The Mortgage Go To Guy!!

In Wednesday night’s Democratic Presidential Candidate debate, Senator Hillary Clinton mentioned a horrifying number…

Sen. Clinton was answering a question regarding the economy and the foreclosure crisis and mentioned that the Mortgage Bankers Association has spent $185,000,000 (yes… that’s million) on lobbyists.  These lobbyists have bent every ear in the House and Senate for years to help the banking industry skate by on lack of disclosure, mismanagement and investor gains for years at the expense of the consumer.

The Mortgage Bankers Association and its Lobbyists have helped supports its members - all the banks and lenders that have made mortgage loans - to railroad legislation that supports the banks and pretty much anything they want to do.

The old saying that “The Man with the Gold makes the Rules” really sums up this discussion.

Essentially, Senator Clinton admitted that banks have gotten away with murder and have been the real issue in this Mortgage Meltdown.

How?:

• They found investors that wanted risky loan portfolios
• They loosened underwriting standards that allowed people that could not otherwise qualify still get a loan
• They ignored logical income, asset and employment pre-qualification systems
• They loaned as much as 125% of a home’s value
• They pushed the riskiest loans on brokers with the highest compensations

During the boom years in the Mortgage Industry, there were many people getting rich writing loans that just were not appropriate!

Examples of inappropriate are:

• Borrower has great credit, assets, etc… they are a PRIME/A-Paper borrower.  Subprime Paper with Prime rates were sold to them because they were not knowledgeable enough to check the margins and prepayment penalties.  Score one for the banks that made a lot more money on those loans
• Option ARMs… I love these loans.  They are amazing tools - for those who know how to control them.  Unfortunately, too many were sold to people that just wanted to lowest payment and did not realize the real effect of Negative Amortization.  Score another for the banks that put undisciplined consumers in an investment grade loan program with little or no disclosure.
• Borrower has bad credit, bad employment history, no assets… let’s get him a home loan anyway!  So the banks made some money… but they spent nothing on educating the consumer as FHA and Fannie Mae do with their First Time Home Buyer classes and certifications!
• Lack of Disclosure!!! … the Transparency Movement and XBroker will love me for this one… Banks do not have to disclose all their fees until closing.  By then, it is often too late for the consumer to do anything about it!  Like Ditech, Ameriquest and all the other people on TV with their jacked up APRs.  Big differences in the APR and Interest Rate are a sign of hidden fees!!  Transparency or Translucency would be nice here!

So score one for Capitol Hill and the Lobbyists!

Think of how many people could be helped in their financial and mortgage struggles if those Lawmakers - sworn to uphold the best interests of their constituents - were made to give ALL that money to a Foreclosure Relief Fund!!

Just my opinion… and not all banks are evil. 

You just have to remember that the worst offenders were definitely more inclined to worry about investors and shareholders than the people that entrusted them with their money and livelihoods.

More Florida Mortgage and Real Estate News you can use from
David A. Podgursky, MBA
The Mortgage Go To Guy!!
Your TRUSTED Source for Residential and Commercial Mortgage Loans in Florida

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