Every time a rule is made regarding loans it affects the pay of everyone in real estate. HVCC killed many transactions. New underwriting guidelines make loans for self employed borrowers near impossible. FHA increased MI premiums (they go up again soon!) make it more expensive for people to buy a home. Now it is over regulation of brokers who cost consumers up to 2% less than big banks.
Why is the Fed speding so much money overregulating brokers when broker loan products and services are more consumer friendly? Prices for loans will increase and it will make it harder for real estate agents and others in the real estate business to close transactions.
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I believe that they are "just that stupid"!
The NMLS is a mess, I 100% agree that we should be licensed, educated, professionals... But WE all should be held to the same standard.
Mortgage Bankers and Brokers MUST pass a federal and state test.. But if you work for a bank there is no testing??? I have been talking about this for a year + now. The Federal NMLS test still has a 30% failure rate... and in NJ I had to pass both a federal and State background check, since NJ did not trust the federal check.
and now the LO comp issue... It WILL raise rates to some buyers, and it may even eliminate some loan programs... How is that good for the consumer?
Feeling your pain in the mortgage banking world in NJ too.
Rob
NMLS 248937
Joyce - You are probably right but I think it is a manipulating of the economy to enrich themselves by buying investments that do well in bad times. Kind of like betting on the #2 horse because someone drugged the #1 horse to slow it down!
Robert - Same standard. What a concept for those in WA. Here is the sad part, most people think they are being treated better at a bank. They don;t know that they pay more and in many cases work with a loan officer with minimal education in finance. As a result the loan officer take the loan application, throws them into a 30 year fixed without regard to monitoring rates to seeif they are dropping, payment ability of future needs of the buyer. Big banks are conveyer belts in my opinion.
The big banks truly dont care about much more than numbers... .That includes clients and employees,
I find it somewhat disturbing that mortgage brokers must meet a higher level of standards than the big bank loan officers do. Especially since in all my experiences, mortgage brokers have been much more competitive, offered many more loan options to my clients, and seemingly work much harder for thier clients than the typical salaried employee.
Good post, Nevin. It's clear to me that the big banks have used this as an opportunity to increase market share...and they have succeeded.
Hi Nevin - Not every broker is as ethical and careful as you, and the government may be doing its common tactic of overregulating one sliver of an industry that they perceived as an issue - after the fact, which is what they also did with HVCC and airline travel. I don't know why banks are not given the same rules, other than the possibility perhaps that they have deep pockets to seek damages if they screw up? Seems flimsy and not apt to protect the consumer, but what do I know about why they gave banks a free pass?
I just wish we had some clairvoyants who could predict where the problems will be instead of fixing something after damage has been done (especially if they point to just one thing to fix - why no security on trains, cruise ships and buses instead of just planes, for example? Because that's where the problem was last time).
I was going to re-blog and suggest your post but it is not allowng me to do it right now! I hope the propblem gets fixed soon......Thanks for the information
"Hippie Lettuce"...I love it.
I'm sure Liz Warren, appointed without congressional approval or oversight, and the other fed regulators are driving mortgage brokers and others crazy. However, the real problem is that taxpayers are on the hook for mortgage losses. That's insane and needs to stop. Get taxpayers off the hook and you mortgage dudes can do anything you want.
Robert - So true
Craig - As do I my friend!
Bob - Yes they have and they pointed the finger at mortgage brokers who sold the loans that the big banks created, offered and pushed brokers to sell.
Susan - I agree that there are unethical people however to single out mortgage brokers as the cause makes no sense. Bank loan officers did exactly the same thing and were paid exactly the same way as brokers except that bank employees do not have to disclose to a consumer how much they make by raising their interest rate or selling them a less desirable product. It is actually the banks fault for providing and pushiong these products.
Lisa - Thanks! You can suggest just not re blog.
Lloyd -Thank you for stopping by and commenting. However think about what you said...
However, the real problem is that taxpayers are on the hook for mortgage losses. That's insane and needs to stop. Get taxpayers off the hook and you mortgage dudes can do anything you want.
One could argue that Real estate agents, appraisers, escrow officers and big banks who did not exercise ethics all contributed equal share to the mortgage mess so I think it isn't just mortgage dudes that tax payers are paying for. Real estate agents without integrity just like the mortgage dudes without integrity must share in the blame.
Example: Agent - How much can my client afford?
Loan officer - 300,000.
Agent - What kind of loan?
Loan officer - 30 year fixed.
Agent - Could they afford more if they had an adjustable rate?
Loan officer - If the client wanted that maybe 400,000 - 425,000 Maximum.
Few days later - Agent- we found a home they like at 450,000 and they want to make an offer. They are okay with an ARM loan they just want to get the house.
Not only did I get these calls during the housing boom I often had agents showing properties above the amount the borrower could qualify for. Naturally I turned these down. Client got financing elsewhere and eventually foreclosed.
My opinion: everyone involved had skin in the game so tax dollars are paying for everyone. We mortgage dudes aren't the only ones being hurt by these rules- agents are too for the reasons I stated in this post.
Nevin... I didn't realize there was such a vast difference between the requirements between broker lender vs direct end lender. that's crazy!!!
Nevin,
Thank you for that lengthy explanation.
GSEs have cost taxpayers $140 Billion, and counting. They must be privatized or dismantled. Liz Warren would still be at Harvard bothering only her students if GSEs weren't in taxpayers pockets.
Many times the government looks for problems that don’t exist. That usually comes about by some special interest who wants to stifle competition. By the way, be sure to stop by and read my Pay It Forward (part 4) post; you have a shout-out!
Christina - There always have been
Lloyd - I appreciate you stopping by again! I think we can only agree to disagree. I'm understanding you as being supportive of the new rules and how they have been applied. I think they are causing more problems which lead to more costs for consumers, real estate agents and others. I am not advocating that nothing should be done. I am saying that the rules imposed aren't fixing the problem and targeting the wrong people. Privatize GSE means we need a bank with the amount of liquid assets as the US Government. Although I wish we did so we could dismantle the GSE's, unfortunately we don't. Therefore dismantling the GSE's would stop the flow of money and bring the real estate industry to a standstill. I don;t like the gov't intervention but we have no choice at this point because most banks are near insolvency.
Russell - Agreed! Thank you sir! I will head over right now : )