Reader Contributed – RC (in response to this post on the MBA)
I don’t comment to these posts on all the forms I read (seemingly all day long lately), but I felt I needed to put in my brief 2 cents on this one. While I respect your view that the Mortgage Bankers Association is the Big Bad Wolf in this whole mess, I must disagree a bit.
First, while I am not a member of the MBA, I want to disclose that I have been a speaker for the organization on the topic of Quality Control / Quality Assurance. I do know many of their members, as well as many of their leaders—mostly CA.
That said, I know personally that the members are not interested in “Screwing” consumers or kicking Grandma to the curb as roundly suggested. While there are greedy, self-interested, and even criminal players in the mortgage industry, I’d hesitate to paint the MBA as even closely dominated by persons with such motives. Plainly wrong.
Your basis for argument that they shouldn’t be involved in the “solutions” or “what to do now” phase of the hearings in Washington rests on an assertion that the CRL is non-partisan and consumer-only based. Sounds nice. But I’ve been around just long enough to know that nobody’s completely “non-partisan” or disinterested in Washington. Everyone has an agenda, and while you may like one organization’s agenda more than another’s, to suggest that good can only come from the CRL is a bit optimistic at best.
When it comes down to it, the MBA needs a place at the table. It’s their industry–and their members tend to be the most capable of keeping the dream of home-ownership a reality—assuming that’s the goal we’re all in favor of. If I had to place a bet as to who has consumer’s best interest in mind I’d put my money behind the MBA before I would put it behind say the Mortgage Brokers (NAMB) or even the CRL for that matter. Not to say that either of those two organizations are “bad”, just my opinion. Let’s not forget that it’s their money (MBA member companies) we want access to we can keep mortgage loans available.
If you swoop in with some third party new organization on the coat-tails of public opinion, chances are that while some good will come out of new policy, a lot of negatives may also result from overreaching or knee-jerk reactionary policy that will ultimately hurt the very consumers you are trying to help.
On the charge or goals of the MBA’s agenda…Not certain that consumers, or guaranteeing that they won’t be foreclosed on, should really be the only criteria used to judge their merits. After all, it paints “consumers” as helpless and violated when they may be far from…Some are.
Others are definitely the type that gamble their retirement checks at Indian Casinos, or lease those expensive lifestyles they felt were a “right”. Should Grandma be able to keep that house she refinanced at 125% to pay for her cruises to Hawaii or her “pretty” things, and now can’t cover her payments with her monthly social security check? I’m not sure I can say for certain. It is convenient to paint her in “helpless victim” status when you want to use her to promote your agenda though…
Look, there’s enough blame to go around everywhere–I’m not delusional–I just think that unless you want to see secondary market financing evaporate like it did in August 2007 (which effectively halted all mortgage financing even for Prime borrowers), the MBA should at least be able to offer their solutions along with everyone else that has a horse in the race.
I still think that giving consumers a choice when it comes to their futures is a lot better than forcing them into state mandated programs that are run by politicians—or the likes of Ralph Nader types…
Just my two cents.
{ 1 trackback }
{ 6 comments… read them below or add one }
RC – Great post. But my question to you is “Who the hell gave grandma the money to pay for the cruises to Hawaii and pretty things while on Social Security?”
The problem we have isn’t because of grandma, it was the people that allowed grandma to get this money and profited immensely off of grandma. They knew all too well that grandma would never be able to afford this loan long term.
Bottom line is that these loans were made to fail and the people that made these toxic mortgages need to fix grandmas cancerous tumor of a loan. Grandmas happy and Moe’s happy.
Just my 2 Gazillion cents……………………………..
F.B.I. Opens Subprime Inquiry
Philip Shenon and Jenny Anderson contributed reporting.
“The Federal Bureau of Investigation has opened criminal inquiries into 14 companies as part of a wide-ranging investigation of the troubled mortgage industry, F.B.I. officials said Tuesday.
“The F.B.I. said it was looking into possible accounting fraud, insider trading or other violations in connection with loans made to borrowers with weak, or subprime, credit.
“The agency declined to identify the companies under investigation but said the inquiry, which began last spring, involves companies across the financial industry, including mortgage lenders, loan brokers and Wall Street banks that packaged home loans into securities. It is unclear when charges, if any, might be filed.
“As part of its investigation, the F.B.I. is cooperating with the Securities and Exchange Commission, which is conducting about three dozen civil investigations into how subprime loans were made and packaged, and how securities backed by them were valued. State prosecutors are also investigating various areas of the mortgage industry.
“It’s significant firepower, depending on how far along the investigation is,” Carl W. Tobias, a professor at the University of Richmond Law School, said about the F.B.I. investigation.
“The F.B.I. has been warning for years that mortgage fraud is a significant and growing problem. In the 2006 fiscal year, it documented 35,600 suspicious-activity reports related to mortgage fraud, up from 22,000 the year before and as few as 7,000 in 2003.
“Many of the cases the F.B.I. has brought so far have focused on local or regional mortgage fraud rings that involve speculators, loan officers, brokers and other housing professionals.
“State officials have been active in bringing mortgage cases. The New York attorney general, Andrew M. Cuomo, is investigating whether Wall Street banks withheld damaging information about the loans they were packaging. Prosecutors in Ohio, Massachusetts, Illinois and Connecticut have also been looking into the industry.
“Earlier this decade, a group of attorneys general reached settlements totaling more than $800 million with two large lenders: Household International, now part of HSBC, and Ameriquest.
“State and federal officials share jurisdiction over the mortgage industry and have often squabbled over who should police it. Many lenders that specialize in making loans to people with blemished credit have state charters, but some of them are owned by or affiliated with federally regulated banks.
“Mortgage companies and Wall Street banks have said they are cooperating with numerous federal and state investigations. The firms have also sued each other and have been accused of various infractions by investors and borrowers in numerous cases.”
http://www.nytimes.com/2008/01/30/business/30fbi.html?_r=1&th&emc=th&oref=slogin
Great post but Moe’s response goes back to pointing fingers. As the OP acknowledges, there is plenty of blame to go around but now is the time to figure out what to do about it.
Moe, I bet she had fabulous credit and she went NO DOC. You imply that it was a conspiracy of the lender ’cause they knew she couldn’t pay it.
How would the lender “know” if she is going NO DOC? The only one here to blame is grandma, the only person that knew she couldn’t pay was herself.
Mitchell,
What does it matter if she went no doc, low doc or full doc? if Gramma’s house were actually worth what she was allowed to borrow against it, there would be no housing slump. Isn’t that why you order an appraisal on a home before funding?
Verifying the value of the asset and the risk involved in funding the loan is the lender’s job to ensure they are covered if she doesn’t pay. They sell the home and rover the loss.
Artifically inflate prices on the collateral of loans via hocus pocus and here we are. Unfortunately, they now sell the home and cannot cover the loss. You can’t tell me they didn’t see this coming.
Hello, here goes my first ever post. Wow, someone is not in tune to all of the problems going on here. It is not just grandma, but my husband has had a time of it getting a job. J-O-B!!! One week after we closed on our loan, he and the whole night shift lost their jobs. Now what, no problem, get another one. Right! Where? He has regerstered with 5 temp services and ran out of unempolyment. We have cashed in all we have to make our payments on time. We never have used credit cards, thank the lord. We don’t use paid tv. We don’t go on trips. We can’t make our house payments. I called to be pro-active with no late pays yet. All they could do was a pay plan that was 500.00 more a month. This is with no lates yet. Excuse me, now we stand to loose our home because HomEq won’t work with us. We have been in this house for six years. Where’s the vacation and all of the gold.