Submitted by Bill H.
I have been an FHA originator for 25 years and I can tell you that the FHASecure is a joke. In order to qualify, the borrower must be diliquent on his mortgage, but all of his other credit must be paid on time. Who in their right mind will pay their Sears loan for a refrigerator on time and go dilinquent on their mortgage? What are they going to do, put the ‘frig in their car after the foreclosure? Common sense tells us that the credit cards will go bad before the mortgage.
I am surprised to find there are 266 people in this country that fit the requirements of this program.
JacMac/ ALan/whomever,
When are people going to get it. Banks and Brokers are all after the same thing. The bankers that I know, are the same liars and cheaters and are worse then brokers. More on that a little later. Enough with just the brokers being the bad guy. Many banks offer the same products that a broker can offer. They have the same relationships that brokers do with every other bank that has a wholesale channel for the products that they do not sell. Just because you walk into Bank Of America or Wells Fargo doesnt mean your getting the loan from them. They broker loans just like traditonal brokers. Funny thing though is that Bankers and Banks do not disclose YSP to the borrower, ever. I know hundreds of bankers that were making 2-4 points on every deal through YSP and never having to disclose it. Now, how is that fair and honest dealings? Why aren’t banks required to disclose? Since it’s such a big deal and everyone is complaining about it, why don’t banks disclose it? Think about it!!!
Dont tell me and don’t cry that brokers are all bad and just after a buck. What do you think people are here for? People have a job and choose a profession to make money and to provide for their family. Why is it that every cry baby homeowner and politician that jumps on the band wagon of “poor me” has to smear blame to every orfice of brokers. HOW ABOUT LOOKING IN THE MIRROR? I’ve worked on both sides and to be in the banking side was total promotion of fraud through superiors. Hit the numbers, hit the numbers, hit the numbers. We are not talking about a closed victim subprime lender of the past year. They were the biggest lender in the country for whom I worked for 5 years…..hmmm. Yeah, many of my colleauges were never licensed or trained properly and many regulations such as RESPA were never adhered too. You work for a bank and there is no education or licensing requirements. What the hell is that? In Ca where I am from, Brokers must have licenses, experience, cont ed, and pass a rigourous test through the state. It’s a total joke the level of intelligence that banks hire. I could go on for days but you tell me who the culprits were and still are and will always be. Next time when your considering your own loan or your speaking with friends of families about mortgages, please be very aware that brokers are not the only ones to blame here and take a look at every intersection and the banks that sit on those corners. There are several bandits within that system too, not disclosing how much they are making on your loan(s).
Enough of the fact Brokers are in fact scum of the Earth.. The issue foes many ways. Please enlighten me how many undocumented loans could prove the made a penny?
please enlighten me to the fact that the profession they chose(borrowers) did it for free?
Its BS as I have been a Broker and a Manager for a Company whom did loans across the US. We all were not there for the Salary, we as brokers had to make commission..
The “I am Holy “crap, is just that Crap.. We were expected to ake money soley on what? We did have YSP, we did charge points etc.
At many banks its hidden , just as in broker land. I have never posted but this is so damn annoying… the “Its all this ones fault and the other ones fault “, what a joke, we all had to make money, we all did, fess up and get off the high horse.
I NEVER lied, made up a W2, or anything such as that, but we ALL, had issues with “NO INCOME” loans”. I read so much on this and it makes me puke, as the ones bitching about the biz being crooked got paid as well…
what are you to do for a contractor or a landscaper in Florida whom, we all know gets over $150k a year, can afford it but chose NOT to pay the mortgage payment…?
Such a joke, , yes some people were screwed and those whom did it cast a bad name over the rest of us, but NO we all are not scum….
Hell if you did not give them a TRUE TIL, or RESPA, shame on you, I gave it to them and they signed it….
Yes JayMac, it is the broker’s fault. It certainly could not be you, the one that had the opportunity to get a fixed rate loan but chose the 1% option ARM instead. You certainly did not want to pay any principle on that inflated home that was going to make you hundreds of thousands in appreciation, so you could brag at the golf club, much less the interest.
If it looks to good to be true, it usually is.
I have been on all sides of this (other then being an LO, although I have dealt with a number of LO’s, Brokers and Bankers). I have a mortgage, from before I got into the mortgage business, I knew as a consumer, that I wanted a fixed. I saved for my first house and put 20% down. I also knew I could gamble and buy a more expensive house and get an arm, but this would have been stupid on my part. I had been working in foreclosures for over 12 years in NJ as a bank representarive at Sheriff Sales (note: as of now there were more sheriff sales in NJ 7-10 years ago then there are today in NJ). I was also an Account Executive for a major Wall Street Sub-Prime Lender.
All Brokers, LOs, and consumers can not be heaped into their own piles. I would go into some brokers offices and all it was about was how much I can “hit” them up for. Many brokers wanted to become Bankers just so they could “hide” the YSP. Many LOs/Brokers knew these loans weren’t good for borrowers, but also knew that if they didn’t do it, the borrower would go down the street and get the loan from someone else. I also dealt with brokers who would ONLY sell 30 year fixed at par (charging up front) and Brokers that would not sell bad loans if he/she knew it was bad for the borrower (these were the great minority of the brokers/LOs that I dealt with). Changes need to be made, but not the way Barney Frank and congress want to change things and more discosures, that are hardly read or understood, are not going to help either. The key is training, in mortgages and ethics. There also must be licensing and severe penalties for unethical behavior. In NJ a broker can make up to 4.50 points. This is not unreasonable (in fact I think it should be higher when you consider that Real Estate Agents are making up to 6 points). The problem is that Brokers/LOs must learn to act like financial planners (not that financial planners are all that ethical). A mortgage is part of a persons finances and a borrower can either be led into financial ruin or can be guided through the purchase of a home and put into a much better place.
Borrowers are not off the hook for this mess either. Many borrowers had no clue what they were doing and were led into bad loans (see above). But many borrowers took advantage of the system and wanted to live a life that they could not afford. They literally used thier homes as ATMs to live (or bought a house they knew they couldn’t afford). I would hear things like they are refinancing to buy a car (duh) or pay off thier credit cards (again).
Sub-prime lenders/Investors are also to blame. They all got caught up in the niche thing (which was always the question from brokers/LOs). “I must have the most aggressive product or the Broker/LO will go to another bank”.
At this point the best thing is for the market to take care of itself. As usual Congress is trying to do too little, too late.
I need to clarify the Realtor commission comment. That is commonly seen as 6%, (but always negotiable), BUT this is split between Realtors, giving them each 3%. At least buyers and sellers know what the fee is and know they have the opportunity to try and negotiate it.
Please Daqwn! The mortgage banker/broker fee is negotiable as well. How do you think so many consumers got “pushed” or “duped” into “ive got the lowest rate and fee”. Consumers are ignorant and only hear what they want hear even if it comes to the mess we are in now, but of course they wouldnt tell you that now because they are all looking for someone to bail them out. Financial illiterates.
They believe the biggest liar. I would lose several deals a month because some guy would lie lie lie and you know what, I have ZERO sympathy for the consumer. I know that doesn’t go for everyone, but it happened thousands of times over.
I know there were and are very shady bankers and brokers, but unfortunately we all get painted with the same brush. It’s sad.
Oh yeah, tell me which Realtor is going to take a 4% listing now. Sit on the market and waste money to market the property only to have the contract expire in 6-12 months without any action or payment for services. Please. The good ones won’t do it and I don’t blame them.
Y’all need a sobriety test. Remember the 4 “B”s – Brokers, Buyers, Banks & Builders. All are pushing the same product for the same reason … $$$ in their pockets. The rest of society are just pawns in their game. Not unlike “Big: oil, Lawyers/Lobbyists, Military/Industrial complex, etc….everyone else is just cannon fodder. A government by the rich exclusively for the rich funded by the middle class. When was the last time you ever witnessed congress doing anything for an individual. I’ve been around 60
years and I’m still waiting.
A final note. If everyone could read & understand English, they would all know how to read terms of loans, etc.
The homeowner in this story is the typical blame everyone, the LO took advantage of me type of crap.
First off, when making a huge financial decision. If you feel uncomfortable with something and the LO isn’t giving you clear answers walk away. Period. What is so difficult about that?
Second, the right to cancel has to be signed by the borrower and acknowledged. Additionally, it says RIGHT TO CANCEL in huge letters across the top so don’t give us that stupid line about “when I found it buried blah blah”.
Thirdly, what the hell are you doing taking advice from some stupid, inexperienced LO who is pressuring you into something? Don’t you qualify the person giving advice? Don’t you take a moment and think about what the hell it is you are signing, produced by a complete stranger whom you found via advertising of some form? Someone commented above and I agree. Borrowers would go with the biggest liar, get pressured into something and then blame everyone else but themselves.
Last. Unless the loan you received was originated in 2002 or so the prepay penalty language was on it own separate RIDER called PREPAYMENT ADDENDUM RIDER in big giant letters across the top.
Consumers, own up. You listened to the biggest liars against your own better judgment out of pure greed. You heard what you wanted to hear, put yourself in a situation where you had to close the refinance and when the LO person changes things up at the last second, starts applying the pressure you sign anyways. Instead of doing what smart people do. See, as a smart person who trusts my instincts, if someone starts changes their word and terms I walk. Period. By you choosing to sign stuff you don’t understand and allowing some 20 something to flip flop her way through a mortgage signing you allowed yourself to get screwed and deserve nothing but what you got coming.
Our great grandparents are rolling in their graves right now over people like this.
brief suggestion to any who says that the YSP was not disclosed to them at closing. Check your HUD-1 (doc with all the costs on numbered line. The YSP is generally on 1300-something.) If your YSP is not disclosed IN DOLLARS get to an attorney. You have 3 years to rescind (refi on your primary only). This can be a very good deal for you and very expensive for the lender. They will be quite inclined to negotiate a restructure.
The only response here that makes any sense and that indicates a grade level education of over high school is the one from ProInc, thank you and Sobriety, although I disagree with a few things that both of you said. But at least both of you are looking at the BIG PICTURE and the WHOLE picture.
Sobriety, loans are written in legalise, and it’s not true that anyone who can read English would understand it. I’ve read my loan documents a number of times and I STILL don’t understand it. That’s why we hire professionals to interpret legal documents. And no one would ever suggest that a closing docs are NOT legal documents. They are.
People suggest borrowers should higher a lawyer. That’s probably good advice. However, Mortgage Brokers, no matter what their role in selling loans, HOLD THEMSELVES OUT TO BE disinterest parties looking to get the best deal for the borrower. It’s part of their sales pitch. It’s dishonest. It is why many people DON’T hire a lawyer. They think they’re working with someone who is looking out for them, as well as their ownselfs (it’s not an impossibility to do both, you know) and then find out that the Mortgage Broker is a SHARK.
ProInc, I don’t think we should let the market take care of itself. WE need new laws and penalties, as you outlined. Brokers DO NEED TO ACT AS FINANCIAL PLANNERS. For many, the purchase of a home is the biggest purchase they’ll ever make in their life.
AS FOR THE REST OF YOU HATERS, I’ve dismissed your responses as the same old, point the finger, attack first, make excuses mortgage broker rhetoric I’ve been hearing since I’ve gotten here.
Mike you suggested: HOW ABOUT LOOKING IN THE MIRROR?
I like that idea. When you start doing so, let me know.
I can only take responsbility for the mistakes I’ve made and I think I did so in my original post, which Moe highlighted here: Thanks Moe!!!
HOWEVER, I seldom hear Mortgage Brokers follow their own advice, and walk down the road they like to point borrowers to: that is, owning their mistakes, the blatant, clear mistakes of their industry and offer solutions to the problems that have arisen because of that industry’s mistakes.
We can all own only the mistakes that we make.
When I read a Mortgage Broker boasting about how honest they’ve ALWAYS been and how upstanding, I think to myself: Me thinks doest protest too much.
If you haven’t been dishonest, why argue so vociforously against the very warranted and needed critism of those in your industry who most certainly were and are?!?!?!
Is it being suggested that there are NO dishonest mortgage brokers?
Come now, that would be just, well um, stupid.
We all know Mortgage Brokers are much more cunning than that.
The kind of posts I’ve read here and that are posted in defense of the Mortgage Brokers dishonesty . . .
(pointing to the Bankers) Well, heeee did it toooo . . .
(pointing to the homeowner) Well, she was just stuuuupppid
(or pointing to the government) It’s not faiiiirrrrrr!!!! Everyone’s always blaming us!!!!! WE don’t want to be regulated!!!!! WE want to be left alone) — all of that points to an infintile mindset that indicates an industry populated by immature people (I dare not say professionals) who have a H U G E sense of entitlement, NO sense of accountability and responsibility AND no remorse or guilt for the destruction that their selfish, self-centered behavior has wrought against millions of Americans — in short, two year olds.
Please, if you don’t feel I am speaking to you, feel no need to reply.
“A government by the rich exclusively for the rich funded by the middle class.”
THAT is the crux of the problem, Sobriety — I agree.
And with that, I’ll say Merry Christmas as I sign off.
On these option ARMS and subprime loans, everybody knew what they were getting, the borrowers and the brokers. This whole US consumer-driven economy is fueled by debt. Our own government is in the hole for $9 trillion ($9,000,000,000,000). This is another wealth cycle. The rich get richer; the poor get poorer. Merry Christmas!
JacMac,
When you stop pointing fingers, so will I. My problem with you is that you single out brokers. I never said there were no dishonest brokers. I know there are. But, me and you can call every one of my clients if you’d like and ask them who they trust more and ask them if I was ever dishonest. It’s a long list so be prepared. I can confidentily say 100% of them would never tell you I was dishonest. I have no problem doing that at all. Let me know when you want to do that. Further, my question to you is this: Do you understand the definition of a “broker”? A sales pitch? It’s Dishonest to find the best deal for a client? WHo are you JacMac? Please explain yourself. You were probably one of those consumers who beleived a 1% mortgage was really 1% after 4 other Honest brokers/lo’s told you it wasn’t, but you proceeded anyway because you were so set on “best rate and fee”. Please
Merry Xmas
Lumping “all” mortgage brokers into one group is irresponsible. Some of us are moral, ethical, professional, educated and do act as financial planners. We spend tens of thousands of dollars on continuing education to make sure that we thoroughly understand our clients’ situation and place them in the proper loan program. Option ARMS were typically given to savy investors who had the equity to borrow if they chose to make the low start rate payment. I blame our industry: The investors who purchased these products on Wall Street-they set the guidelines; the banks who set the price and gave the option to brokers to get YSP of up to 3-4 points on the back side while charging origination points; state licensing who gave licenses to inexperienced uneducated, greedy, unethical people whose career path had never been the mortgage industry but jumped in for the easy money; The Department of Corporation who allowed anyone breathing to sell these products (yes, these are the banks) without any licensing at all.
So, my 25 years in the mortgage industry, tens of thousands of dollars in continuing education costs, tens of thousands of dollars in marketing costs means nothing right now. I am being lumped into a group of people, labeled by other people who know nothing about me, my work ethic and what I stand for. Now, Congress wants to get into the act by punishing mortgage brokers by taking away YSP which eliminates the consumers choices and drives them back to the banks. Geez, it makes you wonder who is behind all of this?????
Do the consumers realize that they are about to be hosed all over again? Do they realize that Fannie Mae and Freddie Mac are going to price everyone out of the ballgame by charging borrowers for HUGE add-ons for having higher LTV’s over 70% and credit scores under 680? Without YSP to build some of these costs into their interest rate, their origination and discount points alone could exceed 3-5%, excluding closing costs. Every other investor will follow suit and congratulations, our industry has truly imploded and guess where the consumer has to go for a loan? To the banks!
Mortgage Brokers serve a purpose: To give the banks competition so that the consumer has a choice. I am with Mike. You call everyone in my database and ask about their experience as my client. They will confirm that I was fair, honest, professional and ethical. They received the rate they were quoted as locked and their final HUD-1′s were almost identical to the one they were given with their initial application. As brokers, we are required to disclose ALL compensation on our state good faith estimate. The banks are NOT required to disclose YSP or SRP on their up front disclosures. HMMMMM there seems to be a pattern here……I wonder who the government would rather see fail: Mortgage brokers or Banks……Caveat Emptor!
Are you serious?? Why doesn’t ANYONE READ WHAT THEY SIGN??? You know…when I was fresh out of high school, I signed a contract. I had to fulfill that contract. It taught me one thing – READ BEFORE YOU SIGN!!! I had to serve my time in the military and had a good time doing it, and it just SICKENS me to hear people whine about the bad LOAN BROKER, LENDER, UNDERWRITER, AND BANKER. Never mind the boat, RV, jetski, toy hauler, debt consolidation, etc. that people got out the equity in their homes. And gee, let me think, do I wanna pay 2200 for my home or 200.?? Do you guys REALLY think that Loan people are the only ones culpable in all of this? Or does that POOOOR borrower have something to do with this???? Maybe its just American culture – milk, then WHINE.
Great Post Big Ed! A lot of my clients called me wanting an Option ARM or Pick-A-Pay loan (four payment options). I provided them with pages and pages of information explaining, in detail, what this loan meant: If you chose to pay the low-start-rate YOU WILL HAVE NEGATIVE AMORTIZATION (at least after 2003) which meant you were borrowing on your equity! YOU WILL OWE MORE THAN YOUR INITIAL LOAN AMOUNT IF YOU CHOOSE THIS OPTION! When I explained exactly what this loan was and how it worked, less than 1% of my clients ended up with this loan who weren’t real estate investors. I did not deal in sub-prime loans, I was exclusively an A paper broker.
GOOD ON YA VIRGINIA AND ED. Virginia nailed it on the head. Thank you Virginia. I’ve been screaming this ever since the implosion and pointed fingers began. Thank you Virginia.
There are good brokers JacMac…
I have been in the mortgage business as a broker since 1990. The situation we are experiencing now is not all that much unalike the S&L crisis of the early 90′s. Simply put there were a few “bad guys” that caused a lot of grief for a lot of people. And, in time, we survived.
In recent years investors brought to the market place creative financing. The borrowing public used the creative mortgages to purchase homes when they could not get conventional, fha or va loans or loans from the local bank. The reasons are simply 1) credit issues; 2) not enough down payment or equity; or 3) more house than income would support. So here come the problems.
1) stated income – really over stating the income to get the mortgage done.
2) more than 100% mortgages – up to as much as 125%!!!!!
3) bogus w2′s , pay stubs, voe’s, bank statements and retirement money.
Investors knew what they were doing. Lenders and underwriters knew what was happening. Mortgage brokers and loan officers were giving the borrowing public programs to get into houses or refinance houses. And the borrowing public knew what they were doing.
People complaining about 9 and 10 percent interest are really out of line. They are complaining because they can’t make the payment. In 1983 we purchased a house with a conventional loan. We paid 2 points and paid 11.25%. It was a 30 year fixed loan. We paid our mortgage. So what’s the problem? Eye’s are bigger than the stomach? Not paying attention to the obvious? Turning heads away from reality?
The sub-prime loans or non-conventional loans as I prefer to call them were to be stepping stone to get to the conventional, fha and va loans. Unfortunately due to competition and demand for more business the investors kept losing up the guidelines. As has been said in another industry “If you can fog a mirrow, you can get the p…..”.
Now we will all pay the price.
YSP is not really an issue. Being paid a reasonable income to do a job should be acceptable. This particularly when compared to the credit card companies charges!!!!! And a comparison can not be made with real estate commissions since those fees are split up. I know. I own a real estate company as well and, in the past, I have sold real estate. The inequity is when the mortgage banking and brokerage communities have to disclose and the banks do not. Hmmmmmmm!!! So who is or isn’t informing who? Gee, the consumer???
Most mortgage people do a good job. Unfortunately now those of us who are left will have more legislation and regulation. In stead of more legislation and regulation, government should simply enforce the existing ones. Layering legislation will not eliminate the “bad guys”. As always they will simply figure out a way to get around it all. Pulling their licenses and assessing penalties swiftly will go a long way.
Anyway, to sum up, the mortgage banking/broker community is a tremendous marketing system. We need it and all of the good mortgage professionals to help many, many people in the next few years. So hats off to the “good guys”. Don’t quit
Again JacMac, along side Virginia, Joe comes to the table with the facts.
Again, there are good brokers..
Good post Joe. What I feel very strongly about is more stringent regulation re: the licensing of loan officers. After all, it is not just about sales. It is about the consumer’s lives and well being. There should be a minimum requirement re: experience and education. Anyone can pass the CA licensing test. I completed it in 20 minutes. What it takes is understanding what you are selling and how it affects the consumer. Most of the “bad” loan officers had no lending experienced, passed the test and were off and running. They were not trying to build a business, develop a referral-based database of clients or care where the client would be in 2-3 years. Banks SHOULD NOT BE EXEMPT from licensing regulations. There should be a level playing field and the US government should not be allowed to make the mortgage broker extinct. I believe in responsible capitalism and no one should be able to tell me what my time is worth after all the time and expense I have put into my career.
Merry Christmas to all!
Thank you Mike and Virginia.
I have a very large following who contact me to refi or purchase their homes and who refer many people to me. So I must be doing something right at a mortgage broker. The point is I am sure I am not alone here.
With regard to ysp, if the government eliminates this for the mortgage brokers then it would only be appropriate that the banks are not allow to have it either, disclosed or not. Then we will see how many people can come up with the points to pay us and to pay the banks. The point here is the government as usual is over reacting. It is an election year and they need votes. Secondly, some reform is needed but again it is only legislation with no enforcement (teeth).
I do agree with the fha reform raising the loan limits to 417,000 and 1.5% down payment. This program has been in existance since 1934 and has provided many people with mortgages. And, by the way, if down payment of less than 5% is an issue, then why is it that the fha foreclosure rate over the years is low particularly with a lesser down payment – 3%?
I don’t know how much impact our comments will have. Maybe somebody in power will read these and ask the question, “What if it was me”?
Virginia, you are exactly right. I’ve worked in both arenas. It was an absolute joke whom these financial institutions were(are) hiring. No licenses needed at all when you work for a bank.
Here I am, with a business degree, experience, licensed, continuing education credits and referral business that was built from the ground up and they(managers) are hiring 18 year old kids and telling them to lie, cheat, and steal. No degree, no education, and Zero training for your home loan consumer. Biggest decision/investement that 95% of americans make and the government allows banks to hire individuals like this without any education, experience, or training. Further, they continue to allow YSP to go undisclosed. Level playing field? Consumer protection? Banks should have minimum requirements and mandatory training and licensing before they even set foot into a mortgage operation.
I worked for First Horizon Home Loans, which is a subsidary of First Tennessee Bank. Never was there a training for new LO’s or education requirements. They hired whomever called in and asked for a job. It was disgusting. This is one of the reasons I departed.
Anyways, it’s good to know that there are good people fighting the good fight. We will be here because we are dedicated to our clients and that relationship, not a simple transaction.
First of all, unless there are consquences for all parties, mortgage employees, brokers, loan officers, investors etc., this will reappear under some other “name” in the future. Just like the savings and loan fiasco.
As for the so called poor “borrowers”, so many lied on their applications, and figured they could blame the broker or lender. Where are basic ethics? “oh the broker did it”.. BS… I applied for a loan and specifically stated I wanted to go FULL DOC. I wouldn’t lie on my application. People want the houses that badly that they LIED…
And stop blaming the underwriters, those stupid guidelines are at fault and everytime I tried to pull the plug on one of these bad loans I got abused and kicked. I do realize allot of underwriters utilized their power to get sideline money, and I hope they catch them. Just like I said in the first paragragh, they need to pursue and give consequences. This would have worked if there was some degree of honesty by all parties. It is just that there were no consequences.
And…. lay allot of this problem on the liberals.. they wanted EVERYONE to qualify, most of the foreclosures now are aliens and illegal aliens, or stupid small time investors that got in over their head. Also, many of these idiots accepted money for being straw borrowers or lied on their applications about income. Their credit will be ruined for years, and they deserve it. You know, good ole equal opportunity lending.
Oh yes, and owning a home is not like paying rent, if you don’t understand all the responsibility that comes with it, don’t get involved. If you want to own a home, learn what is required, and learn how mortgages work. 50% of the people who bought homes don’t know how to deal with the responsibilities.
Am I bitter? Yes, this was a decent industry until they let the idiots and criminals participate.
Sandy, right on!
Unfortunately history repeats itself – S&L and now. And you are right! Again, it goes to accountability, responsibility and work ethic. And, as you said, there are no consequences. Let’s just take care of everybody. What really irks me is that I work hard and I don’t get any handouts! But I gotta help the government take care of those who work the system instead of working for a living.
Ya know, in sports if a player isn’t up to par for whatever the reason, the coach replaces him so the team, get it, the team can win. But we’re like that battery that keeps on and on and on and we keep payin and payin and payin. I work so hard and I feel so dumb. I just wasn’t smart enough to figure out the system and work it. But then again I wouldn’t have a house on the lake, 2 cadillacs, 2 bmw’s, a boat in my back yard, water skiing at lunch time then back to work, a very nice large big beautiful four level home with a very large big back yard on the water, money in the bank, oh, I own two companies, I went to cash in my 401k in early July, oh, I shoot a real low 80′s high 70′s golf with a private forever tee time. Darn, I wonder who’s workin the system? Can’t get all of that workin’ the system, if ya know what I mean!!!!!!!!!!!!!!!
I tell my loan officers, run…………run…………..run faster…………..run faster………..early bird gets the worm………….run………don’t look back…………..run, run, run, run, run, run!!!!!!!!!!!!!!!!!!!
Sorry!
Got off on a tangent!
It really does pay to work hard, be honest, think about the other guy, be the giver, be accountable, say I am wrong when I am wrong, say that idea is better than mine, let’s do it, and so on.
We help one borrower at a time. Gee, and I’m still here!!!!
What’s with dat??????????????/
FHA reform is definitely in the works. The Senate FHA-modernization bill differs in some significant ways from the House bill. Both the House and the Senate versions raise cap limits, the maximum dollar amount of mortgages that are eligible for FHA insurance, but the House bill is much more aggressive in nearly every one of its provisions. The Senate\’e2\’80\’99s version sets the cap at $417,000, while the House would set the cap at $729,750, which is more than twice its current amount. That will give many more home buyers, especially those in high-priced areas like California, access to FHA-insured loans. The House will also allow more people in by accepting no-money-down deals, unlike the current policy, which mandates a 3 percent down payment. The Senate bill still requires a down payment but halves it to 1.5 percent. Both bills relax the strict provisions that have kept FHA insured mortgages of limited use in buying condos and manufactured homes. The next step for the FHA modernization bill is for members of the House and Senate to work out the differences in the two versions. Stay tuned…..
Mortgage Reform Bill S 2452 ( here is the link)http://www.namb.org/images/namb/GovernmentAffairs/Dodd%20Bill.pdf
definitely curtails compensation to the broker via YSP. I don’t think there is any other industry where the US Government determines the profit margin. Is Congress aware of the time and money we spend, as brokers, in continuing education, marketing and research costs? To arbitrarily determine in points, what is fair to the consumer is ludicrous and definitely will send everyone to the banks and eliminate their competition. The proposed bill is 77 pages but it is worth your time to read it through and then act! Contact your congress representative and senators to let them know that yes, some reform is needed but eliminating YSP is not the way to protect the consumer.
Virginia,
Profit margin for absolute middleman industry shall be capped. YOU DO NOT ADD 2 CENTS VALUE to economy by brokering and as such your fees should be capped.
You may be honest LO/broker but fact of the matter is that 90% of your occupation are shysters. Among borrowers in last 4 years that percentage is less perhaps 60% tops but the fact of the matter one shady broker will inflict far greater damage than one stupid borrower. Live with it, stricter regulations are coming and I WILL bring message to my elected officials that your industry MUST HAVE the same standards as security brokerage industry along with the message that stupid decisions made by BORROWERS should not absolve them of any responsibility.
Alan-Where did you get your figure of 90%? Where did you get the 60% figure you quoted? Can you direct me to the website or written material with some statistical data that can confirm those figures? Do you really feel that lumping a whole industry into one group and calling them shysters is sound reasoning or makes you appear intelligent? It sounds like you are pulling information out of the air to confirm your statements and cause a negative reaction.
Commissioned only loan officers are basically self-employed. There is no guaranteed pay check on the 1st and the 15th. We pay for our own education costs, insurance, and marketing fees. We receive zero benefits because we are not employees. We are licensed by the state we reside in and take care of all of our own benefits. Are we suppose to have caps and reduce our compensation so that by the time we pay for these items we make nothing? Alan: Would you work for free?
Research can take many hours to place a client in the best product for him/her. We are available 24 hours a day, 7 days a week to speak with our clients and realtors. We take our laptops and/or blackberrys wherever we go: on vacation, business trips etc. We spend many hours on the phone with our clients and people who just want advice. If the loans do not materlialize, we do get compensated for our time. What do you think is going to happen when you cap profits? The professionals are going to leave and make money in some other industry. You will be left with John Doe who watches the clock and leaves right a 5 p.m. after having his lunch break and two 15-minute smoke breaks. During those times and after hours, do you think for one moment that he cares what happens to Joe Client after 5 and on weekends. Salaried employees will not be available at night and weekends and certainly would not consider taking a call on their vacation. If you make arbitrary caps, how does that work with a loan amount of $100,000? Give the LO 1% and call it a day? The compensation must be equitable just like any educated professional. Most professional, career loan officers do protect their clients. It is the banks and the states that allowed non-educated and inexperienced loan officers into our industry. I feel that a loan officer should not be licensed until he/she has at least three to five years of on the job training. They must have a lot more education than is currently required and pass a more rigid test for licensing. Banks should not be given a pass. They are the ones who are not required to have licensed loan officers at this time.
Is reform necessary: Absolutely! Did Banks contribute to this problem: Absolutely! Did brokers contribute to this probelm: Absolutely! Did borrowers contribute to this problem: Absolutely! Did Wall Street contribute to this problem: Absolutely! Did lenders contribute to this problem: Absolutely! Again, my issue is making sure that a seasoned, educated, ethical, proven professional gets fair compensation.
BTW Alan: What career are you in?
Alan,
Who are you? What do you do? Ok smart guy, let’s cap us at 5-7% just like securites brokerages. I’m ok with that. That’s 4-6% more then we make now. Like a CFP or Stock broker is any different Alan, paa-lease. I’ve worked in this profession as well at UBS for 10 years as a CFP and Portfolio Manager. Talk about sharks or should I use your term “shyster”, they’re loaded with them. More then you could possibly fathom.
I don’t need to say anything further because Virginia covered the rebuttal on all points of interest.
I’m with you Mike! If what you are saying is true re: securities brokerages, I’ll take that 4-6% raise any day!
I believe that these blogs are worthwhile and informative. I love that they incorporate the consumer with the professionals and opens up a dialogue that hopefully will be of some use to all involved.
While looking through some posts from the past 30 days, I found a link to a wonderful article re: the blame game.
http://express-home-mortgage.com/blog/2007/11/17/say-goodnight-to-the-bad-guy/
Alan-I’ve read your posts from the past 30-days and it is obvious you are on a mission against all mortgage brokers. I learned early on in school from one of my best teachers that no matter how well thought out the premise, “all generalities are false”. You will always find someone or something that will not fit in and therefore invalid it. You appear to be intelligent so hopefully you will understand that making these sweeping generalities calls into question your statements and whether or not they can be backed up with authoritative, statiscal data. We are not all “bad guys”.
I worked for a major mortgage banking firm that imploded in
August. I now work for a large bank. The YSP issue that keeps coming up in these discussions between mortgage banking firms, banks and brokers about disclosure has always been pretty clear to me. If you put up your own money to close and fund the loan in your own name you do not have to disclose the service release premium you will earn if you service the loan or any premium you would earn if you decide to sell the loan. If you are a broker and use someone elses money to fund the loan whereby you have no risk involved with your own money you must disclose how much premium you are earning between what the lender sold you the money for and what you sold the money to the customer for. I agree that brokers play an important role in mortgage lending primarily due to creating competion for the mortgage bankers and at the end of the day competion helps consumers get better rates and fees. My proposed solution for fair disclosure would be for all players to have to include the YSP or SRP into the APR which we all know is “supposed” to be the equalizer when comparing offers between lenders. The problem with this however is that the TILS’ I have seen over the years somehow misteriously leave out many of the true costs from the APR calculation. Any ideas?
OK guys lets all be honest the truth of the matter here is that in the past 10-15 Years the word got out that the mortgage business is a great way to make a quick fortune and alot of greedy incensitive people came running, in the middle of these guys are those of us that has chosen this as a career, we look at each client each situation and the truth of the matter is someone said we should not be like financial planners lies lies lies as a mortgatge broker you must be like a financial planner. that is the reason why we are in the crap we are in now, you must know your client they should become like family, that way you know that bill has a 16 year old daughter planning to goto college he’s refing to pay of debts to prepare for the situation you njeed to know how to help and give good suggestions to this guy so that he does not need to come back to you in 2 years to line your pocket be a friend to your clients your business will grow…. there is no such thing as a bad loan but there are bad broker’s everytime a bank comes out with a new program first question whats the dowmside how can this harm my client how can this help my client if half the industry was doing this instead of looking at the biggest spread we would not be here, Crap roles down hill let’s start at the top If the banks and branch managers demanded training on products and guide lines before the LO could sell these products then HMMM would they have put these client’s in these loans that did not suit there situation
TO MR HONEST BROKER Keep doing what your doing i know it’s hard but we will perciveeerrr when the dust clears all the shark’s and shister’s will be gone no more crying for your client that has been put into loan that was nothing like they said it was now you cant do anything to help them no more dealin with lying lo’s that tell clients that there rate will be 3% with no closing cost when par is it 5.875% haaayy don’t worry it’s not your YSP or your origination that’s gotten people to wherew they are its that i want bigger i want better i want the best pricing that got them there if bob makin 30k did not want that 300k house that he knew he could not afford and if that broker had told him know let’s try something smaller hey he would not be in that situation now…….so now MR HONEST BROKER as we stand at our door and watch these client’s leave and goto the shyster have no fear in a year when every thing is not as it was told they will be back to ask you how do i straighten out thiss mess and we shall pray that there is a way to help them…
MR CONSUMER there are thousands of shops on each corner talk to a friend or a family member to get a referal if not ask your guy for a referal at least yo have a 50% chance of getting someone honest……but if it sounds tooo good to be true then it usually is so don’t let your shop for a good deal cost you more than the worst deal…..
I owned an investment firm for 10 years before entering the mortgage business. The market pretty took care of the commission and it moved up and down with the size of the transaction. Now this is during the 80′s. I can not address how it works today. However, again, I do not have an issue with a 5% high cost limit. And, again, I have felt properly rewarded for all transactions, large or small, difficult or not.
The issue of capital risk being the basis of ysp disclosure may be valid. However, the bigger issue is disclosure to the consumer. They, then, will be able to compare “apples with apple”. Ever heard of that, Alan? Alan, while you’re at it why not totally remove the free enterprising element of the capitalistic system. Just control all revenue, income. While you’re at it control all the expenses too. This way all the profits will be controlled. Talk about going backwards!!!!!
It is true there are “bad apples in every bushel”. It is now true, a therom, “all apples in the bushel are bad”. So Alan has some learning to do. Some day, Alan, you will understand “throwing out the baby with the bath water”.
Our system of government isn’t perfect. But it’s the best we have and it’s the best on the planet and has been for over 200 years. So there must be some validity to the system even with some spending waste and some corruption. Again, I don’t believe we should throw out all government officials, top to bottom. Our political system, again, does work quite well.
So given issues and imperfects, we’re still here!!! Again, the mortgage banking and broker systems are large marketing systems that have worked well. We need to do some house cleaning. And that is what is being done.
By the way, Alan, you can keep your job. However, the boss just came in to announce that your salary will be cut by 25%, but you have to continue doing the same job and working the same hours. OK with you?
Correction: …It is NOT true, a therom, “all apples in the bushel are bad apples”.
Mike you said: “WHo are you JacMac? Please explain yourself.
Last I looked, this forum was to help HOMEOWNERS become informed and to advocate for them. It wasn’t for me to come on and talk about myself all day long.
I tell my story only as an illustration and to explain where I’m coming from. How much more information would anyone need?
If I was to make it a platform to talk about myself and I, I, I all day long, I’d being displaying the narcissistic behavior that I read when ever the post starts with “BUT I did this”, and “I never did this”, and “I always acted like this”, and “I think this” —
NOTE to all the disclaimers: It’s not all about you. If you weren’t a part of the problem, then why do you respond to the accuasations?
Be a part of the solution. What are you doing to help?
If you were a part of the problem, than what you can do to help should be crystal clear, unless you’re a criminal with a narcissitic mind, then you simple don’t give a damn.
Abe, thanks for the advice to both the Honest Broker and the Consumer.
Name calling and blaming only works for those invested in never becoming accountable. I never said I blamed all Mortgage Brokers.
“This was a decent industry until they let the idiots and criminals participate.”~ Sandy
Sandy, I blame the criminals. Some people can’t help being idiots, but criminal behavior should be penalized and those who participate in them should be held accountable. Predatory lending SHOULD be a crime.
Jacmac-People are frustrated because they are being blackballed, just because they belong to an industry as a whole, not for anything that they did. They are being called nasty names and it is being inferred that they are complicit in what has happened. The public, as a whole, are accusing them of being “liars” and “criminals”. They want an opportunity to explain themselves to the consumer and confer with others in their industry about what happened. They want everyone to know that there are good, ethical, professionals available who truly care about them and want to give them the benefit of their years of education and experience. Open discourse is an excellent path to mutual understanding. I have read name calling from all sides in this forum and I have read some very good posts as well. I understand the bitterness of the consumer who is now facing foreclosure and financial ruin and I can understand the frustrated anger of the mortgage broker who is now facing extreme financial hardship because of the lack of business and the inability to get a salaried position. It’s kind of ironic, how similar the fate each one is facing. If people make strong statements and sweeping generalities without backing them up, then they are the ones wasting everyone’s time. I say keep up the conversation……
I have been in mortgage lending full time for 25 years, in real estate for years prior to that. The option ARM in my opinion is a horrible product- I have done maybe 4-5 in my entire career. I made sure these people fully understood the product, and they all were financially secure enough to handle the risks of this loan. Customers need to bone up to the fact that they took a huge risk getting a mortgage that had a ridiculously low payment. I will agree that there were many slime balls that entered this industry and pushed this product, but there are lots of slime ball car salesman that push trading in your upside down car loan in on a new model and jack the rate on your new lease payment, and collect compensation from the finance company (that is never disclosed, like brokers). I got a bid for replacing my large concrete patio from 3 contractors, and the bids were a long ways apart, one was twice the amount of the low bid. Do I know what the net profit is for each contractor? All I should be concerned about is what kind of product I get for my money. Prices vary in all industries, the customer needs to shop. Any prudent customer that got those 3 bids should have questioned and researched the low bidder and check references to make sure the guy could perform on his bid. YSP (Yield Spread Premium) serves a purpose in making sure my doors stay open, and gives me an option to give a low cost/ no cost loan to my customers. It should not be used to fatten my wallet so I can rape and pillage my unknowing customers. Education courses for licensing do not make a person ethical and will not work. I have no problems with limits on compensation as long as they are reasonable. The banks should not have allowed those ridiculous rebate points unless they provided a net benefit to consumers, in the form of reduced closing costs.
Customers need to protect themselves by shopping and education. Perhaps it may be necessary to require customers to pass a web based test prior to the closing for ANY adjustable rate loan, in order for them to fully understand the terms, and keep the lenders free from fake “I did not know” claims.
Well said Todd. Every professional that I know operated the same way re: Option ARMS and other exotic loan programs. Ethics classes are taught for continuing education credits. Some people do need to be taught what is ethical behavior in business. If they have no formal training and they come in off of the street, they may not know how to behave properly in a business environment. Morals, on the other hand, are cultural and typically are learned at home.
I appreciate everyones comments. Virginia, Todd, Mike, Abe, JacMac and Alan (as usual
) . Even the bonehead comments because what would a comment section be without the typical rants and rubbish. The well thought out comments are very much appreciated by all.
This is a very touchy subject. JacMac has been a trooper about letting me post her comments. It gives homeowners and others a look at the playing field from both sides of the fence.
I am not trying to pit homeowners against the mortgage industry, just educate one another on how each ones us “views” the mortgage world. We all do not see things the same and we are not all right or wrong. There are truths in all the above comments.
Not all mortgage brokers were scammers and predatory and not all homeowners knew better. A lot were on both sides of the fence.
But what are we going to do? The damage has been done. What can we do to make this a better world for all of us?
I am here to help the underdog right now and that is the homeowner and give the ethical mortgage broker a voice.
Cheers and thanks for another great debate!
Thank you Moe..
JacMac- Just today I sat down with a school teacher whose husband left her with a negam loan for 740K and a 2nd TD for 147K. I did not do this loan and never would because both of these individuals were salaried middle income wage earners with limited savings patterns.
She now makes the neg payment and can’t afford a fully amortizing payment or an interest only for that matter. Albeit, both borrowers when I questioned them knew what they were gettting when they signed the loan docs. Further, I know exactly where she lives and I have a very good idea of value in her neighborhood and what the values were when they got this loan. I knew the lender(Greenpoint) and what there guidelines were in regards to LTV/CLTV at the time they took out this loan(1yr ago). I further know that she is totally upside down and has nowhere to go but to continue to go neg and let it recast or help her. I can’t help her with any refi, or collect a commission like many think we are only here for. But what I am going to do is this:
1. Help her write a letter explaining her hardship. 2. Help and guide her to contact the appropriate people at Greenpoint to possibly look into a modification or requirements for a short sale. 3. Find out who did their loan and their appraisal because there is no way in hell based on what I know about the value and guidelines should this loan even been considered. This could be grounds for major fraud between all parties involved. 4. Make sure a viable solution is in place and that it’s followed through with.
There have been some very good discussions(good and bad) but I wanted to shed some more light on what good brokers and people that value relationships do. I’ve never met this person before but she was referred to me like 100% of all my clients. This is my fiduciary responsiblity. I’m not after or recieving any financial gain but I am spending a lot of time to help someone in need. I do this because I know it’s the right thing to do. I know that my good deeds will come back to me in due time. I know Virginia, Abe, Todd and every other good broker would do the same.
JacMac- Is this helping the consumer? Am I doing my part? Does this satisfy you or are you going to continue to call me and everyone else a criminal?
I’ve responded to your allegations because I’m not going to let you or anyone else for that matter tell me in so many words that I’m a scumbag and a criminal. It takes balls for people to stick up for themselves, let alone an entire industry, but if I do, maybe it will inspire others(in my profession) who feel the same way I do and give them the courage to respond and stick up for themselves. I am here to help not bash contrary to your words.
P.S. I’m still waiting for yor response about you and I to call every one of my clients.
Moe, thanks for as usual, being the gentleman mediator.
Mike, I have never alleged anything against all MBs and did not call them all criminal — but there are many who are.
I haven’t made allegations against you personally, only those who are guilty.
I think what you are doing for this woman is commendable.
Virginia, you made some great observations and I am a great fan of communication — it is always helpful, even when there’s bickering
Todd, I agree with you that the option ARM is a toxic product, especially in the hands of unethical professionals and ignorant, uninformed consumers.
We are in this situation together, as Virginia pointed out and we will all suffer tremendously if we don’t work together to come to a solution. Ultimately, that is my view point.
I think from reading this post we have found out 1 thing only the good guys research we get up early in the morning to find out whats going on in the industry how it affects our world and our client’s(friends). we go to bed late because we are thinking if there is a way to help that scholl teacher out of that neg am loan, I sent one client to an attorney who said hey you signed nothing we can do now, after all the people i turned away this year worst year yet, it all comes down to education the consumer needs to be educated, in the wall street broker chop shops there’s a saying you send me a million today you literally send me a million, people lost alot of money, the point is when you are sold a dream, you need to check you need to verify this world is a scary place maybe we need to put together a website for mortgatge guys who do the right thing not companies but personal brokers, as a branch manager i watch over and impress upon my guys how important it is to treat your clients right, treat em right they will come back and bring friends its not about getting rich on one deal but slowly chipping away at the block….I have clients that there mother is a mortgatge broker but there refeerals come to me strange……… the consumer if he had these sights to read might make better judgement choice…… i used to run a debt management company when i had to put someone in a high interest rate arm i told them how to fix there credit and how to be a better spender 80% of those clients came back and went from a 2 years arm to a stable fix these are the things that experiance offers……no one is to blame her no need to call names consumers made bad decisions and everyone must pay, car dealers sell bad loans every day should we shut down the car dealers, no but if we educate the consumer it forces the car dealer to be honest same with mortgages……and remember you should always get what you pay for….. Jac mac i feel for you i am sorry one of my brothers in bussines mistreated you i wish i would have known you then u would not be here now but everything happens for a reason we would have never had this forum if not for ya…….. merry christmas
the bottom line is that all of these products were offered and being pushed. if you have a LENDER/BANK willing to loan 100% to a 520 credit score then i do not see why the fingers are being pointed at the brokers. they are not funding the loan. And yes, the loan officers should have the decency to tell the borrower that they are not in a financial position to get such a mortgage (and many did) but as soon as that would happen, the borrower would go down to road to another broker and get the loan done. i saw it happen over and over.
the united states is a consumer nation who want what we want NOW. no one can argue this fact. just look at all of our fat a$$es in debt personally and as a nation. why anyone decided that to offer a 30 year debt to someone who has never paid a bill in their life is beyond me but everyone did. now these people are not paying their mortgages. DUH! so lets refinance them…..once again, a lot of these people should have never gotten the loan in the first place and it is damn near impossible to get them out of it now. the fha secure is b.s. b/c unless the lender will turn their head on other factors of the loan such as DTI then these people do not qualify. stated is practically a thing of the past unless you have 700+ credit scores and those people are really not the problem. investors are running away from MBS’ right now and i don’t blame them. i wouldn’t want to loan these people any money, especailly now that there are so many declining markets?
so what do we do now? seems that lender’s have chosen to stick with cookie cutter deals for now. fine by me, but i really feel sorry for the self-employed borrower who cannot prove their income enough to qualify (if they have a good cpa).
this industry is just a mess right now and i am really just so tired of finger pointing. everyone is to blame. lender’s offered the loan, brokers put them into the products being pushed, borrower’s accepted the loan and did not do any reasearch on the biggest investment and longest debt of their life and now we will all suffer in some way.
if anyone has any PRODUCTIVE ideas or solutions i would love to hear those thoughts instead of constant negative.
[...] long time veterans like Joe who believe and hope for they will survive; I have been in the mortgage business as a broker since [...]
“Jac mac i feel for you i am sorry one of my brothers in bussines mistreated you i wish i would have known you then u would not be here now but everything happens for a reason we would have never had this forum if not for ya\’e2\’80\’a6\’e2\’80\’a6.. merry christmas”~ Abe
Abe, thanks for your sentiments, really. I am truly touched and I appreciate you seeing me as who I am: A single mother, with two children to feed and clothe and shelter. I believe as you do, that everything happens for a reason. Experience is what you get when you don’t get what you expected. I AM learning from this mistake.
“but i really feel sorry for the self-employed borrower who cannot prove their income enough to qualify (if they have a good cpa).” ~ Stephanie.
Stephanies, thanks for giving voice to my struggle. I have worked as a Sole Proprietorship since I was 18. I have always paid my bills on time and have excellent credit. I don’t deserve to be in this situation.
Educating the consumer is the key, and Moe is doing his part in providing this excellent forum so that consumers can get an insight to what is going on in the industry, what the motivation is for some of the players, the mindset and mentality of some of the Mortgage Brokers (whether good or bad) and what to do now, and if they ever purchase a home again.
I would hate to be a crooked Mortage Broker, Appraiser, Loan Officer or lender or bank at the table with ME in the future. I am now an Educated Consumer.
But more importantly, I’m not afraid to WALK AWAY. I know what can happen and what’s at stake if I don’t.
Thank you Moe and Jacmac for your comments and Moe, for providing this forum. Jacmac: Good luck and thank you for providing your insights as a consumer. Thanks Mike, Joe, Abe, Msrk and Todd. This was a very satisfying and cathartic experience for me.
I think we went over the situation, in detail, and know what we all have to do or continue to do. While I agree that reform is absolutely necessary, I don’t agree with all of the proposed regulations. I will be watching closely and continue to be involved in the process.
Hey Alan! We never heard back from you since Christmas! I hope you had a joyous holiday and hope you keep an open mind about the mortgage broker. If you need any help with mortgage financing, there are some excellent professionals here on the board to help!
Here’s to 2008! May we be healthy and all have a better year!
The truth is that probably everyone reading this cares about the industry and is more or less honest, that’s why we are all still around and interested in this stuff. The problem was all the bad apples that came in. They outnumbered the good. What is going on now in the industry will weed them out (hopefully) and those left will only be the educated and honest (hopefully). The only questions is when this works itself out what will be left of the industry. There have been so many posts here that I have not been able to read them all fully, but i’m sure everyone had good points and from what I’ve seen there is at least some truth in all of them (although some might lean one way or the other). It will just take some time to work out and then we will see where we are. Hopefully the changes that are made will make it harder for those who have destroyed this industry to can back in, and if they do get in, that there are severe penalties when they act unethically. I hope everyone had a great holiday and HAPPY NEW YEAR (hopefully it’s better then 2007)
proinc
Thanks Virginia and everyone else who made this a very insightful debate. Without you all, I would be blogging alone
I wish everyone the best in 08′ and Happy New Year!
JacMac is the only one who I completely commiserate with. I am a distressed homeowner, soon to be in foreclosure. Before this mess started, my credit was close to 800. Now it is in the toilet. My husband and I were lied to by the realtor, the broker, AND the bank. (The bank may be the most evil of all.) We trusted “professionals” to lead us through a very unwieldy process. I have tried everything in my power to save us from our sorry situation, to no avail. We were not looking to be bailed out. We tried short sale, deed in lieu of foreclosure, loan modification, another refinance, everything. The only thing we could not do was keep paying our mortgage which was already more than $5K per month (my husband has suffered a serious loss of income this year). In 2008 our mortgage is due to re-set at $7K+ per month. Its cap will be somewhere around $10K per month.
I feel incredibly stupid for having gotten into this situation. Now I just want my life back. I’m not going into the details of how badly we were deceived. Yes, I’m angry with those who deceived us. But I’m also angry with myself for having allowed it to happen. I trusted when I shouldn’t have. I am a clear example of an honest person who thought she was doing something good for her family (buying a lovely home my son would inherit someday). My husband is self-employed and this year his business took a serious, 75% loss-of-income hit.
All I know for sure is that next time I buy a house (several years from now; I’m not in any rush and we have lost all of our reserve savings simply trying to pay our other obligations due to the lost income), I will hire an attorney. I have come to the unsavory conclusion that you can’t trust anyone, not the bank, the broker or the realtor. All you can do as a consumer is educate yourself and not be in a hurry to sign papers. Stupid me.
Juli, how much did you put down on your house? You do seem to have been duped due to the fact that you had an 800 score and you’re not in a fixed. Also, what was the price of your home when you bought it?
We put nothing down. Interest only. Basically, everything that you shouldn’t do, we did. My husband’s credit wasn’t as good as mine and we had to have a stated income loan which was the reason we were given for the type of loan we got. Then we stupidly refinanced to get out of our original bad loan and that’s when we REALLY got taken for a ride! Bait & switch, unnecessarily high interest rate (as a contact at Countrywide later told me), we were lied to about the terms of our new loan. We were stupid to trust.
Also, the price of the house has decreased since we bought it. It was at $610K. Now it’s worth $572K. However, when we refinanced they appraised it for $780K so we could get into our new horrible loan. Basically, everyone has made money off of us.
I’m not saying we’ll never buy again but we will do so only when we have enough saved up to put 20% down and we will consider a 30-year fixed rate mortgage only. Plus, we will now need time to allow our credit to recover from this debacle. Add to that the fact that my husband has lost a lot of his income but the bills keep pouring in, and we have no savings left at all.
I even looked into suing the bank to no avail. I could probably pursue but at this point, I don’t even have enough money to pay the regular bills let alone an attorney.
We are learning the hard way. We definitely didn’t do this to “play” the system. We weren’t looking to make a quick buck. We honestly thought that if we didn’t buy when we did that we would NEVER be able to afford to buy a house. We trusted everyone and it’s only after the fact that I’ve come to the conclusion that an attorney is mandatory to have in these transactions.
It’s too late to save the house. I just need this nightmare to end so we can rebuild our life. Yes, we were financially unsophisticated at the time we bought but now I have learned so much. I research everything, am well informed about the mechanics of a short sale, the tax implications of foreclosure and short sales; I even watch Suze Orman so I can learn how to invest wisely (if we ever have money again). I never intend for this to happen to me again, and knowledge is the only weapon I have in this unsavory business.
Juli, I am so sorry that you are in this situation, a situation that so many of us faced.
The lenders and underwriters it seemed, when they got greedy enough, didn’t care who they loaned money to or how. They were toxic loans and they gave it to us all.