Posted by Ed Garcia on April 12, 2007 at 13:09:09:
Max,
That?s kind of you to be concerned.
For starters, my last posts were on 04/06/07 which is not really to long ago.
Like you Max, I get busy doing other things, but I try to keep an eye on the board.
I plan to do a little piece in the near future about Sub-Prime and the effect it will have on the market not only currently, but in the future years as well.
But since you?ve brought up some great concerns, I will address them.
Before I do, I?d like to thank you for your comment, ?I always look forward to learning from experienced people with integrity about them. I enjoy and value your insight.?
Thank you.
Your first statement, ?With all the change in the mortgage business, you have yet to share your thoughts. Lots of lenders are closing up or going broke.?
No question about it. Max, everybody and their brother have been getting into the mortgage business and now the weaker ones will be weeded out. I?m sorry to say when you mention the word ?Integrity?, I feel a lot of it has been forsaken for the sake of a fast buck. I would see borrowers being put into loans that was not necessarily in their best interest, but made more money for the broker.
You mention, ?Rampant loan fraud is being reveled. Loan defaults are on the rise. Millions of ARM loans are coming due this spring. Many loan officers are finding themselves out of work. Mortgage brokers are still being blamed for all the trouble.
My answer is, for years I?ve been watching legal loan fraud. God only knows how many brokers have helped the borrowers pack applications, by schooling the borrower as to how much he would have to show on his/her application ?stated income? in order to get the money they want to borrow etc. There is no question that many or most mortgage brokers couldn?t resist the temptation to save a loan knowing that if they didn?t do it, another broker would.
I?m afraid that Loan Fraud is now an epidemic and the worst is yet to come.
When you mention the millions of ARM coming due this spring, believe it or not, this second wave is going to make more money for the brokers and keep them alive. Most of those loans will be rewritten, the solid borrowers will be able to rewrite and the less quality borrowers (the ones who don?t have the income) will consider themselves victimized by the lender when it was a combination of GREED both by the mortgage broker and the borrower.
Max, I?m going to give you a website as food for thought, but don?t take it as the gospel.
Ed Garcia