(Yes, there was too much alliteration in that title)
This week Countrywide, one of the largest lenders in the country, announced their new "soft market" policy. This policy, in effect, will reduce the loan-to-value that borrowers can qualify for by an additional 5% if the home is deemed to be a slowing or declining real estate market.
This isn't subprime I'm talking about. This affects all borrowers, including those with perfect credit, stable W-2 job history, and thousands of dollars in the bank. And it affects owners too, already worrying about a declining value there is one more thing standing in their way.
Why is this important? Homeowner's who are finding things tight and need to refinance have been hit with an additional penalty besides a lower home value than they anticipated. Homeowner's who were looking to buy will have to come up with 5% additional down payment, in many cases hurting a slumping real estate market even further. And if its harder for people to buy, it will be harder for people to sell... and the struggling real estate market just got a bit worse.
Many of these customers are already paying PMI, which insures the lender in case the borrower defaults (but gives no benefit or protection to the borrower). Now, they have to cough up 5% more dough. A couple who was putting 10% down on a $200,000 home now has to come up with an additional $10,000 of down payment. Their $20,000 they saved to put down is about 50% short. And the homeowner who was already selling the home for a loss is now faced with it sitting on the market even longer, or decreasing the price even more.
I don't blame Countrywide for this policy as they have to do what is necessary to protect their interests and investment. They are already losing millions in the agreement they made with the government in freezing many rate increases for five years. But the effect of this policy will be a further declination of the housing market and an additional strain on our economy.
And whether you are buying, refinancing, own a home now, pr plan on buying in the future... this should concern you. As it will be one more hit to the home values in already repressed areas... one more hurdle for customers trying to refinance... one more difficulty for those trying to buy. Everyone, the economy included, takes a loss.
Showing posts with label foreclosure. Show all posts
Showing posts with label foreclosure. Show all posts
Thursday, December 20, 2007
Thursday, November 8, 2007
Andrew Cuomo is a traitor.
I hate it when people throw that word around, its lost so much of its meaning. But in this case, its entirely true.
I've said it before and been accused of yelling it in the office. Now is not the time to try and achieve political gains, especially when you don't know what you are talking about. Any politician who uses the current crisis in the mortgage industry as a way to make a name for themselves or play political leapfrog over rivals is evil. There are good people facing serious hurdles paying their bills. There are hard working Americans, who have never missed a payment, suddenly facing lates on their credit report and the potential for foreclosure. There are countless workers in the mortgage, construction, and real estate industries facing smaller paychecks or unemployment. And these things spread.
Now is not the time to "pile on".
New York Attorney General Andrew Cuomo is coming out with both barrels against Fannie Mae, Freddie Mac, Washington Mutual, and the mortgage industry in general. And he's doing it with press releases and political maneuvering. You think there was a "credit crunch" going on now? Wait until Fannie, Freddie, WAMU, or some other large national outfit just decides to stop lending. That's what has already happened in the subprime market and with some smaller prime players. Just wait until the big boys in the conforming market follow suit. And you think getting a loan was hard now and foreclosures were bad.... if this kind of thing continues, you haven't seen anything yet.
The always animated Jim Cramer is right to use his platform to go after Cuomo. I saw him do it on tv last night, and he's continuing the drumbeat today. Cramer calls him a communist... I think he's even worse than that.
Politicians in Washington and around the country are coming up with new laws and regulations that will supposedly fix the mortgage industry. They are eliminating variable products, yield spread, stated loans, and other alternatives that helps consumers and their advisors structure a deal to make the purchase of a home a viable option. When the options left aren't attractive or feasible for the consumers out there who are trying to get out of a rental or trying to keep a home... they will have no where to go. Consumer confidence will continue to go down. Ownership rates will continue to go down. Credit scores will continue to go down. Other industries will be affected as people can't afford what they once could, or can't make minimum payments for what they now have. Prices and values will continue to fall. The only things that will increase will be the foreclosure rate and unemployment.
This is serious business, and a serious problem facing our country. While many in the media and elsewhere would rather discuss Rosie O'Donnell's job prospects or whether or not J-Lo is pregnant... our country is on the brink of a recession. And anyone who uses the backs of hardworking Americans facing tough times as a way to catapult into greater political capital is a traitor. Our country and its people come first. Don't sacrifice them and us... don't make the situation worse just because you think your political prospects will become better.
You want to make the situation better? Leave it alone. How many times can I say it... Lender's don't want to foreclose on a home. It is a zero-sum game at best. Changes need to be made, but they need to be made by the people who understand how this works... Washington, North Carolina and other state legislatures, and politicians around the country have proven they don't. The market can't work this out with the threat of lawsuits, increased regulation, and political posturing. The threat of bad debt is bad enough.
Keep meddling around and everyone will take their ball and go home... where do you think that will leave homeowners or the economy?
I've said it before and been accused of yelling it in the office. Now is not the time to try and achieve political gains, especially when you don't know what you are talking about. Any politician who uses the current crisis in the mortgage industry as a way to make a name for themselves or play political leapfrog over rivals is evil. There are good people facing serious hurdles paying their bills. There are hard working Americans, who have never missed a payment, suddenly facing lates on their credit report and the potential for foreclosure. There are countless workers in the mortgage, construction, and real estate industries facing smaller paychecks or unemployment. And these things spread.
Now is not the time to "pile on".
New York Attorney General Andrew Cuomo is coming out with both barrels against Fannie Mae, Freddie Mac, Washington Mutual, and the mortgage industry in general. And he's doing it with press releases and political maneuvering. You think there was a "credit crunch" going on now? Wait until Fannie, Freddie, WAMU, or some other large national outfit just decides to stop lending. That's what has already happened in the subprime market and with some smaller prime players. Just wait until the big boys in the conforming market follow suit. And you think getting a loan was hard now and foreclosures were bad.... if this kind of thing continues, you haven't seen anything yet.
The always animated Jim Cramer is right to use his platform to go after Cuomo. I saw him do it on tv last night, and he's continuing the drumbeat today. Cramer calls him a communist... I think he's even worse than that.
Politicians in Washington and around the country are coming up with new laws and regulations that will supposedly fix the mortgage industry. They are eliminating variable products, yield spread, stated loans, and other alternatives that helps consumers and their advisors structure a deal to make the purchase of a home a viable option. When the options left aren't attractive or feasible for the consumers out there who are trying to get out of a rental or trying to keep a home... they will have no where to go. Consumer confidence will continue to go down. Ownership rates will continue to go down. Credit scores will continue to go down. Other industries will be affected as people can't afford what they once could, or can't make minimum payments for what they now have. Prices and values will continue to fall. The only things that will increase will be the foreclosure rate and unemployment.
This is serious business, and a serious problem facing our country. While many in the media and elsewhere would rather discuss Rosie O'Donnell's job prospects or whether or not J-Lo is pregnant... our country is on the brink of a recession. And anyone who uses the backs of hardworking Americans facing tough times as a way to catapult into greater political capital is a traitor. Our country and its people come first. Don't sacrifice them and us... don't make the situation worse just because you think your political prospects will become better.
You want to make the situation better? Leave it alone. How many times can I say it... Lender's don't want to foreclose on a home. It is a zero-sum game at best. Changes need to be made, but they need to be made by the people who understand how this works... Washington, North Carolina and other state legislatures, and politicians around the country have proven they don't. The market can't work this out with the threat of lawsuits, increased regulation, and political posturing. The threat of bad debt is bad enough.
Keep meddling around and everyone will take their ball and go home... where do you think that will leave homeowners or the economy?
Monday, October 1, 2007
No More Silence. No More Privacy. No More Huckabee?
I haven’t blogged in quite a while. For the past couple weeks I have been trying to comply with an overbearing government and its knee-jerk political reactions to the growing crisis in the credit and mortgage markets. My brother and I own a small local mortgage broker. At our largest, we had 10 or so employees (ourselves included). Now it is just my brother, father, and myself. We have each been in this business a long time and have seen many ups and downs. Nothing compares to what we currently are experiencing. I blame politics and large brokerage firms 90% for the current crisis. The other 10% goes to speculators who were convinced by some HGTV show that they could make a quick buck flipping houses. But that’s neither here nor there... let’s talk about the past few weeks and why American Elephant has been silent.
To be blunt, business sucks. As a broker, we listen to the needs of our customers and provide them options for mortgage loans offered by various lenders. Since the start of 2007, over 100 lenders have closed, many programs have changed, and various legislative measures have been raised or have already passed. Imagine trying to play a par 5 hole when your choice of clubs keeps changing and the hole keeps moving... and don’t forget the rules, they are amended every other day. Except this isn’t a game, if I don’t sink the ball, one of my customers might have to keep renting, might have higher mortgage payments, or might even lose their house. I take my job and the financial well-being of my customers very seriously. Changes in the industry are not just making my job difficult, they are hurting good, hardworking Americans, a cross section of which are my customers.
As if that doesn’t make things difficult enough, I live and work in a state trying to lead the nation on mortgage reform (more appropriately called “regulation”). North Carolina has been a trailblazer for years in regards to the mortgage industry. We were one of the first states to prohibit prepayment penalties on loans of less than $150,000. We were one of the first states to limit mortgage company fee “junk fees”. We were one of the first states to require background checks and licensing for individual loan officers as well as their employers. All of those regulations I support, but this year things have gone too far. Now the state is in the process of eliminating all broker and lender originated subprime loans, stated loans, adjustable rate loans, yield spread premium (which will cost borrowers more out of pocket), as well as interest-only and other hybrid products. All of these restrictions are on brokers and lenders yet banks are somehow exempt. I guess a 9-5 bank un-licensed loan officer is more likely to help the average consumer who needs some extra assistance with their loan while a licensed mortgage broker, who works longer hours and provides a greater range of products is out to screw everyone? Yeah right. The need for mortgage brokers was created by the void left by banks. We are open longer hours because our customers work for a living. And we don’t turn our nose up at you if you don’t have a $20,000 CD or the perfect job and 2.4 kids... we work with people, sometimes for months or years to help them improve their financial position. We often work nights, weekends, and often at less cost to our consumers. But we are the ones who need to be regulated because the banks decided we have taken too much of their business.
But all of that hasn’t even kept me silent this week. What has kept me silent is the absolute inability to find time to write as I try to comply with my state’s overbearing new regulations on my industry. You see, our small, family-run company received an audit questionnaire earlier in September, and we had just a short amount of time to complete it. Some of the items we had to provide include:
Read that. No probable cause, just a random search with apparently no right to privacy for ourselves or our customers. I am to provide phone numbers, socials, credit scores, loan-to-value ratios, and other documentation about you that the government has no legal right to. And I have to provide it in a very small period of time, in an excel spreadsheet, that I am supposed to send them via e-mail.
I can’t even begin to discuss the privacy issues of e-mailing a government agency that kind of data. You hear stories about government hard drives missing and laptops disappearing all the time. If I was that careless with my customers’ data, you can be sure I would be sued... but when its the government... no big deal.
But just forget the privacy hurdles to providing all of that data. Imagine a small 3 person company having to go through all of its paper files and gathering that data on 650+ different people while still trying to manage a business during a down turn. We've changed software, changed locations, and reduced our staff over the past three years. While we keep great paper records in every file... they were in every file and loan files can be huge. Needless to say my wife didn’t see me very much over the past few days.
This is not stuff they told us we would have to provide when we got our license three years ago. In fact, some of the information they are asking for didn’t even have a legal definition until late March... yet that doesn’t stop a government body who wants to enforce regulations retroactively and investigate you without probable cause just because “your number came up”.
I’m disgusted by the whole thing and fail to see the rationale or even constitutional basis for such investigations without cause. And lest you think we have done something wrong to warrant such a search let me tell you clearly the contrary. After 650+ files and at one time 10 employees, we have had only one customer complaint (from a person who decided not to make their mortgage payments). When we refused to lie on their behalf they made a complaint against us that has long since been dismissed as having no standing.
But that doesn’t matter. An overbearing government has to do something to earn its budget... and right now increased restrictions and a witch hunt on mortgage businesses are both popular and politically advantageous.
For the past few weeks my life and my business was put on hold in realization of that very fact.
And now we come to Presidential Candidate Mike Huckabee, the support of whom I am currently re-thinking. You see, I submitted a question through Governor Huckabee’s website a few weeks ago. Unbeknownst to me during that past week, Governor Huckabee answered my question. I found it tonight... and then I began to blog.
Click here for the question. I won’t quote the whole thing or the whole answer. Read it for yourself and make your own judgments. This post is already long enough. But please pay attention to the segment of the Governor’s response I will quote below:
Furthermore, I can’t stress enough how much I object to eliminating “stated” loan products. We live in a time where people change jobs frequently, are more likely to become self-employed, and have more than one source of income. Ending stated loans will seriously diminish self-employed individuals from obtaining homeownership, at least in the short term. Why would someone who supports the FairTax also support eliminating the ability entrepreneurs to own a home? The IRS is already burdensome enough, but ending stated loans will give the IRS even greater effect. Imagine a small business owner just starting out, not claiming legitimate business expenses because their Adjusted Gross Income would decline and thus they couldn’t qualify for their full documentation mortgage loan. That is the exact result you would find in a world without stated loan products.
The Governor concludes by calling for additional regulations on the mortgage industry. Governor, I have just cited for you what my small family business is experiencing in the face of increased mortgage industry regulation. What additional regulation and restriction on my customers ability to choose their mortgage loan would you propose? What additional regulation and restriction on my ability to earn an income would you propose? In what circumstance can you cite where increased government regulation on an industry and a lack of consumer choice has actually worked in favor of consumers? I can think of none.
To be blunt, business sucks. As a broker, we listen to the needs of our customers and provide them options for mortgage loans offered by various lenders. Since the start of 2007, over 100 lenders have closed, many programs have changed, and various legislative measures have been raised or have already passed. Imagine trying to play a par 5 hole when your choice of clubs keeps changing and the hole keeps moving... and don’t forget the rules, they are amended every other day. Except this isn’t a game, if I don’t sink the ball, one of my customers might have to keep renting, might have higher mortgage payments, or might even lose their house. I take my job and the financial well-being of my customers very seriously. Changes in the industry are not just making my job difficult, they are hurting good, hardworking Americans, a cross section of which are my customers.
As if that doesn’t make things difficult enough, I live and work in a state trying to lead the nation on mortgage reform (more appropriately called “regulation”). North Carolina has been a trailblazer for years in regards to the mortgage industry. We were one of the first states to prohibit prepayment penalties on loans of less than $150,000. We were one of the first states to limit mortgage company fee “junk fees”. We were one of the first states to require background checks and licensing for individual loan officers as well as their employers. All of those regulations I support, but this year things have gone too far. Now the state is in the process of eliminating all broker and lender originated subprime loans, stated loans, adjustable rate loans, yield spread premium (which will cost borrowers more out of pocket), as well as interest-only and other hybrid products. All of these restrictions are on brokers and lenders yet banks are somehow exempt. I guess a 9-5 bank un-licensed loan officer is more likely to help the average consumer who needs some extra assistance with their loan while a licensed mortgage broker, who works longer hours and provides a greater range of products is out to screw everyone? Yeah right. The need for mortgage brokers was created by the void left by banks. We are open longer hours because our customers work for a living. And we don’t turn our nose up at you if you don’t have a $20,000 CD or the perfect job and 2.4 kids... we work with people, sometimes for months or years to help them improve their financial position. We often work nights, weekends, and often at less cost to our consumers. But we are the ones who need to be regulated because the banks decided we have taken too much of their business.
But all of that hasn’t even kept me silent this week. What has kept me silent is the absolute inability to find time to write as I try to comply with my state’s overbearing new regulations on my industry. You see, our small, family-run company received an audit questionnaire earlier in September, and we had just a short amount of time to complete it. Some of the items we had to provide include:
- a spreadsheet detailing personal info, ssn, credit score, loan amount, etc. of every person we have ever spoken with whether currently active, funded, denied, or withdrawn by the customer. EVERYONE.
- 15 months of bank statements, credit card statements, and a list of all assets
- tax returns
- personal details (ssn, etc) of all employees past or present since opening, including their education and license history, phone numbers, and reasons for termination
- every marketing piece every produced since opening
- and much more
- OH. And they pulled my credit, without my consent.
Read that. No probable cause, just a random search with apparently no right to privacy for ourselves or our customers. I am to provide phone numbers, socials, credit scores, loan-to-value ratios, and other documentation about you that the government has no legal right to. And I have to provide it in a very small period of time, in an excel spreadsheet, that I am supposed to send them via e-mail.
I can’t even begin to discuss the privacy issues of e-mailing a government agency that kind of data. You hear stories about government hard drives missing and laptops disappearing all the time. If I was that careless with my customers’ data, you can be sure I would be sued... but when its the government... no big deal.
But just forget the privacy hurdles to providing all of that data. Imagine a small 3 person company having to go through all of its paper files and gathering that data on 650+ different people while still trying to manage a business during a down turn. We've changed software, changed locations, and reduced our staff over the past three years. While we keep great paper records in every file... they were in every file and loan files can be huge. Needless to say my wife didn’t see me very much over the past few days.
This is not stuff they told us we would have to provide when we got our license three years ago. In fact, some of the information they are asking for didn’t even have a legal definition until late March... yet that doesn’t stop a government body who wants to enforce regulations retroactively and investigate you without probable cause just because “your number came up”.
I’m disgusted by the whole thing and fail to see the rationale or even constitutional basis for such investigations without cause. And lest you think we have done something wrong to warrant such a search let me tell you clearly the contrary. After 650+ files and at one time 10 employees, we have had only one customer complaint (from a person who decided not to make their mortgage payments). When we refused to lie on their behalf they made a complaint against us that has long since been dismissed as having no standing.
But that doesn’t matter. An overbearing government has to do something to earn its budget... and right now increased restrictions and a witch hunt on mortgage businesses are both popular and politically advantageous.
For the past few weeks my life and my business was put on hold in realization of that very fact.
And now we come to Presidential Candidate Mike Huckabee, the support of whom I am currently re-thinking. You see, I submitted a question through Governor Huckabee’s website a few weeks ago. Unbeknownst to me during that past week, Governor Huckabee answered my question. I found it tonight... and then I began to blog.
Click here for the question. I won’t quote the whole thing or the whole answer. Read it for yourself and make your own judgments. This post is already long enough. But please pay attention to the segment of the Governor’s response I will quote below:
My sympathies are not with the billionaire hedge fund managers, but with some of the folks getting foreclosed on. These people qualified for normal mortgages, but their mortgage brokers steered them to these sub-primes with teaser rates because they got bigger commissions. Now credit standards have been tightened, and they no longer qualify for traditional mortgages. I don’t think the government – meaning we the taxpayers -- should bail them out, but I think lenders should be pressured to refinance these loans so that the rates rise more slowly and affordably. Some people did buy houses they knew they couldn’t afford, and I don’t have much sympathy for them.In the above selection and the totality of Governor Huckabee’s response he has shown either a complete misunderstanding of what a mortgage broker does or a brazen attitude about their livelihoods. I take offense to the Governor’s response personally, and I ask him to cite any studies that, weighing all detail (such as job stability, equity, credit score, documentation provided, assets, etc), suggest that there is a large contingent of consumers who have been “steered” into loans below what they actually qualify for. I also object to the notion that mortgage brokers “steer” consumers into sub-prime loans for the purpose of making bigger commissions. Being a broker of both prime and non-prime loans, I can not think of any reasonable occurrence where a borrower could be unwittingly steererd into a subprime loan as opposed to a prime loan so the loan officer could make more commission. Assuming a broker has equal access to prime and subprime lenders, it is easier to make yield spread on a prime loan so why would a broker steer a borrower to a subprime loan if a prime loan was available? Now I can accept that a borrower may get a subprime loan when they could have otherwise received an FHA loan... but that problem is due to the extremely high barrier of entry for a mortgage broker to have FHA access (approximately $10,000 in annual audit fees).
We need increased regulation of the mortgage industry to get rid of things like ridiculously low teaser rates and stated income loans where borrowers don’t have to prove they’re qualified.
Furthermore, I can’t stress enough how much I object to eliminating “stated” loan products. We live in a time where people change jobs frequently, are more likely to become self-employed, and have more than one source of income. Ending stated loans will seriously diminish self-employed individuals from obtaining homeownership, at least in the short term. Why would someone who supports the FairTax also support eliminating the ability entrepreneurs to own a home? The IRS is already burdensome enough, but ending stated loans will give the IRS even greater effect. Imagine a small business owner just starting out, not claiming legitimate business expenses because their Adjusted Gross Income would decline and thus they couldn’t qualify for their full documentation mortgage loan. That is the exact result you would find in a world without stated loan products.
The Governor concludes by calling for additional regulations on the mortgage industry. Governor, I have just cited for you what my small family business is experiencing in the face of increased mortgage industry regulation. What additional regulation and restriction on my customers ability to choose their mortgage loan would you propose? What additional regulation and restriction on my ability to earn an income would you propose? In what circumstance can you cite where increased government regulation on an industry and a lack of consumer choice has actually worked in favor of consumers? I can think of none.
Friday, September 14, 2007
Once an Opportunist, Always an Opportunist.
When I got to the office this morning, my brother (and partner in the family business) told me to go to Yahoo and watch this video. I did, and thus starts another lovely day in the mortgage business.
The video shows an interview with Michael DeLaSantos who is mislabeled as a former mortgage broker. Actually, he is a former loan officer who worked for a broker or lender. That is a big distinction, especially in Virginia where Michael worked because Virginia doesn't require loan officers to be licensed (at this time).
But I digress, his license, and that factual inaccuracy by ABC News is not the point of this commentary. The point is to call out a one-time opportunist for what he is... still an opportunist.
I made my living in the subprime business. I did not, and do not take advantage of borrowers. I did not and will not close a loan for someone if I don't believe they have the ability to repay. I did not and will not offer a loan to a customer that I wouldn't offer one of my family members, or myself. That is how a good mortgage broker does business, subprime or otherwise.
But apparently not Mr. DeLaSantos. Michael was an opportunist. He tells you with wide eyes and a slight smile about putting people in loans he knew they could not afford, about offering higher interest rates without regard to better programs for the borrower, and lying on applications to make a quick close. Michael says he felt guilty about such practices, but the lender and his boss encouraged him to do it. Michael made his quick bucks and kept his mouth shut while putting his commission checks in the bank.
Why has Mr. DeLaSantos now seem the error of his ways and finally found a conscious? The fact that the mortgage business has gone bust and he probably doesn't have a job right now might be one factor. Its easy to call attention to your past transgressions now that there is no profit in it anymore. Of course it wasn't Michael's fault... the lender's made him do it.
Now, this generous soul, having ended his evil ways, is volunteering his time at the Center for Responsible Lending. It sure is easier to volunteer and change your tune now that you can't make money sinning any more, isn't it Michael?
Now instead of taking advantage of helpless borrowers, Michael appears to be taking advantage of the current economic crisis... getting publicity by calling out his past employer, lender and co-conspirators while still not taking much personal responsibility. Now Michael is ceasing the opportunity to get some more limelight and is taking advantage of the mortgage brokers out there... many who didn't do business the way Michael did. But you wouldn't know that from the video.
In order to make himself feel better, Michael with ABC News seem to think that all mortgage brokers do business the same way Michael did. And it is the mortgage brokers who created this mess and are responsible for the sky falling on home lending and an ever increasing foreclosure rate.
Now that he has cleared his conscious, I wonder what is next for Michael DeLaSantos? Is this the beginning of his negotiations for a book deal??
Most brokers/loan officers are good people who do good service for their customers. Most subprime brokers/loan officers work with their customers to put them in a better financial situation. Have I closed 2/28 adjustable mortgage for borrowers with the idea of refinancing them again. YES, I have, and the idea was to get them the lowest possible payment now to make their expenses and mortgage affordable. BUT, every time I have offered them advice on how to improve their credit and financial position so when they come back to me or another mortgage broker in 18 months to 2 years, they can refinance into a better, fixed-rate program and never have to worry about it again. My customers always have my phone number and always receive as much attention as needed, both before and after the closing, to help them understand how to improve their credit situation and qualify for a better deal. And most of my customers have been successful doing that. In this business, there is not much greater joy than taking someone from the brink of bankruptcy and helping them reduce their stress level and debt and obtain a low fixed rate mortgage that they can have as long as they own their home. Often there are intermediate steps involved because their short term credit situation is bad. But that is why I am a mortgage professional. I work with people to improve their lives, not just make a quick buck.
Not Michael. He could have taken that approach. But instead he took the easy way out, and now this unscrupulous broker is trying to ease his conscious by painting the rest of us in a negative light. Now he is trying to seize another opportunity, still being dishonest, because the last gig is up.
Once an opportunist, always an opportunist. As for me, I'd rather be a professional.
The video shows an interview with Michael DeLaSantos
But I digress, his license, and that factual inaccuracy by ABC News is not the point of this commentary. The point is to call out a one-time opportunist for what he is... still an opportunist.
I made my living in the subprime business. I did not, and do not take advantage of borrowers. I did not and will not close a loan for someone if I don't believe they have the ability to repay. I did not and will not offer a loan to a customer that I wouldn't offer one of my family members, or myself. That is how a good mortgage broker does business, subprime or otherwise.
But apparently not Mr. DeLaSantos. Michael was an opportunist. He tells you with wide eyes and a slight smile about putting people in loans he knew they could not afford, about offering higher interest rates without regard to better programs for the borrower, and lying on applications to make a quick close. Michael says he felt guilty about such practices, but the lender and his boss encouraged him to do it. Michael made his quick bucks and kept his mouth shut while putting his commission checks in the bank.
Why has Mr. DeLaSantos now seem the error of his ways and finally found a conscious? The fact that the mortgage business has gone bust and he probably doesn't have a job right now might be one factor. Its easy to call attention to your past transgressions now that there is no profit in it anymore. Of course it wasn't Michael's fault... the lender's made him do it.
Now, this generous soul, having ended his evil ways, is volunteering his time at the Center for Responsible Lending. It sure is easier to volunteer and change your tune now that you can't make money sinning any more, isn't it Michael?
Now instead of taking advantage of helpless borrowers, Michael appears to be taking advantage of the current economic crisis... getting publicity by calling out his past employer, lender and co-conspirators while still not taking much personal responsibility. Now Michael is ceasing the opportunity to get some more limelight and is taking advantage of the mortgage brokers out there... many who didn't do business the way Michael did. But you wouldn't know that from the video.
In order to make himself feel better, Michael with ABC News seem to think that all mortgage brokers do business the same way Michael did. And it is the mortgage brokers who created this mess and are responsible for the sky falling on home lending and an ever increasing foreclosure rate.
Now that he has cleared his conscious, I wonder what is next for Michael DeLaSantos? Is this the beginning of his negotiations for a book deal??
Most brokers/loan officers are good people who do good service for their customers. Most subprime brokers/loan officers work with their customers to put them in a better financial situation. Have I closed 2/28 adjustable mortgage for borrowers with the idea of refinancing them again. YES, I have, and the idea was to get them the lowest possible payment now to make their expenses and mortgage affordable. BUT, every time I have offered them advice on how to improve their credit and financial position so when they come back to me or another mortgage broker in 18 months to 2 years, they can refinance into a better, fixed-rate program and never have to worry about it again. My customers always have my phone number and always receive as much attention as needed, both before and after the closing, to help them understand how to improve their credit situation and qualify for a better deal. And most of my customers have been successful doing that. In this business, there is not much greater joy than taking someone from the brink of bankruptcy and helping them reduce their stress level and debt and obtain a low fixed rate mortgage that they can have as long as they own their home. Often there are intermediate steps involved because their short term credit situation is bad. But that is why I am a mortgage professional. I work with people to improve their lives, not just make a quick buck.
Not Michael. He could have taken that approach. But instead he took the easy way out, and now this unscrupulous broker is trying to ease his conscious by painting the rest of us in a negative light. Now he is trying to seize another opportunity, still being dishonest, because the last gig is up.
Once an opportunist, always an opportunist. As for me, I'd rather be a professional.
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