Comments on: Preventing Another Subprime Mortgage Crisis http://goodspeedupdate.com/2008/2246 Rob Goodspeed's blog Sat, 06 Mar 2010 05:30:34 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: helen http://goodspeedupdate.com/2008/2246/comment-page-1#comment-258442 helen Fri, 08 Aug 2008 19:58:51 +0000 http://goodspeedupdate.com/2008/2246#comment-258442 I am a mortgage broker and everyone in the process of someone buyer a home works for commission, up to and including banks and direct lenders. I believe the advantage with mortgage brokers is that the customer has a closer relationship with these people. We as brokers have a fiduciary responsibility to them and work very hard on their behalf. I will admit there are bad apple brokers as with any other business in the United States but to punish, blame or do away with brokers because of a very few is wrong. The problem is not brokers -- in the United States a product or multiple products are created when there is a need or customer base for same. It is called "economics". I did not create the product, I merely supply the demand. I follow the guidelines, whether FHA or when it was available, subprime loans. We carefully gather the documentation for such loan, meet the stipulations and I make sure the borrower can, I believe, make the necessary payments. When the loan is approved, I am still with the customer at closing and continue to counsel them on the importance of their obligations of homeownership including payments. We are mortgage brokers cannot foresee, as lenders cannot, that hardships may happen; i.e., loss of job, sickness and these people, whether prime of subprime cannot make their payments. In other articles I have read people did not understand their ARMs. We fully explain these types of mortgages and to my dismay, don't listen or care all they are interested in is their payments. ARMS were meant to be used for people to get rid of their debt, have an increase in salary, etc. during the first fixed term. They promise they will do the same, but do not and will not be willing to buckle their belts a little tighter; thus default. We have become a country of entitlements and now everyone looks to some entity to blame. Well, I have made mistakes in my life and so have these people. We all must pay the piper. I have bellied up and so must they. I worry about the customer from the time I get a file until I close it and after. The stress is driving me out of the business and the business needs more caring and concerned people like me in it. I am a mortgage broker and everyone in the process of someone buyer a home works for commission, up to and including banks and direct lenders. I believe the advantage with mortgage brokers is that the customer has a closer relationship with these people. We as brokers have a fiduciary responsibility to them and work very hard on their behalf. I will admit there are bad apple brokers as with any other
business in the United States but to punish, blame or do away with brokers because of a very few is wrong. The problem is not brokers –
in the United States a product or multiple products are created when there is a need or customer base for same. It is called “economics”.
I did not create the product, I merely supply the demand. I follow the
guidelines, whether FHA or when it was available, subprime loans. We
carefully gather the documentation for such loan, meet the stipulations
and I make sure the borrower can, I believe, make the necessary payments. When the loan is approved, I am still with the customer at
closing and continue to counsel them on the importance of their obligations of homeownership including payments. We are mortgage brokers cannot foresee, as lenders cannot, that hardships may happen;
i.e., loss of job, sickness and these people, whether prime of subprime
cannot make their payments. In other articles I have read people did
not understand their ARMs. We fully explain these types of mortgages and to my dismay, don’t listen or care all they are interested in is their
payments. ARMS were meant to be used for people to get rid of their
debt, have an increase in salary, etc. during the first fixed term. They
promise they will do the same, but do not and will not be willing to
buckle their belts a little tighter; thus default. We have become a country of entitlements and now everyone looks to some entity to blame. Well, I have made mistakes in my life and so have these people. We all must pay the piper. I have bellied up and so must they.
I worry about the customer from the time I get a file until I close it and after. The stress is driving me out of the business and the business needs more caring and concerned people like me in it.

]]> By: The Bellows » Mount Up? http://goodspeedupdate.com/2008/2246/comment-page-1#comment-245027 The Bellows » Mount Up? Mon, 28 Jul 2008 19:38:50 +0000 http://goodspeedupdate.com/2008/2246#comment-245027 [...] Goodspeed has a long post today on how we might want to alter regulatory policies in the wake of the sub-prime crisis. [...] [...] Goodspeed has a long post today on how we might want to alter regulatory policies in the wake of the sub-prime crisis. [...]

]]> By: Rob Goodspeed http://goodspeedupdate.com/2008/2246/comment-page-1#comment-244775 Rob Goodspeed Mon, 28 Jul 2008 14:26:49 +0000 http://goodspeedupdate.com/2008/2246#comment-244775 Doug, thank you for your comment. I agree there are too many conflicts of interest in the industry, however I am unclear on what you propose. What must change to eliminate the conflicts? Doug, thank you for your comment. I agree there are too many conflicts of interest in the industry, however I am unclear on what you propose. What must change to eliminate the conflicts?

]]> By: Doug Miller http://goodspeedupdate.com/2008/2246/comment-page-1#comment-243118 Doug Miller Sun, 27 Jul 2008 13:55:18 +0000 http://goodspeedupdate.com/2008/2246#comment-243118 The source of the problem you say? The answer is simple, but not palatable. Remove the conflicts of interest from the transaction and the service providers will regulate themselves. And it is that simple. Currently appraisers and home inspectors are dogged with concern about not providing information that might kill a deal and thereby a commission for their referral source. They are rightfully afraid that they will be blacklisted. One Stop Shopping (One Stop Robbing) is nothing more than an exploitation of a client's trust. Instead of shopping and comparing ancillary services for their clients, the Realtor simply steers his clients into the most expensive ancillary service, that they happen to own, thereby removing price competition and checks and balances that come from independent competition. Even some attorneys are doing this "for" their clients. Dual agency is an abandonment of the client when they need you the most. Imagine having full representation from your Realtor up until the time you find the property you actually want. But because the property you want is listed by your broker, your broker is all of sudden throttled and isn't allowed to do anything to detriment of the other side... A huge percentage of consumers don't have to imagine this as it has happened to them. Oh, but they received a disclosure that most Realtors don't even understand... Conflicts plague the industry. Realtors, lenders, attorneys and other service providers don't need to have their hands in all the ancillary services. And real estate companies don't have to be mega brokers that create higher likelihood of dual agency transactions. Attorneys do thorough conflict checks before they undertake representation in order to avoid representing both sides of the deal. And they are trained in conflict management. Realtors might not even have a high school education. Remove the conflicts and the independent players will represent their clients not their pocketbooks. The source of the problem you say? The answer is simple, but not palatable. Remove the conflicts of interest from the transaction and the service providers will regulate themselves.

And it is that simple. Currently appraisers and home inspectors are dogged with concern about not providing information that might kill a deal and thereby a commission for their referral source. They are rightfully afraid that they will be blacklisted.

One Stop Shopping (One Stop Robbing) is nothing more than an exploitation of a client’s trust. Instead of shopping and comparing ancillary services for their clients, the Realtor simply steers his clients into the most expensive ancillary service, that they happen to own, thereby removing price competition and checks and balances that come from independent competition. Even some attorneys are doing this “for” their clients.

Dual agency is an abandonment of the client when they need you the most. Imagine having full representation from your Realtor up until the time you find the property you actually want. But because the property you want is listed by your broker, your broker is all of sudden throttled and isn’t allowed to do anything to detriment of the other side… A huge percentage of consumers don’t have to imagine this as it has happened to them. Oh, but they received a disclosure that most Realtors don’t even understand…

Conflicts plague the industry. Realtors, lenders, attorneys and other service providers don’t need to have their hands in all the ancillary services. And real estate companies don’t have to be mega brokers that create higher likelihood of dual agency transactions.

Attorneys do thorough conflict checks before they undertake representation in order to avoid representing both sides of the deal. And they are trained in conflict management. Realtors might not even have a high school education.

Remove the conflicts and the independent players will represent their clients not their pocketbooks.

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