Mortgage Crisis Rolls On… Fraudsters to Be Bailed Out
Before I start on this post, please understand that this is not an attack on people who work in the mortgage or lending industry. This is simply my opinion of how the industry has used the market to it’s advantage the past few years and how it’s finally catching up to them (it’s our turn).
Our Country’s Mortgage Crisis
Many home buyers and people seeking to refinance their existing home loans these days are, for lack of better words, “shit out of luck”. The mortgage and banking industry has taken advantage of the highly overated economy and rising home prices in most mainstream markets.Â
While many homeowners are also to blame for the mortgage crisis, the loan officers, homebuilders and mortgage lenders are primarily responsible for the worrisome circumstances that the country sits in now. In addition to providing high-interest ARM loans to people who couldn’t afford the homes they were buying, lenders and buyers both manipulated the paperwork required to get a home loan in order to get approved for their mortgage.Â
Buyers were led on by promises of low starting interest rates for their home purchases, an over-hyped housing market and rising home prices, and the hope of refinancing their mortgages as the ARM interest rate started to rise.
What’s really happened is that the market has adjusted and those same homes (over appraised) are now worth less than the loan amount, lenders are filing bankruptcy, closing their doors and laying off thousands of employees. Homeowners can’t refinance their loans because they can’t qualify and foreclosures are rising at unbelievable rates.
Taking Responsibility For Actions
As in any industry, there are good times and their are bad times. The mortgage industry has enjoyed the good times for a long time without any bad times, and the people working in that industry have taken advantage of the system for far too long.
It appears that the government (Fed) will help out many of the larger companies by offering them low interest rate loans to help keep them afloat. While this is probably the best thing for the economy in the short-term, it would seem to further bolster these people in the mortgage industry that they can continue to take advantage of us without repurcussions.
These companies that have screwed up should pay for their mistakes; they should not be bailed out. If all the loan officers, processors and other higher-ups who’ve been buying up BMW’s, boats, vacation homes and other extravagant purchases have to give up their new toys because they can’t afford them anymore… too bad!!!
Mortgage Rates, Points, Commissions
I have several friends and relatives that work in home building, real estate and mortgages. At least in the real estate and mortgage side, “most” agents, brokers, processors and officers are being overpaid – YES, overpaid.Â
You work 10 hrs to close a $300,000 loan and you’re going to take home even 1% as a loan officer – that’s $3,000 for 10 hrs of work, or $300 per hour. Last time I checked, most doctors, lawyers & attorneys don’t even charge those rates.Â
Even worse, are the “big home purchases” where each person involved in the loan process gets the same percentages that they do on the small purchases. While working the same 10 hrs to close the loan, getting 1% of a $3 million home purchase comes out to $30,000 commission, or $3,000 per hour.
While I might be underestimating the time it takes to process a loan, even if you double the hours the amounts of money these people are making is ridiculous. What’s worse, is that these same people are adding “points” to the loans to make themselves even more money – all at the home buyers expense. Afterall, what’s an extra $500-1,000 on a $300,000 loan – it’s only a few dollars a month more on the mortgage payment -hell, the buyer might not even notice it.
I completely understand that the loan officers and loan processors are making the least amount of money in the sale – there’s a hierarchy of people just racking up dollars for doing very little. Yes, there’s some risk involved, but if you provide solid loans to people that are qualified to receive them – there’s little risk involved in lending them money.
This is just my 2 cents…
(if you know me, please understand this is nothing personal – just my opinion on the issue)
Other Mortgage & Financial Headlines:
As Mortgage Industry Retrenches, Industry Job Cuts Surpass 40,000
Citi, JPMorgan Chase, Bank of America and Wachovia Say They Borrowed $500M Each From Fed
Countrywide Financial Says Bank of America Made Equity Investment of $2 Billion Into Company
CJ;
Blaming anyone is this present crisis isn’t going to move us forward. We are all responsible for creating this mess. It’s very easy for any us to build a case or argument about how good things are in the this industry or how bad they are. That’s because both are true.
But the things that are bad are just symptoms of some deeper issues within the industry, that until now not many us have been willing to talk about. It requires us to do some soul searching. It also requires us to declare responsibility for getting the results that we have gotten to date. Lets take responsibility and stop pointing our fingers every where out there other then to ourselves-the time has come to collaborate not just through our posts but our voices and to find solutions. The industry is in a huge breakdown, which in a way is good news because that is what’s required to create transformation and change.
When it comes to compensation you are way oversimplifying it and obviously didn’t do your research about how mortgage brokers are paid and how long it takes to complete a file. Most mortgage brokers are self employed and figures you talk about are gross not net. Most of them are on a split with the office where they work similar to Realtors.
We need to talk about solutions not blaming and pointing fingers.
To Your Success,
Coach Steve