrywide, or any other retailer during 2002-2006, YOU MISSED OUT ON THE GOLD RUSH! Us brokers made double what you made doing the same amount of work or less. Don’t blame brokers for this. Blame yourselves.

But again, whoever invented these programs and allowed them to exist are the cause of this Mortgage Meltdown. Period.

Jim H, you’re right on with what you said, at least from my perspective. The mortgage company I’m with now is funding more each month, although be it mostly Conforming, but nevertheless, we’re still funding loans, profitably. The Real Estate Industry isn’t going anywhere and those of us who know how to ride these waves will survive.

In regards to John town, just because you have a Triple Decker Chocolate Fudge Cake doesn’t mean you eat the whole cake. Loan products are designed for certain types of borrowers and just because you have a product you can slam a borrower into, it doesn’t mean it’s the right product for your borrower. It’s called ethics. It’s called educating your borrower, and making sure they know what they’re getting into. It’s called “customer service.” A novel idea I know for many who came into the mortgage industry in the last 5-7 years. I’ve been doing counseling for a non-profit company instructing borrowers, who were never told what kind of loan they got into by their loan officer or broker, what their options are and educating them on the industry and it’s the loan officers job to make sure the product they sell is what the borrower can afford and understands. Option Arms were around long before the refi boom, but we sold them to borrowers who knew how to manage them, not to make 3 points on the back and give any jo schmo keys to a house he couldn’t afford.

In regards to the fraud issue, banks, brokers, mortgage bankers, guilty, guilty, guilty!

I believe in capitalism and all of us having the ability to make as much money as we can, as long as it’s done honestly, ethically, and doesn’t hurt anyone. It’s called responsible lending. This mortgage mess is no one’s fault and everyone’s fault. It’s years of bad practices, greed, and no regulation and monitoring that’s caused this mess. It is what it is………….

I am a mortgage banker in NJ. My office is 2 floors above B of A. Almost everyday I would check the posted rates at B of A. I would say that 99% of the time I could find a better deal for my client and still make 1.5YSP. As a matter of fact I could close the loan at B of A wholesale and beat B of A retail by a quarter point. Here is an idea, have every loan officer post a bond and if they commit fraud/lie they should lose their bond, pay a big fine and never be able to write a loan again!!!!!! Countrywide was and still is the biggest fraud in our industry. I have made a great living refinancing their pay-option arm to clients who should have never been placed in that type of loan!!!! instead of a 30 yr fixed motgages, only to be sold a piece of crap loan and Countrywide reps getting paid a ton. I am here to stay!!!! I have not been in a realtors office in over 8 years, all of my clients come from CPA’S, Financial planners , attorneys who trust that I will take great care of there clients!!!!!!! My clients are my best advertisment!!!!!! Repeat business!!!!!!! Sure I could have made more money, but I can go to sleep ay night knowing I did the right thing and that I will have clients knocking at my door for years to come because I am honest!!!!! Honesty has paid off for me and I am glad that most of the crap brokers will be gone!!! I will survive and make more money in the long run!!!

This article is so dead on. Former co-workers and I have been saying this for a long time and I am glad someone finally wrote the article. Writing “mortgage” on your resume is like writing curse words and that’s for job-seekers with college degrees! A recruiter told one of my ex-coworkers to take her mortgage job off of her resume! Take years of hard work off of her resume like it had never happened. She’d be better off saying she was a stay-at-home mom for the last 5 yrs.

I’ve worked with hundreds of brokers in Los Angeles and most of them were not crooks. People wanted these loans regardless of benefit. They didn’t care if the loan made absolutely no sense at all. They didn’t care if they had to go to the slimiest broker in the community–as long as their loan closed. And if one broker/lender refused to fund the deal, another one would have it doc’d and funded by the end of the week.

The reason we are in this mess is because the competition always found a way to show “willful blindness” to unethical (sometimes fraudulent) practices. The reason all of these homebuyers are upset is because they thought they would have more equity by now and they would do another refi. Unfortunately, many brokers and homebuyers didn’t know that lenders would change their guidelines and they would no longer qualify for their own homes anymore. No one thought it would
get this bad. If you say you did, you are either lying or psychic.

gee moe if your such a guru why cant you afford to move out of corona.
or is it you like the smell of horse manure when it rains?

Someone call me when everyone stops pretending that they were too stupid to think for themselves. I can’t even tell you how many times homebuyers have committed the fraud themselves. I worked for a Lender and I know the Brokers aren’t to blame here. And since, I didn’t write the guidelines, I am not either. We all played by the rules. All of us. I refuse to believe ALL of the homebuyers just aimlessly went by what BROKERS had to say. Come ON!

When others feel the end is near, the few take advantage of the moment. I am proud to be a mortgage banker!!!!! I can walk on any street in my town and hold my head up high. You know why???? I am honest, I always try and do what is best for my clients and I feel I am rewarded with refferals. A funny thing happens when you do the right thing, you get more business from happy clients.So to all who think the end is near for brokers , I say good bye!!!!!! I am proud of the fact that I do not have any loans that have defaulted…..because when I receive a loan that I know damm well is bullshit or the client cannot afford, I tell them to go away!!!!!! You will thank me in the future. Some took my advice and some wish they had!!!

Make LO pass a real test, get a bond, 24 hours of CE credits every 2 years and be held accountable for there actions!!!!! Retail included!!!!! The bullshit would stop!!!! If we are to be respected, we have to raise the standard/stakes of the people who orginate the loans.

I want B of A, Wamu, Countrywide and other lenders around!!!! They make me look good!!!!! I have better rates, service and put my clients in the proper loan program. I will be in the business for next 10-20 years, where as the Loan officer at the retail shops will be lucky to last a year!!!

Paul if the reputation of your industry is SO GREAT..why are most of you being Blacklisted when it come to finding new employment?

Most people surveyed today would NOT go to a mortgage broker because of the bad press…

So, really, how many loans are you actually closing today vs. 1 year ago?(Please do us a favor and not bs us on here instead look in the mirror when you ask the question? You need the answer more than we do.) And how many do you expect to close in 08? Not dead files that can’t go anywhere because the product isn’t available, the client has a bad score or they are underwater…business isn’t business unless it is a closed file.

Great financial people are invaluable at any price. What this article fails to note is that the liquidity crunch is being caused precisely because there is literally no mechanical difference in the way banks and brokers originate. Banks no longer fund there own paper: period. With negative savings rates where do you think the money would come from? Not from depositors: that is obvious. We are all beholden to the FCBs and giant retirement funds. A broker, at least, is not captive to a static funding model and can migrate rapidly. This reason alone, AGILITY, makes the survival of the broker much more likely than the survival of behemoth banks who have decked the halls with hanging corpses. The independent brokers are an army for hire and as logn as one bank hires them and treats them fairly they will slay the opposition. What I am seeing is that the indescriminate approval of brokers has been tightened quite a bit by the banks who will emerge as the next giants.

I am somewhat unique in that I am a mortgage originator who caters almost entirely to bank employees: loan officers, commercial bankers, actuaries and bank executives. Why do they use me if they can deliver a superior product to themselves? Do you think actuaries would settle for a subpar or inferior deal? If you think so then you don’t know what an actuary is. They use me because I offer superior pricing, service and product: period.

This misaimed article would make you assume its vast wisdom by pointing to the way in which securities brokers have been consumed and rendered moot by the large investment houses. Of course, that never happened either.

Matt and ANN yes it does hold true, look it up on their web site!!!

You prove you know nothing!!! Bank of America …30 year fixed 450k purchase 20% down,full doc,680 credit. 6.250% 30yr fixed 1,127 points! Everbank wholesale same deal 6.250% ..0 points 1.555ysp to broker!!! 30 day lock and yes I can close that loan in 10 days!!!Look it up!!! Which is better for your client???????? To pay 1.127% points or 0 point deal!

Our rep. sucks that is my point!!!!! Most of the brokers deserver to be blasted. I am no where near being a boiler room operation!!! Like I said…put up a bond, pass areal test, CE credits every 2 years and 1 strike and your gone!!!!!

Thats right most people would not go to broker because of bad press. Only people who took the time to educated themselves for the biggest purchase in thier life would seek out a broker who had their best interest in mind and not their wallets!!!! Smart people would ask there CPA, Attorney or CFP for a refferal!!!!!! Not some lame ass who would give them a option arm with a prepayment !!

Ann

I do not have many if at all dead files!!! I know right off the bat if I can close the loan or if I should close this loan!!!!! If a client comes in with a 600 Fico or lower, I ask my self if this person SHOULD be buying a home or enter into this transaction.I do not take pride in banging the crap of some financial challenged clients… 3-4 points. If you like to do shit loans you will only receive shit loans!!! If you surround yourself with quality people…..honest CPA’S CFP’S and attorney’s you will do very well even in tough times!!

LJ
I did consult a broker and a realtor. The realtor said, “Now is a good time to sell.” lol. The broker gave me his card and said if I found a property I liked – give him a call. I think the year before he gave up his job as a car salesman to becme a mortgage broker. In fact, I heard the mortgage broker bought several properties between 2004 and 2006, planned on flipping them but is now heading into bankruptcy! As for advice about selling too soon? I bought that property in 1975 for $100,000 and sold it for $400,000 so I have no complaints. Unlike most mortgage brokers, I’m not greedy. Want to know when prices will bottom? Easy. When 100x the average monthly rents in the area are reached. I have been renting since I sold. My rent is $1,800. Rents have risen slightly and are around $2,000 but going no higher. Why. One word. Affordability. People making $25,000 a year cannot afford expensive rents. A fact the mortgage brokers seemed to have left out when talking to the people they sucker punched. However, at the peak, the values for this sfh reached $725,000. They are now at $575,000 and sitting on the market. 100x the average rent means the true (and eventual) value of this house will settle somewhere around $250,000. Maybe $300,000. It’s going to happen and when it does I will go and see my bank manager. NOT a mortgage broker. My 2012 prediction is based on that as more and more people abandon property, inflation bites, stagnation take hold, wages are stuck and unemployment increases. It’s 100% baked into the cake. Want another indicator? Watch the charts of BZH and RYL and DH Horton on a monthly chart. When they start to move on the monthly, wait 3 months and if they are actually moving up as opposed to being in a dead cat bounce, it’s time to look. BUT, this is such a gigantic mess, property prices will take years to increase substantially once the bottom is reached.

Competition is a good thing!! Just think what rates and fee’s would be if there were only a hand full banks offering mortgages. Most certianly they would go up!!!!

Verdy, verdy interesting!!! Remember Schultz!!
I am the person quoted in the article above the 71 responses.
1) If the “big guys” were so smart about investing – Wall Street – then why are they writing down billions and billions of dollars? Hmmmmmm!!
2) I got out of the stock market and into cash on July 5, 07. and I am still in cash. I was an investment broker in the 80’s, have an MBA with honors and have been investing in the equities markets since I was 16. (My father started it all!)
3) Investors know there is a lot of money to be made in this industry. They will be back and the investors that are still here will stay here for the same reason. Get serious. People will continue to purchase real estate. People will need mortgages to purchase the real estate. A very god marketing system is in place to facilitate the process. The “money guys” know this. The mortgage banking and the mortgage broker industries will not be dismantled. Get on the other side of the table. If you were/are the “money guy”, what would you do?
4) Mortgage brokers will always out do the banks. As was mentioned earlier, they got the guts to go get the business. They don’t just sit there and wait for it. Oh, gee, give me a nice office and a, duh, salary, and pretend I know it all. Not!!!!
5) A past customer (really) came in my office late last week. He needs to refi his investment property, cash out, no escrows, pretty good credit. He decided to have me do his loan. He got a quote from COUNTRYWIDE, duh, at 6.5%. Oh, let’s see $7,000 in closing costs. For those bankers who don’t know the difference, this doesn’t include ESCROWS. I am charging him 1 point plus normal (real!!!) closing costs. Total cost to him – way less than 1/2 of COUNTRYWIDE’S quote. Oh, he knows I TELL THE TRUTH AND SHOWED HIM THE GFE! For those bankers who don’t know what that is, it is a Good Faith Estimate. Hmmm!!
6) Doing good, honest business pays. And, according to the numbers mentioned above, 60% of the mortgage community will still be here.
7) My office had a great November and December. Best in the past five years! (Gee, I keep records!) We anticipate January to be really good. Oh, I am FHA approved and have been for many years. Guess what we have coming. If ya think you’re gonna get approved FHA and close a lot of FHA loans, WRONG!! I promise I won’t tell those who don’t know the secret. (Do ya know what FHA loan doesn’t have mip?) I closed a loan for a bank person. This person has been at a local bank for 5 years now, 4 years when I helped her with her FHA loan. The mortgage person at that same local bank told her she could not get an FHA loan because SHE MADE TOO MUCH MONEY!!!!!!!!! Hmmmmmm1!!
Point made. They really don’t know what they’re doin!!! How in H… can a mortgage person tell a same bank employee she can not get an FHA loan because she makes too much money??????????????????? And this is my competition???????????!!!!!!!!!!!!!!!
9) Last week 8 people were sentenced after a 4 year FBI investigation. This is in a nearby relatively large town. Believe me, they’re goin after the “bad guys” and they’re getin ‘em.
(Enjoy the early English!)
10) As John Wayne would say “Well, Pilgrim”!!
11) There is a big market developing out there. All ya good guys, hang in there. This country needs you. The bad guys are gettin out ’cause there ain’t big bucks in it any more. That’s ok. There is a good, honest living in it and that’s why I’m a stayin’. If it ends, so be it.
12) I told my kids as they were growin’ up, “ya gotta stick together-help each other”. It’s like the pioneers headin’ West. When the Injuns were comin’ over the ridge, “Farm a circle the wagons”. So what is different today? Nothing! So all you positive, creative, energetic, hard workin’ loan officers, stick together. The fight has just begun. Our ancestors got through the Great Depression and we will get thru this. Remember the best way out of trouble is through it. Hmmmmm!!! (A former President of the United States went to England, smoked pot and got out of the draft!!!) Hmmmmmmmm!!!! Guess who’s runnin’ for President now!!!!!!!! By the way, I served in the UNITED STATES AIR FORCE for 4 years! And I was stationed in Pakistan!!!!! Hmmmmmmmm!!!
13) Summary – I hope this gets the blood runnin’. I hope this gives hope to a bunch of the “good guys”. I hope this pisses off a bunch of the “other guys”.

Broker or Banker, which is worse? Neither. Fraud can take place any where, at any time, by Broker or Banker. In Washington, I was a Broker for 9 years, but switched to a Bank job to weather the storm. As a WA Broker, you have to get a Loan Originator license. Working for a Bank, no license required. I think to make it fair, all Loan Officers need to be Federally Licensed and Bonded. Finger printed, thorough back ground check, the whole nine yards. Also, 20-30 hours/year of Continuing Ed should be required to originate any type of mortgage. Rebate/Overage should be limited to .25 – .50% to the L.O., the rest to the borrower.
To make additional income for an L.O., you get a “Residual Income” for a perfectly performing mortgage. This forces Loan Officers to orignate good, fair loans. When the loan pays well, the LO gets a bonus each year. Plus this would keep LO’s in touch with their clients to make sure the are paying on time, or if another sales opportunity is there due to changes for the borrower. This could be a win/win.

You brokers kill me. You make it sound like you are truly helping people. What a crock of crap. Would you help a dope addict obtain his dope at any cost? FBs and speculators all overstretched their true buying capacity. When you have people making 25k to 50k buying 500k and 600k homes you are not helping them. There is no subprime loan on earth that these people should qualify for. Just because it exists doesnt mean you throw your client to the sharks. Not just a few places were doing this almost every brokerage whore house was is on this.

No, I dont have sympathy for any brokers. Sure there were hard working honest people but if they were out buying themselves 600k houses and mercedes and not saving then they deserve what they are getting now. This isnt going to get any better for them in the next year, year after or the year after that. Look at telecom, many of the people making huge amounts of money no longer exist. There are some but the industry as a whole has changed nearly 8 years later and the people that are left are making less.

Mark:
You quit. You left the mortgage brokerage business!! And now you give instruction as to regulation!! What’s wrong with you? Mortgage brokers work on commission. And from your non-broker positon you hand down income/revenue restrictios!! Oh well!! Russia, here we come!!!!!

Carpenter:
So brokers make 10% commission? In talking with wholesale reps I hear 2-3% is max. Where in the h… are you gettin’ your info?

Joe, Really!!! Broker’s work on commission? How do you think LO’s at banks get paid? Maybe…..commission!!! In some other countries, LO’s get paid for the life of the loan. Not here. We want it all up front. Which is fine, when no one is complaining. No they are. So let’s get paid some other way. Like earning it.

mark you are an easy target. you are a broker working for a bank to wait out the storm. why not put your balls on the line like us diehards instead of hiding behind a bank?

Earn it?
LO’s at banks get a salary, not a commission. And we are talking about this country, not other countries.
I earn it. That may disappoint you. There is a lot of work to this business when ya don’t just sit behind a desk in a fancy office (which ya don’t pay for!!)
Clearly, you have no idea of the word risk!

Gill, I’m not stupid. Stupid is is trying to avoid the inevitable by staying on a sinking ship. Things are changing, so deal with it.

My question to all the brokers and bankers is how are you going to compete and originate loans when new regulations are squeezing your ability to compete and you can’t even fart without the feds hooking up a pollution control emissions to test the gas for your a$$. I say that in fun, but it’s true.

Joe, you are a class act as well as some of the other commentators such as Amy, Ann, Paul, Mark, CTAN, JacMac, Makai, Jim, Vegas, John and anyone I forgot. Thanks for comments from all sides of the fence.

There are many good people that are affected by this. Homeowners and industry professionals. A lot of people should be pushed and and never should have touched a deal in their lives.

I wish all the sharks and scammers a cold cell in a dark federal prison and I wish the good guys the best and hope you all do make it in 08 and years to come.

I feel if you do what is right by the client, you will make it.

Maybe this is just what the industry needed to weed out the sharks and firmly plant guys like Joe and the other good brokers and bankers to get back some much needed respect and dignity. It will take a lot of time and work and it can be done.

But, I feel you all have your work cut out for you and a lot of uncertain times ahead in 08 and 09. 08 will be the year of reckogning for this wounded industry.

Will it survive? Time will tell and if it does, it will never, ever be the same.

What happens if there is no wholesale channels? Rumors keep circulating that what lenders are left will shut down wholesale in early 2008.

What makes everyone think that more lenders will not follow suit? I think the writing is on the wall.

Joe, do you have a back up plan to your mortgage biz in 2008? or is it all about FHA?

Ok. I a few more minutes. Yes, I have a back up plan. It’s not just FHA. We have been doing FHA, VA and Conventional loans all along. We will continue to do these loans. We have a large data base of customers who continually call us for mortgages and refer people to us for mortgages. So I see this continuing.
2) We are getting some very good leads from a very good lead source. Many of these people need a mortgage and the banks will not give them a mortgage. There is a very big arena of people here who need the mortgage banking and mortgage brokerage communities to help them.
3) I own a RE/MAX real estate franchise. We are in a very good vortex of growth and a stable market. Values here are holding relatively well. We are not experiencing price decline such as in Florida, the Southwest and California. Yes, volume has slowed down, but we are getting the business. We will benefit with more traffic due to a new large grocery store and large chain drug store currently under construction and opening for business in April, 08.
4) We have been given the opportunity to have our own radio show which in our current format has been responsive and profitable due to tracking.
5) We have augmented the mortgage and real estate business with another business we believe is a very large market and will help people.
6) If all else fails I am planting seeds to branch my company with a large bank or banker. I am the only mortgage broker in the entire county and have a 14 year credible history and a large clientele
7) I am exploring other avenues that relate to this business because I am a firm believer that people will be purchasing real estaste, refinancing real estate and will need mortgages to do so. I believe that people really want to be face to face with their mortgage professional. I have always done this and will continue to do this. I think there will be a pause in internet lending. With the eventual loss of 40% of the mortgage broker business I will become less commoditized, get more business and become more profitable. I will not run away. If it ends, it ends. I’ve been there before. So it is no threat to me.

Great conversing with everyone tonight. Gotta go. As Winni-the-poo says, TTFN

I agree JARIAH.I’ve been in survival mode the last 90 days and going forward I will be in life support.(In god’s hand) People enjoy your family and plan for the future.

CA Sucker- Oh sorry you said you did a refi…well…I really dont know why you paid all those fees. Good luck all the same.

My, my, this thread caught a fire. For all LOs: middleman DO NOT ADD 2 CENTs of value. Middleman’s function is to facilitate transaction and be paid from that transaction. Middleman are FRICTIONAL COSTS to overall economy, the lower those costs are there better overall economy is. Go read Warren Buffet’s annual report from few years ago where he observes that frictional costs (cost to facilitate transaction) are raising because those middleman are paid when transaction occurs, it doesn’t matter whether transaction makes sense or not middleman WILL FACILITATE transaction by lying, cheating, misrepresenting so he can get paid. Middleman has close to zero interest in making sure that transaction itself makes sense, he simply DOES NOT CARE. That’s the freaking reason middleman people need to be controlled. Otherwise they will transact us all away into 7th circle of hell.

As far as brokers going away: automation and technology WILL make story of disintermediation happen sooner than later. Sorry guys but you are going the way of horse carriages and travel agents. Given the level of intelligence required to price agency loan out (let me say threshold is very low) I’m pretty sure computer can do it much better and CHEAPER. Brokers will be left with 2% of mortgage originations: subprime and hard money share before this bubble.

Great Article!

Related Toons:

http://www.stockmania.com/index.php?showimage=116

http://www.stockmania.com/index.php?showimage=106

CTAN. . .
Sorry about the “hope you all starve” thing. I hope you people appreciate the anger out there. I paid about $19k in closing costs for a refi of 4.75% fixed for 5. I thought I’d done a reasonable amount of shopping around and understood the break-even point and all that. Because of a health problem I needed low payments until about 2010 or so when we had planned to retire and downsize. Now the house in CA is down about $150k with more to come. If it goes down more than 40% we’re upside down. I think one of the problems is the loans and the various costs are so complicated most people don’t understand what’s really going on. That was okay until the crash. Now, from what I’m hearing, the public perception of the real estate and mortgage industries is very negative for a lot of people. What’s really incomprehensible are the riches handed out on Wall Street and the compensation to the big boys in big business. But that’s another story. Bottom line: for years now a lot of wealth has been shifted from the bottom and middle up to the top and eventually that’s going to tear this country apart. Maybe it’s already started. Thanks for the sympathy.

Also, most ethical mortgage brokers kept their compensation to 1 to 1.25% (maybe more for low loan amounts). YSP was truly used to offset costs, fees to the benefit of the consumer. We share the commission with the broker of record: typically 50% to 70% splits. Less for more inexperienced loan officers. Out of that share we have to pay our own costs such as: education, marketing, life-health-E&O-workman’s comp etc. So, while we may have made good money with volume, we weren’t “gouging” people to increase our earnings. Prepayment penalties were not in play unless a borrower had bad credit or they took an Option ARM. Most ethical loan officers did not slap a pre-payment penalty on a loan to bump their commission.

Now Alan, can you please rail against Wall Street Investors, banks and lenders as well? Jariah you ROCK! Well said!

Alan: thank you for the reference. I was able to read the small comments re: Kenneth Harney’s article but was unable to link up to the original article. Surveys can be fraught with inequities: Who performed the survey; were the appraiser’s chosed “at random” from all areas of the county or were they chosen from declining markets and sub-prime transactions? Were all of the appraisals ordered by mortgage brokers or were there orders from both banks and brokers. I think I will perform my own survey of 15 appraiser’s from across the country chosen at random to see what kind of statistics I can come up with. I’ll keep you posted.

Also, I agree with you. Some companies have already opened up DU directly to the consumer. Cookie cutter loans are easy to do. But when you talk about taking away stated products so you have to go full doc and you have a multi-million dollar client who owns a huge conglomerate, fifty seven properties and has three feet worth of tax returns to review and analyze that takes a professional with years of experience.

Brokers really do provide competition to the banks. I cannot tell you how many loans I closed where the banks could not even come close to the rates and fees I provided to my clients. I do work in an A paper, jumbo area where most my clients were very sophisticated and internet savy. I lost very few loans to the banks and usually only to Wells Fargo. I have to tell you, I worked very hard for most of my income.

Your post re: Wall Street was very interesting. Yes, we will all have to wait and see what is left after the bleeding stops. I see a value in what I do as you can tell. I will survive, one way or another.

You guys kill me! Norwest mortgage bought Wells Fargo bank remember? Hmmm? They were a subprime lender who bought Wells Fargo bank! A wolf in sheep clothing! As far as calling your self a top producer working for a bank well ok…what ever. Let me ask all of you the so called “bankers” a question ok? Where do all the bank CEO’s live and what kind of cars do they drive hmmm? What about bonuses they recieve every year do the kick down to you for taking so good care of your customers? There was a master plan here by the banks and you guys cannot see it let me explain! When home values dropped and short term rates climbed 13 straight times because the Fed turned up the hot water too much there was too much inventory out there as Alan Greenspan stated in his article The Roots of the Mortgage Crisis dec 12, 2007. He sates in his writtings that it started back in the aftermath of the Cold War,when the economic ruin of the Soviet Bloc was exsposed with the fall of the Berlin Wall. As soon as inventory clears out and it already has started. Very large loses will, no doubt, be taken as a consequence of the crisis. But after a period of protraccted adjustments, the U.S. economy, and the world economy more generally, will be able to get back to business. So back to the banks master plan! Hey lets hang this on Brokers and deflect the politicians away from us ok? How do we do this? We stop doing business with brokers and it will look like we did not do anything wrong! Hey that’s a great idea! To finish our plan let’s throw lobby money at Washington and tell them how bad brokers are. They’ll go for it because they can take some blame away from them also! We are Geniusses are we not! Cool let’s do this and hey let’s get the media to bite too! Every one has a grandpa that has a saying I’m sure you remember your whole life long right? My grandpa came through the great deprestion, fought in World war one. He used to say for every guy jumping out of a building when times are bad there’s two on a trampoline coming up…! Makes sense to me.

Amen Doug

CA Sucker:

2010 is two years away. A lot can happen in that amount of time. Keep your chin up and hope for the best. There are a lot of people out there trying to help others that are in trouble due to the resets on sub-prime loans, exotic loan programs and decline in value. At the very least, they can go to their existing lender for loan modification. The lender would rather renegotiate the loan than go through the time, money and hassle of foreclosure proceedings. When the time comes and you need a good mortgage professional, ask questions, get referrals and check licensing/reputation. Make sure you get at least three quotes from three different reliable sources to be sure you are getting the best deal. You should be okay.

Great post and an interesting conversation between predators and real mortgage lenders. Thank heavens HUD stood its ground on the minimum bar for their mini-eagle.

BrokersAlly
I think in your predictions, you left a couple of things out. The most important one being the banks. They are even more avaricious than mortgage brokers and they spread their money around in political circles and, frankly, mortgage brokers are no match against banks wherte political influence is concerned. With this meltdown, banks will/have sensed a big opportunity to corner the mortgage industry for themselves. EVERYONE (except mortgage brokers) will be looking for heads to roll as this mess grows worse, and it will, and the prime suspects are going to be mortgage brokers. Also, to a lesser extent, realtors.

Watch out for the deluge of new regulations will will be introduced to beat mortgage brokers into the ground or even drive them out of business. Posting VERY big dollar bonds will be one. Background checks. Annual examinations, etc. In fact, mortgage brokers will try and buy off the politicians but because of the magnitude of this mess, even the most corrupt politician (and there are plenty of them these days) will not get involved on their behalf. Seeing as we are going to have the democrats running things for the next 4 years after 2008, with a majority in both houses, life will get very uncomfortable for mortgage brokers.

In the next 5 years, for good or bad and I have no interest in the banks or the brokers either way, the landscape for mortgage brokers will look very different from today.

It is amazing how many people just read the paper and believe everything printed. The mortgage companies and brokers are the evil of the Earth and they have collasped the American dream. But, maybe if you took a more educated looked at what has truly happened over the last couple of years you may soon understand that it may not be the mortgage companies to blame. The past 3 yrs have seen record foreclosures, and everyone points to ARMS (adjustable rate mortgages) and large commissions. Well over the last 10 years the percentages of ARMS sold was the same as the last 3 yr and the 3 building up to it. Why then has the market not fallen 10 yrs ago? The answer is simple, but rarly said. Higher energy cost and the taking advantage of the consumer by energy companies. Fact, most people who bought a $150,000 mortgages in the US on an ARM, the payment has gone up once the loan adjusted by $200 in payment. But the average energy cost for a home owner has gone up $425 between electricity and gas for the house and the car, not to mention goods sold that require freight. Goverment or congress never points that our, instead they drop it on the door step of the mortgage companies, it is an easy out. Lets not forget to also place blame on the many home buyers who decide they need more than they can afford. Year after year people want more and more to keep up with the Jones. My thought is that there should be tighter regulations on the amount of payment you should qualify for, and if that means buying a smaller house then that it was you have to do. There was and always will be some people doing fraud in the mortgage industry, just like there always has been, but that is no different then say bad writers who write ridicules articles based on no merit or facts, but as just a way to put there name out there for the sake of vanity.

There has been quite a turndown. The largest in history. The mortgage broker has been the fastest channel to the market for over 20 years. Things will tighten and eventually ease but not like it had been. This will be trying times for all. Not just the strong will survive only the strongest will survive.

Major generalities made here. But, truth be told, the 24 year old high school dropout with gift of gab and no scruples will thankfully be yanked from the business. Gone will be the 30 Mercedes and BMW and Porsches in the parking lot. I never understood how they got people to refinance their homes anyway. But, thats the subprime fiasco: It let otherwise incapable people make huge money for too long.

This happened in the stock broker business and, as mentioned, in the S & L thing before. Culling of the herd.

Its good.

Who here really, I mean, really thinks the brokers are at fault for the Trillions, yes Trillions of dollars that are being lost and the global economic crash this is going to cause when all is said and done? I for one would like to think that my little shop here in Michigan was powerful enough to create such a catastrophic mess. The fraud that everybody is talking about was being done by everybody in the industry. So if everybody is creating fraud, and fraud is the norm, then there can be no creation of fraud.
Someone mentioned that lenders have to repurchase a loan if there was fraud in the origination of the loan? Where is the lenders due diligence when it comes to approving the loan? Okay, they overlook some things to approve the loan, so they can get paid upon sale to secondary market. At that point, bundles of loans get securitized, and oops, we’ll just not disclose that there were 20% second tds attached to the same properties that all these investment grade 80% first td’s that all of these investors, foreign and domestic, will be investing in.

I could go on and on, but will just say that the greed is widespread, and nothing will change (even by eliminating brokers) unless the risk associated with mbs, cdo, and other security instruments has been properly and honestly assessed and rated, period, end of story.

Great article for doing exactly what it had intended, creating a lot of banter.

Mlmortgageguy, I had to address your flawed reasoning, which IMO is a recipe for evil.

You started out really well. Who is responsible for the fraud. EVeryone! You’re right. Everyone involved who fudged numbers, looked the other way, out and out lied and misrepresented — they know who they are, and SOME Mortgage Brokers played their part.

But then you go on to say this:

“The fraud that everybody is talking about was being done by everybody in the industry. So if everybody is creating fraud, and fraud is the norm, then there can be no creation of fraud.”

WHAT!!!!! All that is necessary for evil to triumph is for good men to do nothing ~ have you ever heard that little tid bit of knowledge?

When we start believing that evil is normal, and that to lie and cheat should be an accepted way of the world then WE ARE REALLY IN TROUBLE.

Yes, fraud exists in every corner, ever nuance of the capitalistic society of America but that doesn’t mean that it shouldn’t be rooted out and EVERYONE who partcipates can revert their behavior and instead become part of the solution.

I have to say here, as a homeowner and victim of fraud, it is EXACTLY THIS TYPE OF TALK (and also the ha, ha, ha, I made so much more money than all you other suckers) from Mortgage Brokers and industry professionals which has created the bad rep. that they have now, along side of the actions of some unscrupulous members of your ilk.

The, “oh this is the way of the world” and “it wasn’t me — it was the (fill in the blank — the bank, the homeowners, the builders et cet.) ” — it gives me, personally, an impression of a profession attracts those looking for ALL THE MONEY THEY CAN MAKE — and here is where it goes wrong — WITHOUT THE MORAL, LEGAL OR MENTAL ACCOUNTABILITY — and that’s something that WE ALL no matter our profession SHOULD HAVE.

There is nothing wrong with making money. Let’s all make as much as we can. But there is something wrong with hurting people and ruining the lives of families and children. There is something very wrong with fraud.

My name is Frank and I am in idiot broker who is now burning seniors by selling reverse mortgages, now that pay options have dried up.

Please visit my website at http://www.msogallc.com or email me at frankthrift@msogallc.com. I only charge 4.5 points and an additional $5k paid outside of escrow. Now accepting applications.

the reason we are having this credit crunch is pure greed from wall street. they were the drug makers and brokers were the pharmasict. the only diffrence is that wall street will get away with it and brokers will take the heat.

jacmac,
it wasn’t my intention to suggest that no fraud was created. everybody knows it was, and on all levels. my point is, that it is ridiculous to suggest that brokers are the only culprits. many players of the game turned a blind eye, in particular, those that were most responsible for the securitization and sale of the securities. A lot of people made a lot of money in the business. But there are some that made a ton more than the brokers…those on wall street to be exact. follow the money and you’ll see where the greed really came into play…
without knowing your situation and how you were a victim of fraud, there is still some responsibility of the client to do your diligence and have everything reviewed before your loan funds. if there are any questions you don’t get answered, well then….gotta look in the mirror…

After 12 years as a mortgage broker, I got really worried last fall. Started thinking about my options and went to work as a loan originator for a big, well-thought of bank that has a nice corporate culture and a big share of the mortgage market. Definitely a high-end player with lots of volume.

As a mortgage broker, I charged a point on my loans. I usually advised the borrower to pay a point rather than go for the higher interest rate they’d pay if I took a YSP. Yeah, I know, a lot of brokers took the point AND the YSP. But I just took my point, did the loan, and called it a day. I often advised clients to take a one year pre-pay unless they had a good reason to think they might need to sell or refi in the next 12 months, because then either ther rate or the margin would be lower.

The borrower and I worked out what program would work best for his situation, I shopped around for the best deal on that program, and made my one point. Do you get what I’m saying? Didn’t gouge, didn’t churn, didn’t put people into 3 year pre-pays on a 2 year fixed, always tried to give clients my best advice.

In November I started at Big Bank. First thing I got was as a sheet explaining the commission structure. They do things a little differently. You can sell whatever you want, but you get paid the most on the deals that net the bank the most profit. In November, as the market was MELTING DOWN, they were still paying the highest commissions on option ARMS and HELOCS.

So let’s say that whatever the program, the borrower pays a point. But if you put him in a 5 year fixed, you get .375%. If you put him in an option ARM, you get .625%. IF you call everybody you know and get them to open a nice line of credit, you get .75%.

I’m still able to look at wholesale ratesheets, and you can almost ALWAYS find a better rate for the client wholesale. The bank has a $350 non-refundable origination fee. And when they say non-refundable, they mean it. You don’t get your money back if they decline the loan, discontinue the program, the property doesn’t appraise, whatever. I assume if the borrower signs docs and then rescinds, he could sue to get it back, but you get the picture.

So you tell me — are the banks the good guys? In case you’re wondering, yes I’m going back to being a broker. These are tough times, but I think I’ll survive.

Do all of you really think that fraud was done just by brokers????
I worked in a CHL branch, an Option one branch and a BOA branch all as retail and there was more fraud in those places then in any brokerage I have ever seen. Just becuase they work for the servicer dosen’t mean they were not greedy too.

and BTW all of those companies priced the loans at 7% profit before they paid out anything on the mark up to the LO.

It saddens me that now a mortgage professional (Broker or Banker) has about the same credibility as a used car salesman. I guess as an industry we’ve earned that reputation. We sold too many of the wrong types of loans to the wrong types of people. There were too many crooks out looking out for their own paychecks, and not their customers best interests. Its really a shame because mortgage transactions are usually the biggest financial transaction the average American makes. Mistakes in this industry can really damage peoples lives. I guess the broker charging 4+ points and YSPs didn’t care about anything but their own paycheck. Didn’t the phrase caveat emptor originate with real estate transactions? I guess not much has really changed in the past 2000 years…

I really hope that the non-profits do take over the sub-prime business. It removes the greed component of the equation, and it creates a permanent housing solution for the low/moderate income borrower. I’ve seen impressive things done here in Southern CA, with the state bond program, layered with affordable seconds.

As far as brokers disappearing. I doubt it. I also doubt that retail is going anywhere. I work at a large bank (in the top 10 by size in the nation). We never really did take off during the boom times, but now things are really picking up. Admittedly we are mostly doing conforming loans, and the purchases seem to all be bank owned (not ours..thankfully). Business is doing great! Oh and by the way.. our bank Loan officers are paid a base salary + commission. Most American banks usually have a commission only or salary + commission compensation for their loan officers. (Most banks will also not let the Loan officer charge 4 points plus premium pricing).

After years of wondering why our bank was passing up so much business, I finally realize why we weren’t pushing the riskier loans, even though we had them available. We’ve got an really low default rate (Less than the 3% standard I’ve heard somewhere.). Now I know how the tortoise felt when he was racing the hare.

I have worked at a couple of broker shops…. the training stinks and the attitudes are less than honerable in my experience.
Yes, there are good ones…. but I think there are far more bad ones than the author suggests.
End of the broker? I don’t think so….
Tough going in 2008, certainly.

“Houshold, Ameriquest, Centex, New Century’s retail division, UC Lending, Greentree, Transamerica,Associates, American General, Benificial”

These are not “banks”, these are monoline lenders, most of whom derive 100% of their revenue from mortgage origination. Most banks derive less than 25% of their income from mortgage origination and actually offer bank accounts and other services primarily and mortgages are secondary.

jdub – if you read my post you’d see that I’ve been both a broker and worked for a bank, so I understand how these things work, but you missed my point completely, which was that there may not be a wholesale market when the smoke clears, or if there is the barriers for entry will be a lot bigger.

The gred was two part. The hedge funds and the rating companies. Take a look at there earnings. Just look at the top five. Let me ask you guys and girls a question. Was that not a form of brokering?You think with all of the brilliant minds in Washington they could see the trees through the forest? Senator Schumer sent Countrywide a letter asking for hud-1 closings to see what they were charging on the retail side of there lending model. I bet their scrambling to cherry pick the ones they want him to look at. I’m sure he is on to there games don’t you think?

Their retail side Full Specrum subprime side of there bank had one of our friends working for them. First of all she could not even get a surity bond due to her drug convitions in her early years, and that also meant no Califoria state license to do loans. But could hire on with them with flying colors. She said if you did not close at least three loans a month and if you goosed egged two in a row you were gone! Here is the kicker they use clues and it priced the loan for the agent with a min of three points. They had to go to higher management for the exeptions.

She closed about five loans a month cold calling there client data base and she made about 5000 a month. I wonder how much the bank made? They came in one day and said if you want to drive 50 miles each way you can move with us if you would like? She is a single mother with one child 5 years old. Banks do not care about anything but bottom lines!

Mark- the purpose of listing these lenders “Household, Ameriquest, Centex, New Century’s retail division, UC Lending, Greentree, Transamerica, Associates, American General, Beneficial” as banks is purely for the purpose of illustrating that it is not Mortgage Brokers who the average consumer should concern themselves with. Would you prefer I listed “Norwest/Wells Fargo Financial” and “Citi Financial” in with the mix.

When you say banks you seem to mean the FDIC insured depositories. Do you really think that means anything? Countrywide Bank, World Savings, Downey, these are FDIC insured banks and they make heinous amounts of revenue from selling some the most venomous loans have ever been devised. In the late 90’s I worked for a Mortgage Broker/Banker that was setting up their depository to become a bank. It means nothing.

When I said Banks in my earlier post I wasn’t really referring to “BofA, Wells Fargo, Chase and the rest of their ilk but for every bank you can name that is above reproach, I can give you fifty that are rotten to the core. Everybody keeps blaming the brokers….We’re just selling the banks stupid loan product (FIGURE IT OUT!!!) if you go directly to the source (the bank) to get your loan, you still get the same product, you just pay more for it. Of course if your dumb enough to pay 5 points to a broker then maybe you should just rent, However, I think most posts are actually referring to those who are intelligent enough to do the math.

ML Mortgagebroker, I vehemently agree: “Brokers have not completely, single handedly, create the TRILLION DOLLAR global economic meltdown, and to suggest so is ridiculous!!!”

But it’s besides the point, because the dirty ones played their part, didn’t they?

Just look at CTAN’s comment above: “Everybody keeps blaming the brokers….We’re just selling the banks stupid loan product (FIGURE IT OUT!!!) ”

Like I said: No accountability. The Devil made me do it mentality. BS.

CTAN goes on to say: “Of course if your dumb enough to pay 5 points to a broker then maybe you should just rent, However, I think most posts are actually referring to those who are intelligent enough to do the math.”

Aaron said: “The reason brokers will be around is because we’re smarter than you.”

Joe Cahill: “when i look at the drug industry, the investment industry and about 12 other diffrent industries. i can only say where is there an honest i care about my customers needs before mine industry. let’s not be so fast to kill the mortgage guy there is a couple of others that have gotten away with a hell of allot more. how many investment advisors gave a thumbs up to the market before the crash. fundamentals didn’t matter…”

Marvin: “There’s enough negativity in our industry now without help from “poor me” attitude, bs article.”

jdub: “The posters original article smacks of jealousy and I woudl imagine it is with great envy he or she writes about the 50K to 70K commision months. I see nothing wrong with someone making money. . . . . It sounds as if they are almost wishing the broker out of business or just jumping on the bad news band wagon to hear their own horn blowing.”

Kev: “Now regarding the people who went to work at Countrywide, or any other retailer during 2002-2006, YOU MISSED OUT ON THE GOLD RUSH! Us brokers made double what you made doing the same amount of work or less. Don’t blame brokers for this. Blame yourselves. But again, whoever invented these programs and allowed them to exist are the cause of this Mortgage Meltdown. Period.”

LJ: “Someone call me when everyone stops pretending that they were too stupid to think for themselves. I can’t even tell you how many times homebuyers have committed the fraud themselves. I worked for a Lender and I know the Brokers aren’t to blame here. And since, I didn’t write the guidelines, I am not either. We all played by the rules. All of us. I refuse to believe ALL of the homebuyers just aimlessly went by what BROKERS had to say. Come ON!”

Arrogant, egotistical, condescending, callous, irresponsible — is this a representative of the industry?

The worst of it, I say, the ones who:

1) Need to be regulated.
2) Need to be licensed.
3) Need to be held accountable and penalized for all loan fraud they
participate in OR (I say) fail to report.

That was suggested by Mark.

Here are the other suggestions:

1) Higher barriers to entry into the field.
2) Bonds and backgrounds on ALL (bank and broker, CFL, net branch etc etc etc) employees.
3) More in Depth mandatory C/E requirements

That was suggested by JDUB

Raise the barriers to entry, Jim Hackman says.

Any other suggestions for SOLUTIONS?????

JacMac, another comment hits the front page. Thanks, you rule.

hey that guy did my home loan P

CTAN, I started to read your response but then I stopped. You see, we don’t see things as they are, we see things as we are. A little similiar to your a thief always thinks someone is lying statement, huh?

I’ve used that one before myself, so I get where you were coming from with that statement.

But YOU haven’t gotten where I’m coming from at all. I asked for solutions, for those in the industry to suggest them. I highlighted some of the ones I thought meritted repeated.

You seemed to have taken offense at my quoting you and calling your statement amongst other things, callous.

As a testament to your ego, you go on and on and on, but never offer any solutions yourself.

If the industry has rules and is already regulated, as many have suggested, the rules are not be ENFORCED and therefore there either needs to be new rules or never enforcers but definitely a call for change.

Just look at this place. Moe is on his toes and is hands on. If something goes wrong here or in the Homeowners forum, he is on it like white on rice. Flaming and baiting is NOT tolerated. There is no room for “fraud” while Moe is on watch.

We can have intelligent discussion as to who is to blame but in the end what is all of that worth if we don’t come up with solutions? The emphasis is on WE.

$10 Billion? That’s not very much money in the grand scheme of things. Who pays the bills at these “non-profits”? They have overhead just like any other organization don’t they?

You are asking who pays the bills of these non-profits? You, taxes and governement funding.

$10 Billion is not a lot? You are joking right? This is one non-profit Larry and just the beginning of many more billions to come.

Just wait, Bruce Marks and NACA will be in a town near you, soon. Like I said, good for consumers, BAAAAAAAAAAD for brokers.

JacMac, yes a HUGE difference. Spot on, again

Yes, some banks have cut brokers but wholesale lending will still be around in some form. I have a office in NJ and I have big banks who have cut off wholesale only to be contacted by the same banks “Private Banking Group” looking for loans. What they want are loans over 500k to 3 million good credit (680) good assets, can be stated( but job,assets, are realistic) strong LTV.

I do believe if you have quality full doc A paper loans that there will be a market for it. Banks cannot handle the business now, 2-4 months to close! Go ahead and call Citibank retail, they answer in India!!!!No competitation will only make the problem worse!!!! Some of the lenders who have stopped there wholesale channel were/are the biggest fraud players…that is just the facts!!!!! Selling option arms, fast and easy program to the guy who pumps gas. Everyone is to blame including the big banks!!!!

There will always be a market for high quality loans, no good business would turn them away!!! It will be a tough couple of years but the strong will survive.

At least if LO Were held higher standard the investors, bond rating groups, underwritters could not point the finger at brokers. BROKERS DID NOT PACKAGE A PAPER LOANS WITH CRAP LOANS AND SELL THEM OFF TO INVESTORS FOR HIGHER RETURNS!!!!!!!! BOND AGENICES RATED,THEM INVESTORS BOUGHT THEM, HOW IS THIS BROKERS FAULT!! Shit flows down hill and brokers are at the bottom of that hill!!!

naw

loans cant be closed properly by min wagers.

they will figure that out soon

and when they realize they need mortgage professionals, and have to pay more… they will.

do pendulums swing one direction, then return and stop in the middle? i forget.

loans cannot be properly closed by minimum wage earners? LOL….. That’s why most loan officer’s have college degrees, wrong. A lot of people that work for non-profits are educated consumer activists and not greedy capitalists (some may beg to differ).

This is the future Chuck.

Borrower walks into local non-profit mortgage co.

1. App taken & Credit is ran.
2. 689 mid fico and that borrwer is sent to window 3
3. Window 3 has 5 or so motgagte options with fully disclosed terms and fees.
4. Borrower picks loan and signs disclosures
5. Sent to processing and then underwriting.
6. 30 days later loan closes

Doesn’t seem like rocket science to me.

But, hey, I know some LO’s that make a stated/stated SISA, 600 FICO wage earner 100% refi’s seem like they are puting together a skeleton fossil from an ancient dinosaur in the Egyptian Desert.

Just a point about NACA…You must have rate over 10%, 24 months in your property,owner occ., live in certain area codes…

If you have 689 credit you would not have rate over 10% and if you did either your Lo drilled you or just plain out of touch!!

NACA does good work but it will not replace mortgage business!

Its unfortunate that the industry is viewed as similar to a used car salesmen. There are still good and honest people in this business. And in time, the bad stigma will fall off. However, mortgage brokers aren’t going to go completely away. Like anything new to society, a product must be infused into our society and then recalled for an overhaul and to remove malfunctions. That’s where we are right now. In the recall era. Complaints, laws, regulations, blame, money lost and money gained is what happens with any product is introduced, then the new improved model emerges. It will operate smoothely and then it will break again. So as long as there are consumers, brokers will still be in business.

WallStreet doesn’t want to deal directly with consumers. Never had, never will. But they want that money. They put buffers in front of them to get that money and not have to interact with consumers directly. In any industry thats how it’s set up. In the real estate industry the current mortgage buffer has been exhausted. The result is foreclosure, companies shutting down. Is this the end. Everyone please. Do you not think all of this is planned? Money is being made because of this mess. WallStreet is going to play some hocus pocus with the media. Blow blue dust at the already confused consumer and confuse them even further, get the politicians to change the rules they themselves created for brokers and blame the brokers for the change, then get some lobbists to attack every aspect of real estate; Title Co, Realtors, Appraisers, etc, just to buy time to cement the new money plan.

Just look at what’s happening in MA and NV. That not going to last long. GA tried this years ago and lenders came back when the rules adjusted more realistically and people complained that they couldn’t buy a home. Wallstreet is the only entity that knows when the reset will take place. As some sort of joke, they are allowing us to guess at before they do something. Will this end in 08′,09′, never? Now we are all panicking and shortly will be willing to accept any new solution to the current problem, wether its to our benefit or not. When it reaches its zenith and everything is appearing to completely not work, is when you will see the roll out of the new mortgage industry. Most of the same players we are complaining about if not all, will still be there giving us a new improved product. The funny part is we are going to forgive them and fall in love with them again.

To the customer, which I’m apart of: We are just as guilty as the industry is for this mess. Enough of us wanted houses we couldn’t afford. We knew we couldn’t afford it. We didn’t need someone else to advise us on that one. We wanted to live like our rich neighbor or our t.v. hero. We convinced ourselves that we are “owed” having a piece of the american dream of being a homeowners, even if we didn’t work at it or properly prepare for it. Why buy a 1500 sqft house when a 3000 sqft is right up the street? I have good credit but no money. I have a little money but bad credit. I have money, good credit but I can’t afford it. Something can be down for me if I keeping bitching because I(consumer) want what I want. So complain and complained we did and banks, lenders, realtors, appraisers, insurance agents obliged us.

Now we are losing our ass off. The same “i deserve to have this” attitude now has us blaming everyone for us not paying our bill. And yes, some consumers were deceived but not to the tune of all the millions of homeowners losing their homes as you are seeing now. Some of these mortgages are going bad not because they are adjusting, but because they weren’t being paid for. Some of these mortgages are fixed rate mortgages. So as these nonprofit companies make this “run,” remember this. Doing the loan for free won’t stop foreclosure. There will be lots of those clients still who won’t pay their note on time or at all. My question then will be, who’s fault will it be then? And allowing nonprofits to take over mortgages completely. Nahh. Its only going to be a new facet of generating money for WallStreet. Check the criteria of getting one of these non-profit loans. If it was that easy, then brokers would have been eliminated years ago. Bank lending too. Everyone needs to relax, get their credit back in line and be prepared to spend a little money next time they want to buy a house. Just this time, make sure its something you can afford.

If you need a loan go to your local Bank or Credit Union, while they are still around, be aware to read your Settlement Statement or HUD 1, there should be no garbage fees other than points if any, appraisal, and/or rebates-YPS, remember if larger than .375% this is really costly to your rate, and how these brokers make their money and can be extremely costly in the long haul, pay no garabe fees such as Admin, Processing, Discount fees, Underwriting, Credit Report, ETC…NO POINT, NO FEE LOANS are becoming very popular, it is usually the unfortunate ones without good credit and desperate borrowers (Subprime) that are targets of brokers and because these products are not offered by banks or credit unions that is unfortunate, that we prey on the less fortunate, it’s awful, but it is no different than a Consumer Lender, Title Pawn business etc… Your not going to wash out all the brokers overnight these parana’s are going to be around for a long time just with less popularity due to a weak maket.

What does a license do???????? Do you go to doctor without a license/?attorney?Pharmacist?engineer?CPA?CFP? YOU BET YOUR ASS YOU DON’T? A license shows you have meet standards and been educated in your choosen field!!! If they screw up it can cost them there license/job for life!!!!!!! Even jail!!!

Why bother get a MBA or PHD its just a piece of paper…….because it shows you have spent time mastering your craft!!!!!!!!!!!

A home purchase is one of the most important events in a persons life…..you should be licensed and educated to help people with there needs. Yes there are bad CPA-doctors and for that matter cops, but it is a standard!!!

Buy the way did you know you need a license/educational traing and standards to groom dogs, cut hair, run a daycare……..but not to finance the most important purchase of your life…????????

It is finally going back to the good ole days.. once the market levels out, there will be plenty of work for HONEST mortgage professionals, and to be honest, you will need more than 10 years in this business to get a job. They want the ones that knew it like it used to be.

Finally some justice. I spent more time justifying my declines than my approvals. And naturally massive time to fight the commissioned A holes… on their nasty slimey submissions.

Thank goodness things are changing….

Virginia,

Be careful, in NJ,NY,CT,CO,WY states in which I am a license mortgage banker, LO DO NOT HAVE TO PASS A TEST OR CE CREDITS!!!!!!!!! All lo work under the office license….sad but true! The only state that I am licensed in that does require LO To pass a test and CE is Florida.. The test and 24 hour class is pretty easy but it is educational.

That is why I only have 2 people work with me…I trust them and they do the right thing…no boiler room here!!!! My license is on the line, not them. I must say my home state does not enforce many of the present laws,, it is very sad!!! They just make new ones to make themselves look good!

Banks and mortgage bankers are not required to license their loan officers. My post read: loan officers who work in a broker enveironment” Mortgage brokers are required to be licensed in most states. I am not a compliance expert but my many years of experience tells me that as a general rule, mortgage brokers do have to be licensed.

I am (soon not to be at the end of this month) a Realtor and an appraiser in the Northern VA area. I got into the appraisal side in 2001 and agency side in 2003. I love appraising and hate agency. When I first started as a Realtor, I was so excited….we had to take so many ethics classes and than had give a pledge which included the Golden Rule. I was in the middle of a very nasty divorce with lots of lies and I was feeling so blessed to be going into a business that I could be honest, know others were honest and still make money! This was just the answer I was looking for…right? Well, 2 years later I left my broker and came close to sending back my license because the rose colored glasses had been yanked off me too many times. I interviewed with a broker that was different and went with them instead. I also started my own appraisal company in 2005 so that I would have no pressure from a boss to “bend” the rules. Since appraising is what I like and excell at, my bread and butter is there. Agency was done just to help friends not get taken advantage of. Everytime I get into conversations with folks over the past few years, I would very hestitantly tell them I was also a Realtor. I specifically said that I have found most Real Estate agents to be lower then used car salesmen…and I still take that view. I believe that if you made your living in Real Estate over the past 7 years and did well, you are in that catagory guaranteed. Even the NAR condones the actions by themselves giving a rosey picture when they know the reality of the downhill slide we are in. So YEAH!!! As of January 1 I will no longer be in the catagory of “worse than a used car salesman.” 2008…what a year! PS- I will mention that I turned in appraisers and Realtors to the boards during my “reality check” time to no avail…all the actions were condoned. The practice in this industry is corrupt from the top down.

Jacmac & Paul — you are correct in your opinions in favor of licensing … however … it may be too little too late for the industry now … i just read a post stating that the state of Massacusetts has in effect banned YSP as a way for brokers to be compensated effective January 2nd … in response to this Wells Fargo is designing a flat fee compensation program for brokers … while IndyMac has pulled out of the state … in effect … the end of the mortgage broker business segment in that state as all lenders either go to the Wells form of compensation which will not adequately provide the necessary compensation for a broker to operate a business or the wholesale lenders will simply exit the state … it is reasonable to believe that many of the other state attorney generals will follow Massachusets lead on this matter … and as one by one the states eliminate YSP then so will the viability of operating a profitable mortgage brokerage be eliminated.

Chris,

I am not a expert on NACA but the fee last 5-10 years and depends on loan size. 0-99k $50 100k-199k $50 and over 200k $100…but they do not pay MI…They pay this fee .

bigcityloans- As always lenders will just find a way around the problem one way would be a flat fee a better way would be to simply use the yield (“backside”) on loans to pay for the points (“front side”) at least then all fees will be disclosed to the borrower right on the top of the GFE and HUD.

Here is the thing that gets me-

If you go to Wells Fargo retail and get a quote on a say.. 200k loan, full doc, great income, 80% ltv (really “vanilla”) you will get a rate that is a full half a percent more than the rate that would be given to a broker by Wells Fargo wholesale. So why is Mass. passing legislation saying that a business owner doesn’t have the right to “mark up” their loan products?
An “A Paper loan” pays YSP at about 4 to 1, so a loan offered to a broker at 5.75% and sold to the borrower at 6.25% pays the broker 2 points YSP. Is that really so awful? Wells Fargo retail just keeps the 2 points YSP for themselves but doesn’t have to disclose it to the borrower because they (unlike the Broker) are funding the loan with their own money. I really think the repercussions of flippantly forcing an industry to suddenly change the way is run will have dramatic unintended side effects.

Also as to Wells…. I have closed loans at lender A at 6.25% 30 yr fixed and been paid 1.5ysp… a few months later that loan is sold off to Wells…no big deal…..but when I was placing the loan Wells was at 6.5 for the same loan, not only wholesale but on the retail side. So how much is Wells making and is this really better for the consumer????? I doubt it!!!!!

I invited any Congressman or law maker to my office and I will show them facts….Wells is making more than the broker and costing the consumer in rate….the facts will speak for themselves!!!!! Free enterprise is the only way!!!!!

Competiton is good thing, if brokers go away so does pricing to the consumer!!!!!!!

Paul — it is not the remaining “wholesale” divisions of banks that will arbitrarily eliminate YSP … YSPs will be eliminated by new laws passed by your elected officials … similar to the Massachusets governance … because it is politically correct … or … in the case of the attorney general of the state of Massachusets … she feels that it is the right thing to do.

sorry, jacmac
i’m not trying to show anybody up. just trying to share the knowledge that brokers have not created this mess…have we contributed, absolutely. but the meltdown does not rest solely on us…paul, yes the shit does flow down hill, especially with this fiasco…it being an election year, the politicians have to make somebody the sacrificial lamb…to try to win votes…in the mean time…
jacmac, i wish i had the answer, then i wouldn’t be working harder than ever for very little…i’d sell my solution to those on wall street!!!!!!!!

If Congress, attorney general wants to elimate YSP, then Wells and others big banks have to give loans to consumers at cost!! Wells should not be able to make a fee for delivering a loan… in effect it is there YSP,WHICH IS A MUCH MORE YSP THAN I RECEIVE!!!….OH I FORGOT THAT IS PROFIT FOR DOING THE LOAN…and I thought they did it for free!!!!!

NACA forgot to show the APR after the note rate in their ad according to federal truth-in-lending advertising rules.

LOL.

And one more thing!!!! I know I am out of controll!!!!

What does YSP have to do with mortgage fraud????? We are in this mess because underwritting standards were to easy,stupid loans 100 ltv stated-580 credit NIV?? bond ratings were inflated, and so on.

WE ARE NOT IN THIS MESS BECAUSE SOME BROKER MADE 3 YSP INSTEAD OF 1.5YSP. The fact is it was a bad loan to start with and the blame lies on the bank who created the product, and the bank who bought them!!!

Food for thought…..If banks limited the YSP TO 1.5 4 YEARS AGO AND HAD ALL OF THE SAME LAON PROGRAMS, WOULD WE BE IN THIS MESS??? YOU BET YOUR ASS BECAUSE THE PROGRAMS , UNDERWRITTEN AND PURCHASE OF THESE LOANS BUY WALL STREET IS THE REAL PROBLEM!!

Paul- the 10% you are speaking of is a special deal they have with Countrywide for loan modifications of loans that have a reset or starting rate of 10% or higher. I reported on that deal last month.

Of course the homeowner gets to keep any profits on the sale of their home.

They are a mortgage broker and these lenders have committed $10 billion to fund these mortgages on NACA’s terms and NACA’a way. Below market rates.

Chris- They will still have title rep and appraisers, but it is the mortgage broker/LO who needs to worry about this new breed of mortagage company. The non-profits have arrived and they are now backed BIG TIME by our government.

Like I said, good for consumers, BAAAAAAD for brokers.

Here is their mortgage program;

PURPOSE: Purchase
Purchase & Rehab
PROPERTY TYPES: One to Four Family, condos, and co-ops.
Existing, New Construction, and Renovations
DOWN PAYMENT: None
CLOSING COSTS: None (paid by lender)
INTEREST RATE: One percent below the prime market rate
Current Interest rate: 5.375% 30 year fixed (as of 12/28/2007)
BUY-DOWN: Additional funds can reduce the interest rate
Paying one percent of the mortgage amount up front reduces the interest rate by one quarter of a percent (.25%)– a tremendous added benefit.
APPLICATION FEE: None (paid by lender)
POINTS & FEES: None (paid by lender)
CREDIT HISTORY: Perfect credit not required
P.M.I.:
(Private Mortgage Insurance) None
NSF/Membership:

(Neighborhood Stabilization Fund) $50 per month for five to ten years
This payment occurs once you purchase through NACA and is part of your mortgage payment. This is a required payment as a NACA Homeowner Member, and as a Member you can receive assistance to NACA\’e2\’80\’99s membership assistance program if you are ever at risk of losing your home. You would also receive the other benefits of NACA Membership.

OTHER TERMS: No yield spread premium; No pre-payment penalty; No balloon payment; No required credit life, or other unnecessary or overpriced insurance.

Let me ask you this. Can you beat this rate and terms? 5.375% on a 30 year fixed with no fees.

Paul- the reason that YSP is being looked at so closely is because of that damn Option ARM. Brokers/Banks have been steering borrowers into those loans because of the massive YSP paid on that product. The real irony is that with all the problems we are having with forclosures the Option ARM is still in the product mix and has gotten ZERO attention from the media. In fact if you listen to the news the Option ARM is lumped in with “Sub-Prime” which of course you and I know to be an absolute lie. Option ARMs where A paper and then Alt A but never (asside from a brief stint with GMAC) where they ever Sub-Prime paper.

Paul- agreed on the Banks non-disclosure. I suppose the argument is that at the time of funding the bank hasnt really made anything on the loan and so its no business of the borrower what they will make later.

Of course this goes for mortgage bankers as well, I guess Allied and Wilshire will be growing like there’s no tomorrow. They would be exempt from the YSP problem on the “banked” side

CTAN

Right again!!!! Option Arm is not subprime, Brokers sold the shit out of this loan for the big payday. Most lenders turned a blind eye to these loans, They new damm well that most of there clients should not be in this loan, but it made the most money so on it went!!! Where was the state banking depts. allowing these loans???? Getting paid contributions by the big lenders?

paul — you are missing some basic business concepts … when a customer retains your services to provide them with “money” they are not buying a manufactured product such as a drug or a car … they are retaining your services for your knowledge, advice and expertise as a professional … what the Massachusets attorney general has determined is that as a professional you are not entitled to receive illegal kickbacks from lenders in the form of YSP for the funding of the loan … however … you are entitled as a professional to charge fees for your services to the client who retained you (the borrower) such as an attorney, an accountant, a doctor, or a financial planner would.

Vote for Paul and CTAN for NAMB pres and VP’s in 08! and all the other fine commenters like bigcity, mlmmortgageguy etc.

Some of the few mortgage brokers and LO’s with class, dignity and a firm grasp of this industry and I appreciate the information and debate.

There are a lot of influential people who read this blog, non-profits and also a lot of homeowners. So, this gives you all a chance to shine and educate the non-industry mortgage professional. It also gives some of the idiots a chance to look like, well, idiots. But you all have out weighed any idiotic comments by taking the time to explain yourselves in detail.

Thanks for the insight, ideas and future posts that I get as a result of the ideas I pick up from all your comments.

Bigcityloans- to a broker loan programs are as much of a product as a mutual fund is a product to a financial planner. Now I know FP’s get “kick backs” so what about them. How about car loans? they are financed with the equivalent of YSP, what about them? I’m certain I could find other examples if I where so inclined.

they serve many more town then that Paul.

Their main office is in MA. and they have over 30 offices in 16 states.

I think they do it the right way and commit homeowners to ownership not just of their home, but of their communities. Like it should be. I would say that it’s a safe bet that many of these people do not walk away. Especially when NACA teaches consumer activism and community involvement.

https://www.naca.com/members/eligibilityIntro.jsp

General Requirements

The following are the general eligibility requirements to participate in the NACA Program. There are no income limits, but there are maximum purchase price limits and you must purchase within a NACA service area.

Be a Member in good standing

NACA provides the NACA Workshop to everyone without becoming a NACA Member. After attending the workshop, should you decide to begin the NACA Program and the initial counseling, you need to be a NACA Member in good standing. This requires that the Membership Agreement and Authorization be signed by all household members. At your first individual meeting with a Mortgage Consultant, you will need to pay the Membership Fee, (for 2007 is $20 for the year). Once you purchase your home, you will need to pay the Membership Fee, which includes the Neighborhood Stabilization Fund Fee,of $50 a month for a period of between five and ten years, depending on the amount of the mortgage. The Membership fee entitles you to not only NACA\’e2\’80\’99s comprehensive counseling to assist you throughout the home buying and mortgage process, but also to NACA\’e2\’80\’99s membership assistance for NACA homeowners that provides comprehensive foreclosure prevention assistance.

No member of the household can have an ownership interest in any other property

NACA focuses on people who have not been able to purchase a home. The program, however, is not limited to first-time homebuyers; you may participate as long as you do not own another home at the time of purchase. Current NACA homeowners must have lived in their home for at least three years and have been active participants in the NACA program to be eligible to purchase through the program again.

Occupy the home for as long as you have the mortgage through NACA
NACA believes that owner-occupants stabilize neighborhoods. Therefore, NACA requires that you live in your home for as long as you have a mortgage through NACA. Being an owner-occupant involves you in all aspects of the community because you own a piece of the community, not just real estate. NACA is very serious about Members adhering to the occupancy requirement. Therefore, NACA takes out a lien on the property\’e2\’80\rdblquote in addition to other enforcement mechanisms\’e2\’80\rdblquote to ensure that homeowners live in the home.

This does not prevent you from selling your house for a profit, refinancing your house, or purchasing other property while continuing to live in the house purchased through NACA. These serious actions and remedies are in place to prevent the abuse of the NACA Program. Lenders participating in the NACA Program also require owner-occupancy and may have their own enforcement mechanisms beyond NACA\’e2\’80\’99s. Obtaining a second mortgage requires that NACA subordinate its lien to the second mortgage, which NACA may or may not, in its sole discretion, agree to provide; therefore, your ability to obtain a second mortgage may be limited.

Participate in at least five actions and activities a year in support of NACA\’e2\’80\’99s mission

Every Member is encouraged to contribute their unique skills to NACA and its mission. Many people say the NACA program sounds too good to be true. It is real because of the active participation of NACA\’e2\’80\’99s huge Membership. Participation and direct action have made NACA successful and will continue to strengthen our neighborhoods and organization. There are numerous ways for you to participate:

Join advocacy campaigns that may include protests, demonstrations, actions and/or engaging in litigation against persons or companies that discriminate against or victimize others;

volunteer in the NACA office;
participate on the peer lending committee; and
assist other Members with the home buying process.

Virginia,

Yes you fill-out a application in NJ for LO license no test, fingerprint card. $100 CHECK ON YOU ARE ON YOUR WAY!

um….5.375????? How? From Where? How does one keep the door open? expenses to do loan? All for low cost loans, but lets be real here. Someone seems too low…. not feasable for the long term! Same level of costs that banks face. Dollars and cents… Do the MATH!!! Short Termer…

CTAN

Financial planners do get 12b-1 on assets under management. .250-1.00 basis points. This fee is to pay the planner for his time. In that I mean does your planner look out for you? Does he have a semi-yearly meeting with you to discuss your concerns or needs. That is what the fee is for. If you mdo not hear from him/her it is time to find a new planner.

What does the pay structure look like for a Non-profit LO? Sounds interesting to be in a non-greed driven market, but I still need to make a living. I would love to continue helping people in to homes with good mortgage, but I also have big bills to pay. So how much does the average Non-profit Loan Officer make per year?

Virginia,

Also A LO must work for a licensed banker, broker, correspondent. It is my ass on the line not the LO.

Oh by the way..where is your precious NAMB?? They were too busy enjoying the boost in membership fees to care about its members..to busy enjoying the bigger budget for their expense accounts than caring about the destruction of their industry…funny how so many of your higher ups have already jumped ship!

Give them a call and ask them what are they doing about your future??

Paul,

In your opinion, do you think requiring everyone to be licensed at this stage of the game, even though it needs to happen quickly, will really prevent fraudulant activity?

Mortgage brokers have never had a good reputation. I don’t know what planet you are living on. They have never been respectable and have always been thought of as used car salesman. Wake Up!!!

Chris

Every LO is licensed in NJ but there are no requirements, testing, fingerprinting, bond. If every new LO had to complete 40-60 hours classroom time, pass a test and buy there own bond it would help! The average Joe would not put in his time.

10 trillion dollars will be the payout of the US taxpayer for this mess. We are the new subprime company………non profit is tax money………once the government cleans up the mess they will make sure that they CONTROL all the future mortgage origination. They will have to save a few banks in this mess, with CITI and MERRILL having 13 billion plus losses quarter after quarter, well say goodbye.

Banks like Washington Mutual, CW and Suntrust and Wachoivia have huge problems and may not make it.

The builders start going bust next month. This will not be gone until the over supply is sold off, we are at about 3 year supply right now.

“A” paper mortgage holders are starting to give their homes back, no shylock there but they will find another excuse for the problem, no one seems to see the supply and demand side of it, they all want to blame someone, what a shame. But guys this just started in November with CITI’s losses and the adjustments to the loans really don’t start until February. Oh yeah that is the month that the first of the baby boomers start getting their checks…………oooops………….

Good nite all!! Off to watch the Pats complete the perfect season!

Paul,

I hope not. We need banks, just as much as they need us

Chris,

Yeah, I know we need them. Just being silly.

As somebody said many years ago “This too shall pass”

What about computer chips embeded in the loan officers skin and anytime they charge more than a point, it is then registered into a central database that is manned at Central Mortgage Control. CMC?

Much like a sex offender, but a loan offender and they will have to register has a loan offender is they ever move and if they don’t register, it’s like a lo jack system and the DRE or whomever can send in their goons and I dunno, shock him with taser guns or something like that to teach em a lesson.

Why does Countrywide get to refi people at NACA???? Didn’t Countrywide approve these people the first time???? Or did approve bullshit option arms or fast and easy???? How is there rate now over 10%???? Must have put them in a great loan to begin with!

America’s Best Mortgage!
One Mortgage Product – $10 Billion Committed
5.375%
Fixed 30 Year (as of 12/28/2007)
No Down Payment, No Closing Costs

NACA is a national non-profit community advocacy and homeownership organization providing the best homeownership program in America
Home About NACA The Fight Partnerships Purchase Home Save Property Rehab Members Vendors
Purchase Overview Purchase Product Eligible Criteria NACA Service Areas Maximum Purchase Price Mortgage Calculator Ten-Steps To Your Home Workshop Sign-up Overview Eligibility Criteria Refinance Product Mortgage Questionnaire Hardship Letter Authorization Steps To Homesave Mortgage Calculator NACA Service Areas Maximum Mortgage Limits Workshop Sign-up Urgent Situation Overview Membership Counseling Appointments Information & Documentation Status Credit Report Property Listings Property View Repairs Membership Assistance Program Testimonial Make Payments Member Services Task List Agreement Authorization Fax Cover Sheet Budget Employment Information Bank Information Rental Information Fax Received Foreclosure Prevention Procedures Concerns/Complaint Compliments Workhop Evaluation Property Rehab Overview Rehab HAND Rehab Process Contractor Selection Rehab Administration Payment Process Completion of Repairs/Renovation Overview Current Campaigns Predatory Watch Predatory Lending Forum Campaign Victories Neighborhood Stabilization Committees Predatory Lending Legislation Politicians Report Card Subprime Lending Predatory Lending 1991 \’e2\’80\ldblquote 2000 Fleet Bank Associates / Ford First Union Senator Phil Gramm Overview Bank of America Citigroup Union and Management Neighborhood Stabilization Overview Real Estate Agent Contractor Home Inspector Settlement Agent Appraiser Credit Reporting Agency NACA Overview NACA History Offices NACA’s Team Services Press Materials Participation Goals and Tactics Timeline Office Map By Zip Code Establish new Offices CEO – Bruce Marks Job Opportunities Free Services Technology Press Clips Press Releases NACA Video NACA Radio Volunteering Contacting NACA
Home Save/Refinance
Overview
Eligibility Criteria
Refinance Product
Mortgage Questionnaire
Hardship Letter
Authorization
Steps To Homesave
Mortgage Calculator
NACA Service Areas
Maximum Mortgage
Workshop Sign-up
Urgent Situation
Refinance Eligibility Criteria

The below criteria is for a NACA Refinance. Even if you do not meet the below qualifications it is likely that we can assist you with your mortgage as long as you live on the property and do not own other properties.
You cannot own other property, and the property to be refinanced must be owner-occupied.
You must have a predatory interest rate or unaffordable loan terms. The interest rate for the current mortgage(s) must be 10% or greater or considered to be predatory, or the home must be in need of substantial repairs. NACA considers loans predatory that have a teaser rate, but become high rate once they reset.
The property to be refinanced must be within a NACA region where the NACA Program is available.
The property to be refinanced and all requested money for improvements cannot exceed NACA\’e2\’80\’99s maximum purchase price limits set for that region.
You cannot have multiple refinances where you are continually taking money out to pay for your living expenses. This does not include refinances to obtain lower rates or to pay for one-time expenses such as home repairs, medical expenses, or education.
You must have had your current mortgage for at least 24 months.
All properties to be refinanced must have thorough home inspections\’e2\’80\rdblquote a complete house inspection and termite inspection. If applicable, a septic inspection will also be required.

If your situation does not meet all of these criteria, we will not be able to refinance you. However, we may be able to assist you in other ways. You need to complete the Mortgage Questionaire, attend a NACA Workshop and meet with a NACA Mortgage Consultant. If you believe the lender or broker engaged in illegal or unethical activities, you should contact the Federal Trade Commission and state and federal banking regulators.

E-mail Print

For information about the NACA program, contact service@naca.com. Questions, comments, or concerns about this Web site? Contact webmaster@naca.com.
Join our mailing list to stay informed about NACA. This site is copyright (c) Neighborhood Assistance Corporation of America.

How about we videotape every transaction!! We can see the borrower tell us he makes 100k or has money in the back, or a job. It will show if the LO is telling the truth…quoted no points or this is the best loan for you!

When there is a problem, lets go to videotape…case closed!

Chris

Well said!

Moss just got lit up by Giants safety!

Great play, The Giants are making a game of it!!!

Buy the way NYC, Bronx, Queens NACA loan limits 36S,750!! GOOD LUCK!! Parking spots sell for 60-125k in NYC!!

Moe – I am a mortgage broker and I would be happy to work for $50 per month for 5 – 10 years. As for the rate, don’t blame me, I am only taking the rate the lenders give me, JUST like NACA. So, give me 5.375% and I will do the loan and all the parework for $50 per month for the next 5 years. What you are REALLY bragging about is NACA’s ability to blackmail a bunch of lenders into providing below market financing so they will not level charges of discrimination (and the discrimination was often performed by the large lenders, not brokers). When that money dries up, I will put my measly 1.5 pts of YSP up against your $50-100 per month anytime. I am gald to see some of the crooks and bad apples get out of my business, but I guarantee there are a bunch of bad apples in the non-profit sector. Your reasoning sounds just a tad off – NACA is squeezing the lenders for discrimination, which they will blame on the brokers as you put them out of business, thereby guaranteeing the survivability of the big lenders and increasing their margins. I see where this is going.

Yes. Every state has some entity that caters directly to reinvigorating forgotten areas. But look at the financial contributors. Instead of loaning the money directly, they use NACA to loan their money out. Sounds like brokering to me. And these instituition don’t want to be directly attached to helping sub par credit clients but they understand there is profit in doing so. So when and if the program is a bust, the real lenders name aren’t on anything. Hmm. Forget about the loan limits. Its about getting that available money out into the world. Lender don’t make money if they hold on to it. If the borrower is not going to be responsible, you can give the loan away at cost and you will still get a disaster

Paul Pats 16/Giant 20 Pats need to tighten up

that’s to much like right.

How many people understand this!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Home | Customer Service | Contact Us | Locations
HOME LOANS CAN BE FIXED AND FLEXIBLE.

——————————————————————————–

If you’re looking for a mortgage that offers the stability of a fixed rate and the flexibility of payment options, look at the Pick-a-PaymentSM Mortgage.1

With Pick-a-Payment, you can:

Choose a lower monthly payment2 and temporarily free up cash for:
paying down high-interest debts
funding college tuition
retirement savings
Make higher payments and pay off your home sooner
Pick your rate from adjustable or fixed

With the Fixed Rate Pick-a-PaymentSM Mortgage , we’ll lock your rate, but not your payment because you still get to choose from up to four payment options. Plus you get the added stability of a fixed interest rate.

With the Pick-a-PaymentSM Adjustable Rate Mortgage , your initial payments are based on a lower interest rate and you can still get the house of your dreams and have cash at hand when you need it.

Pick up the Phone

Call (866) 489-7491 to speak with a Mortgage Specialist. Or we can call you. Just give us the best time to call by following the button below.

Email This Page Printer Friendly Version

Your inquiry may be handled by Wachovia Mortgage Corporation, or World Savings Bank, a Wachovia Company. The Pick-a-Payment product is originated by World Savings Bank and is subject to credit approval, verification and collateral evaluation. Products not available in all states and are subject to change without notice. Certain restrictions apply.

1 Up to four payment options are available during the first 10 years of your loan, depending on the option you select at origination. At various times during the life of your loan, some payment options do not provide for the full payment of principal, interest, or both, which could result in an increase in your loan balance (negative amortization). This can occur if the initial payment amount that you select is less than the full amount of interest due. This can also result from increases in the Adjustable interest rate prior to the Payment Change Date, or from a monthly payment that did not increase sufficiently to pay the full amount of interest due because of the Payment Cap. The minimum payment can change every 12 months, beginning with the 13th payment. Each date on which the payment may change is a “Payment Change Date.” The monthly payment cannot increase (“Payment Cap”) more than 7.50% each year, with some exceptions. Please contact us for details.

2 When you choose the minimum payment option, it may generate deferred interest and increase your loan balance (up to a maximum limit of 125% of its original amount), reducing the equity you have in your home. The initial minimum payment is fixed for one year. When your loan reaches its tenth year, or if the balance reaches its maximum limit before that year, your minimum payment will increase significantly to the amount needed to pay off your loan within the remaining term. A prepayment fee may apply. Ask for details.

Pick-a-Payment is a federally protected service mark of Golden West Financial Corporation.

Contact Us
(866) 489-7491
8:00am – 10:00pm ET
Monday – Thursday
8:00am – 6:00pm ET
Friday
9:00am – 6:00pm ET
Saturday

Chat with a Mortgage Counselor

Chat Now

Related Links

Compare Mortgages
Fixed vs Adjustable Rate Mortgages
Adjustable Rate Mortgage Index
Text Only
About Wachovia | Privacy | Security | Legal | Careers | Merger
© 2007 Wachovia Corporation. All rights reserved.

What a great game…..Don Shula and the 72 fins are on CPR watch!

Beeeeeeep………Beeeeeep Don’t be suprise if Don or his boys come out on the field and shoot Brady in the head

Yes. Plastic does rust. But if you take the 5year or 50k mile warranty for $2000, it won’t rust……Really it won’t rust. Or the priceless, limited and ancient floor mats for an extra $800 and the $750 destination fee for getting the car from the back of the lot. Though its free is you take the upgraded LX model for an extra $1550.

sorry……… hear me????

boy I really need to get a life.

Starting CPR again… I don’t know how much he can take!!!

WOW What a play!!!!

Extra high

Mr. Shula do not go into the light!!!!!!!!!!!!!!

Virginia

Good for you for standing up for yourself!!!!!!!! Your repuatation is everything, your soul is not for sale at any cost!!!

Who is underwritter???

Its been a rough 4 quarters. Its o.k.

Underwritter you sold yourself to the devil…do not sign off on shit loans. Document your employers thearts to push loans to close, call a good wrongful termination attorney!

Moe~

I wouldn’t give any credence to any underwriter that signed off on any loan that he/she knew was fraudulent. All mortgage bankers have a system: If an underwriter suspected fraud, it went to quality control for a complete audit . If the underwriter was still uncomfortable, they could take it to their UW or Ops Mgr. NO UNDERWRITER IS REQUIRED TO SIGN OFF ON A LOAN THEY DON’T BELIEVE IN. There are rules and regulations regarding that position. Any underwriter that knowingly pushed fraudenlent loans through the system is part of the problem and should be prosecuted. If he/she was coerced, I agree with Paul….get a good wrongful termination attorney!

Lucille,

Do you know anything about the mortgage business?? All loans, every single loan originated in America costs money to originate. The advertisements themselves offering a “no cost” loan are nothing but smoke and mirrors and border on fraud. Every loan requires a credit report, some sort of valuation determination, title work and insurance, etc. These loans are only called no-cost due to the fact that the interest rates charged are higher than the current market rate thus enabling the lender to receive a premium on the secondary market (which banks do not have to disclose) that covers the costs associated with the origination of said loan. Get a grip, there is no free lunch…

All I have to say is that a great majority of this is bullshit. I’m so sick and tired of hearing the same old rhetoric regarding all these poor victims who were duped into a loan that they could not afford. Take a hard look at the statistics and you will see that the numbers tell a different tale. An astounding percentage of these homeowners falling behind on their mortgages have done so PRIOR to an adjustable rate reset. Whose fault is this? Does personal responsibility not play a factor in all of this? The masses all thought they were Donald Trump’s in the making and rushed out to get their tickets to ride on the real estate train and the consequences be damned. Every 2/28 I sold (as a mortgage professional with over 15 years in the business) to a borrower was due to one simple fact – they could not qualify for anything else – plain and simple. I clearly spelled out the terms of their loans on numerous occasions throughout the process. Those with less then perfect credit all knew that they had less than perfect credit and were perfectly fine with a 2/28. They simply didn’t care as they all had dreams of selling for a huge profit before the rate re-set. Something that is not being discussed is the role of the Realtors in all of this. I can’t count the times when a borrower came to me with a house already picked out (and emotionally committed) prior to the application process. You would then run their application and discuss their financing options with them. Countless times I urged clients to reconsider their purchase as too expensive for them only to be countered with such responses as how can you get my payment lower? What about an ARM, what about an interest only payment, what about a 40 or even 50 year amortization? How much can the seller contribute to my closing costs as I have no money to put down? I would ask where they learned of these various options and the response was almost always the same – from our realtor. You had a situation where realtors were showing borrowers houses that they could never afford while at the same time feeding them inaccurate information regarding the mortgage process. In North Carolina, if you work for a mortgage broker as a loan officer, you must be licensed by the state which involves a strenuous examination and background check conducted by the SBI. Sadly, this only applies to brokers and not bank loan officers or realtors. Realtors were specifically exempted from this legislation (due to their powerful lobby) and are therefore free to discuss mortgage financing with their customers. What’s the problem with this you ask? They don’t know what the hell they are talking about! They poison the minds of their customers with loan scenarios and payment options that are not realistic. This takes place before the customer has come to see me. Now imagine this scenario: The borrower has been shown a variety of houses without regard to their ability to qualify by their “trusted” Realtor. Now they sit down with me after they are emotionally attached to a particular property and wonder why they don’t qualify for what the realtor had presented to them. They beg and plead for any option available that will get them into this house. So who’s fault is this now? As their mortgage consultant I am required to present them with all of their available options regardless of suitability. Ultimately, it is the client who must decide what is best for them…

Case and point: A few years ago we were solicited by a previous client’s sister to perform a refinance. She had a really good fixed rate first mortgage in combination with a “silent” second held by the city. She was not required to make any payments on the second mortgage. She was adamant in her request to receive a lower mortgage payment while also getting cask back if possible. Unfortunately, her credit situation only afforded her the option of a 2/28 interest only ARM in order to meet her desires. She closed on the mortgage as requested and we hadn’t heard from her for a couple of years until we were served with a lawsuit accusing us of predatory lending practices. She claimed that we should have never “put” her into her current loan and that she couldn’t afford to make her payments. As it turns out she was about a week away from foreclosure and the judge granted a stay of the proceedings until the suit was worked out. She not only sued us but the original lender, the attorney, the trustee for the lender, a previous owner of the mortgage and the current owner, Wells Fargo. Long story short, her claims were bogus. Wells Fargo produced documented evidence that she fell behind on her payments a year before the rate reset. They had recorded transcripts of all of her hardship stories regarding her financial position at the time period of her late payments. None of which had to due with her interest rate adjustment. She has successfully stayed off foreclosure and cost all of us involved thousands of dollars in legal fees for no reason at all. I know for a fact that this is happening all over the country each and every day. Consumer advocate attorney’s smell blood and are suing everyone in sight. Unfortunately, unlike a criminal case, the state does not provide free legal assistance for a civil defense. How is this fair???

All this being said, I must agree with the original thread’s premise. With all of this legal wrangling going on and everyone pointing the finger at mortgage brokers, while the Realtors and the borrowers fail to accept personal responsibility for their own actions, we may very well be doomed…It says a lot about where we are as a society. We seem to have adopted a secular view where every wrong is always someone else’s fault. I am deeply troubled about my child’s future as our society is certainly sending the wrong message

The second biggest issue I see is we have legislation all over the place. We do not have enforcement of the legislation. So who’s fault is that? Why is it the small business person is the scapegoat? Government representatives are insulated from the realities of business.

A professor of econonics from the Milton Friedman School of Business, Chicago, stated this week the following:

People have tapped their home equity. Now prices have leveled and there is little or no equity. So this is done. Next people have used their credit cards. They’re now tapped. So this is done. Next people’s wages/incomes really haven’t kept pace with inflation. And particularly with energy costs and real estate taxes. Case in point: Energy costs and real estate taxes vs. adjustable mortgages – up $425 vs. $200 respectively for a $150,000 home. Hmmmmmmmmmm. So now people have little or no equity, tapped our credit cards, income not keeping pace, energy and real estate costs up and adjustable mortgages up.

Sorry, folks, but all of this is not the fault of the professional mortgage banker or broker.

Did you know that real estate taxes have gone up 50% since 2002? Check it out.

Joe~ post #83 is spot on.

Virginia:
Sorry, what is “spot on”?

Paul and Chris – I do see NACA expanding big time as the awareness and also massive funding of these non-profits is coming to fuitation as we comment back and forth.

I see other “smart” brokers that have a sense of reality and a pulse on the street that will apply for their 501 (c) 3’s and change their tunes and start being community leaders where they can exist, thrive and keep their doors open.

You see, that’s where I see the business going.

Anyone can open a non-profit mortgage brokerage and offer every product available in wholesale. All they would have to do is charge low fees that cover costs and expenses. Just because they are non-profit does not mean they do not charge fees and they can be more than NACA. So, when a non-profit mortagge brokerage opens down the street in your community, good luck marketing against that.

Andrew – I am glad you see the light.

Cynthia – My heart goes out to all the ethical and honest mortagge professionasl that are suffering and being black balled as a result of all the scum and scammers that entered and most likely exited the business. It’s is a travesty that everyone has to suffer for and be black balled.

Virginia – underwriters have a holier than thou approach as if they were some kind of guardian angel to the gold with no faults. you and I both know that they were the last line of defense for fraud and guess what, the angels were a sleep at the job the last 5 years, based on a money and greed induced coma.

rcf – Great view form the table with clients and Realtors. I know real estate agents have a huge part in this, but they have NAR and years and years of community involvement. If anything NAMB needs to get off their a$$e$ and so do brokers and get involved in their communities instead of counting how many loans they are closing.

Joe – there is only so much you can do when advising a client on what they should do to protect themselves. I know that a lot of professionals fully explained the terms of a mortagage how it works. But at the same time, there were just as many loan officers that did not do that and placed borrowers in predatory mortgages with predatory fees where that LO and broker made the most cash. Same can be said for Realtors.

All I know, that way of business is gone and no one will make the money they were making.

Oh and one more thing, watch out for the non-profits because they will be opening these types of shops everywhere and most likely in your town too.

Moe

You have to admit NACA IS WIDE OPEN for FRAUD!!!! 100 LTV, LESS THAN GREAT CREDIT!!! Is this why we are in this mess!!!!!

I still the think the 20% down, 680 credit, full doc conforming loans are not going to NACA. I can get to 5.625% and make 1.25-1.5 ysp. You seem to missing the fact that peoples time is worth a quater point in rate….no 5 requirements for the next 10 years!!!!!!! Two income households with 2.4 kids running around like crazy do noy have the time over the next 10 years just to save a quater point!! Just my opinion!!!

Moe:
Why would I get the 501(c)3 if I all I can do is cover costs and not make any money?
Again, I probably shouldn’t be asking this since I don’t know enough about it. But if it is a way to expand my existing business, I will have to look into it.

Thats right Joe, you do not quailfy…you make to much, do not live the proper zip code unless I am missing something!!! Sounds like reverse discrimination!!

NACA does help many people , there is room for both broker and NACA.

By the way there(NACA) loan officers get 45k-65k benifits, bonus and 401k, good for them any hard working person earns it!

Paul:
I agree. I said it in the beginning of #83 above. It really gets right down to responsibility, accountability, commitment and work ethic.

It was too easy over the past few years to get a mortgage for the home that people wanted!! Note wanted!! Here in lies some of the problem. Again, they found what they wanted. Then they looked for a mortgage.

When the borrowers signed the papers at application and when they received the papers in the mail from the lender and they signed the papers at closing, how did they not know or think about actually making the mortgage payment (PiTI)? And really how on earth did underwriters approve these loans?

Even when doing a stated income loan salary.com gives guidelines for jobs, positions, etc. I understand that many of these stated income loans were given to people who’s income was stated double of the real income. How in the world could this get through the system?

Oh, and then there is fraud – bogus W2’s, pay stubs, bank statements and retirement accounts. I am not an underwriter. But I can tell after many years in the mortgage business whether these documents are real or not.

In our area recently 8 people were sentenced after a 4 year investigation to prison, revoked licenses, etc. It was because of fraud. Period. I remember asking someoe several years ago how is so and so closing so many loans and making 30m per month. Well, here we are. And there they are.

Joe -charge costs and cover fess etc, how does the non-profit pay the employees? How does anyone there make any money at $50 per month or whatever?

Moe – they get additiinal funding from the government and lenders in the millions that pay for all of this. All employees and the CEO must be paid within reason for the industry. What’s a broker CEO make on average. You could pay yourself a salary of what a comprable for profit would make within reason for your area. I am in So Cal and a broker here (not during the subprime market) income on avearge would be $80k-$120k. Processor $12-15 an hour, LO $35-$50k a year with beni’s.

Joe – I went to the website last night. I don\’e2\’80\’99t totally understand this non-profit mortgage lending. I do understand there are parameters. I get the impression this is for certain zip codes or type of borrowers.

Moe – NACA has their own deal with lenders and their own mortgage model. It’s for low income borrowers and you can still have your for profit.

Joe -By the way if this is true then how can I get a 5.375% mortgage fixed for 30 years with no costs, etc? I have a mid 700 score, equity, assets and can prove income.

Moe – Yes, it is true and you can even get a mortgage with them.

Joe -First off I know according to what I read and what you are saying I will not qualify for this type of loan. So isn\’e2\’80\’99t this discriminating?

Moe – No, it’s underwriting

Joe – But if it is a way to expand my existing business, I will have to look into it.

Moe – probally the smartest thing you can do in 08. By the way what state are you in? Is this the Joe I know from San Diego?

Paul – I understand that these private bankers and jumbo mortgage clients come to you now and you do them a great service and you may get to keep doing this and my predictions will be rubbish. But, if these non-profits open in your same town and they are charging considerably less to do the same thing you do because they will have professionals such as yourself on staff, then I am almost certain that these same banker will be calling them. I know I would.

I just see more regs coming down and a lot more controversy that will be hitting you ALL in the next 2 years. It has just begun and if Clinton gets the oval office, brokers are done.

Moe:
Thank you for your response. I am in Illinois west of Chicago near Rockford, Illinois.

Can I have this type of operation and have my existing mortgage broker (business) at the same time at the same location?

Where does the money come from for the mortgages?

Moe:
The funds. So a non-profit organization is formed. I can see that from the website when googled. Now where does the money come from to give to the borrowers? Do we, then, solicit donations from the public to fund the non-profit organization and the donors, then, get the tax benefit?

I would like to find out how this works after the non-profit organization has been formed.

Any suggestions?

Moe,

Again, NACA is a facet of this industry. Its designed to do a specific thing in a certain area with certain binding criterias, for a certain period of time, geared towards certain clients. NACA has been in my state and is in my town for years and its not that popular. I have financed several people over the past three years who left NACA because of their unusual conditions. A 5.375% is not that great when you have to commit a part of your daily routine for 5 years, having liens and “membership” fees as opposed to a 5.75% and you can do what you want when you want and your house is not tied up.

In regards to jumbo financing, that is a different breed. Paul is right. Time is money to these type of clients. They want it done quickly, discretely and with a sense of sophistication. And they have no problem paying for that. Going through an assembly line and having that kind of exposure isn’t going to work for them. It may sound crazy buy my jumbo and luxury clients would never touch a NACA loan. They’d invest in it, but never use it for themselves. That’s the realty of this world. Its backwards. And as long as its backwards, by design, NACA can take all 50 states by land air and sea and it will still be only a facet to the industry. But a facet only to a borrower in a certain area, with certain unsual requirements. But continue to do what you do Moe. You are giving NACA good press. The CEO would be proud of you. Some indivisual will never own a house without this type of assitance. Its a needed vehicle. Its a good thing.

You never told me if they entertain BK/FC clients? And what are their minimum fico scores?

Wall Street is here to make money, they are not going to let NACA take there business!!! Wall Street will find a way to put money out on the street!! END OF STORY!!!!!!!

It depends. They have a good shot after last night. However the Giant brought it to them. They can be beat but the right combination has to implemented from the toss of the coin to the very end. Getting ahead in score doesn’t phase these guys.

Giants took there foot off of the pedal in the 3 quarter, try to protect being up 2 scores. You have to go for kill, no fear!

Yes sir

Paul:
You are right. Unfortunately it is what it is. And those of us in the mortgage business who have and are surviving the turmoil and aftermath of 2007 will still be here. The best part is that 35% of the mortgage people are gone. It will tougher for people to enter or get back into this business. Therefore competition is reduced. The “bad guys”, not all of them, are gone because of the obvious – can’t steal large amounts of money from people. Fha will have higher loan limits. Fha will have smaller down payment requirements. And if they don’t change the rules, it’s ok with me. I live in an area where the limits and down payment are just fine. And, again, we already meet the new proposed Federal predatory mortgage legislation. So let’s go.

Ron Paul is a joke. — When the liberals and Democrats support Ron Paul then I know something is very wrong.

The lending industry – not just the mortgage lending — Banks also have raped this nation and bleed it through interest rates and outrageous fee’s.

This is a dumb question — no it’s not — can someone tell em why if someoen buys a house for $200,000 — the bank earns some $279,000 in PROFIT??

And your total amount of payments is 479,000 that you paid for this house. Like I said above. I am a proud member of the vast right wing conspiracy and I support corporatiosn right to make profit but something is terribly wrong. Premium Yiled Spread. 1.5 % and the bank makes $279,000??????

Joe,

WallStreet is figuring out how to make some long term money and who the players are going to be. There will be some minor legislative changes. H.R.3915 will pass but not as we see it now. Some licensure requirements will be insitituted and the state will make some more money off of that. The effect of these modifications will weed out the newbees. The market has rid us of most of the bad apples already. The rest will be on there P’s and Q’s for awhile until they discover the ever present loophold.

Defunct lenders will be replaced by new ones who promise good ethical behavior.

Appraisers will be scared to go over value even by one dollar.

L.O.s will act like they truely care because for some strange reason, we won’t them too.

Realtors will be artificially realtors and then it begins.

The borrower who is not held liable for any of this will want something they can’t have and the industry will give it to them. They are the ones who have truely not learned anything from this mess. Why? Because we haven’t made them.

Watch the down payments requirements go from 20% to 0%. LTVs 80% to 90% to 100%. Fico requirements 750 to 650 to 600 and you know. Gradual and new guideline changes from those ethical lenders who promised. Them damn lenders. Always wanting m$ney.

Watch the crazy real estate contracts start popping up. Watch the Appraiser start stretching. Watch the Title Attorneries begin to forget their legal obligation.

Watch how the L.O. will advise against certain deals in the begining, but will give in when, the word gets out that everyone is doing it. Property values will rise again and before we know it, its five years from now and ten years from that it blows again.

Crime/fraud has paid a great deal of money to some brokers. Until crime does not get paid and people go to jail, surrender there license , pay big fines, and be exposed to the public…like there name being printed in there hometown newspaper and local cable channel this will continue!!!!

No three strikes and your out, your are gone on your first case of convicted fraud…minor or major!!!!