Jamie contributes to the Rowdy Republican from time to time and is a good friend.A few words from a mortgage guy,
Yes I am the scum of the earth, and yes the mortgage market has caused the worst financial crisis since the great depression. But lets delve into why this really happened. First of all I am tired of hearing the Mortgage Brokers/Bankers caused the demise of our economy, and I would like to say a few words about this. I love when I hear this mortgage guy put me into a loan that I could not afford, nor did I understand the terms of this mortgage. I have closed over 10,000 mortgages in the last 20 years and I cannot tell you how many times I have heard this
“ I really don’t care what happens in three years I will probably refinance before then or move”
“ I’m not really worried about three years when my ARM adjusts I need to save this 500 bucks a month NOW!”
“ Mr and Mrs Smith you have 3 options of payment plans, 2% of the balance, the regular 6% payment, interest only payment, which would you like? What interest rate gives me the lowest payment, asks Mr Smith? The 2% does sir, but it will add interest on to the end of your loan and your balance will increase instead of decrease?
That's fine, we will pay additional money when we get our tax return. “
“ Mr Mortgage broker/banker, we just have to have this house, whatever you have to do, make it happen. “
The fact of the matter is folks, the reason we are in the mess we are in, is because of us! We have the ability to say NO! We have the ability to watch our money and not get tempted. Nobody holds a gun to your head and says sign these papers. Nobody denies you the right to read to read your paperwork! If they did, you were stupid enough to sign the paperwork and deal with that
dumbass!
The 2
nd big reason I will explain in a short paragraph what started the snowball. If you ask anyone what caused this, most people will say fraudulent mortgage brokers. This is not the case, the mortgage banker/broker Is just an instrument in the grand scheme of things controlled by Wall Street. Credit default swaps are where it all began. If you take a loan out from Countrywide, even though you pay countrywide, your loan is actually owned by an investor. Countrywide made your loan and thousands of other people loans. They, then pool them all together and sell them to Fannie Mae/or Freddie Mac. These are government sponsored agencies that have decision engines that underwrite loans. These decision engines have certain underwriting criteria. My job as a banker or broker feed your information into this and get an approval or denial. This tells Countrywide that if you make this loan, with this criteria we will buy it. Fannie/Freddie buy these loan and then sell them to investors which turn them into Mortgage back securities. Here is where the problem starts……………… The big 5 (
AIG, Bear
Stearns, Lehman brothers, Merrill Lynch, Goldman ) go to Mr. investor and say hey, we are going to
Guarantee all of the loans you buy, but we
aren’t going to call it insurance. We don’t want Mr. insurance regulator see what we are doing now do we? Mr. Investor says OK, open the flood gates, loan away!!!!! What do we have to lose? Fannie and Freddie loosen your guidelines we will buy whatever you have. Its insured and we can’t lose. So new underwriting criteria comes down to Mr. Mortgage broker/banker. Hey guys you are now allowed to loan 100% to a 520 credit score borrower. Far
be it for me to ask any questions. I am on commission and my manager and
RVP will beat the stuffing out of me if we don’t grow. I have to make these loans due to if I don’t, my competition will. If they do and we don’t, we will get eaten up by the big fish and go out of business due to lack of growth. Mr. 520
fico at 100% cannot pay the rate the investor is asking at a 30 year fixed (10%). Nor can we find a benefit for the customer here, but we can do a 3/1 ARM which the rate will be 7% for three years.
Which loan would you like Mr. customer? Um let me see Mr. Mortgage broker what is the difference in payment. About 400 dollars Mr. Customer, but if you take the Arm it can adjust upwards in three years. I’ll worry about it then, I will get raises and I will fix my credit by then anyway. Meanwhile a few years gone by, and Mr. Smith ran up his credit cards, found out that living on 79$ an hour at GM is not enough. Oh, and by the way you better refinance your payment is due to adjust in a month. Now Mr. Smith debt ratio is 80% and does not qualify for a loan so we must pay off credit cards. Well we can’t do this again Mr. Smith, you already refinanced 3 times in three years to payoff credit cards, now you have no Equity to do so. Sorry sir. You Scumbag Mr. Mortgage broker, you put me into this situation. Ill show you, I will stop paying my mortgage payment and the bank will lower my rate to 2% and I still wont be able to make that payment. That’s OK Mr Smith, the government is going to let you stay in that home.They feel bad that you can’t buy the GI Joe with the
Kung Foo grip for your kids this Christmas. You can file Bankruptcy on all your other debt and your credit score will shoot from a 520 to a 650, and you can start racking up debt in no time.
Has there been fraud in the Mortgage business, hell yes. Is there fraud in every business, hell yes. But thanks to regulators, they are now going regulate even more. All this means too you is that instead of 80 forms to sign for a mortgage, you will now have to sign a 100. What good is a form, when 90% of the people out there don’t read them anyway. So you see folks, it really
isn’t my fault. If we would look in the mirror, pass by a store, not go out so much, and quit buying 7 dollar coffees, we might not be in this situation
Everyone have a great Holiday. If you stop by my house I will be the one searching
careerbuilder.
James S. Ray
Team Leader/
Refi Direct
4720 Piedmont Row Dr. Ste. 200
Charlotte, NC 28210
Phone/Fax 980-233-4920
My friend Betty, a big contributer to the Rowdy Republican.
Homer Hickam made an interesting comment on TV this morning. In case you don't know who he is, Homer was a poor West Va. miner's son who worked his way up to being an employee/scientist for NASA. He wrote a book called "Rocket Boy" which was later made into a great movie called "October Sky."
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