Housing crisis, the spark that begat the flame.

[piece-itpete]

Originally Posted by BlueStreak

Yeah, it does get a little disconcerting trying to follow whether liberals are "pussies" or "thugs", the teabaggers keep changing it back and forth on us.

Dave

Followers and leaders?

Pete

[piece-itpete]

Heaven forbid I should offend anyone btw. Accept my apologies in advance.

Pete

[Charles]

Originally Posted by Zeke

At least in words, a lot of this stuff was directly addressed, here:

"SAFE Mortgage Licensing Act of 2008

Title V of P.L. 110-289, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), was passed on July 30, 2008. The new federal law gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the Nationwide Mortgage Licensing System and Registry (NMLS). The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan. Mortgage loan originators who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, or for an institution regulated by the Farm Credit Administration, are registered. All other mortgage loan originators are licensed by the states.

The SAFE Act requires state-licensed MLOs to pass a written qualified test, to complete pre-licensure education courses, and to take annual continuing education courses. The SAFE Act also requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check; and state-licensed MLOs to provide authorization for NMLS to obtain an independent credit report."

But only since Obama has been President have a litany of national -- and, hence, state -- standards actually been codified.

In sum (as of March-ish), things like application fees are illegal and, as Mortgage Loan Officers are now required to be registered and act within guidelines to legally operate, any failure to act within SAFE Act guidelines gets you removed from the game.

Amazingly, there never was a system to check this. In the past, a guy could be convicted of fraud in Dallas, TX, and open up shop 24 hours later in Tulsa, OK, with ZERO (beyond fines in the previous state) repercussions.

Now, this stuff is tightly regulated and it has taken me >90 days to receive licensing in MO and KS. Why was there an opening at a prestigious firm in a business that is relatively closed to outsiders?

Let's just say that, as licensing rolled in, a sizable percentage of originators rolled out: being unable to pass a criminal background, credit check, get the necessary score on state/fed examinations, and/or convince their brokerage houses that they were not a potential liability...

Yes, much of the industry used to smell. In my opinion, the SAFE Act is an example of regulation acting in a positive manner (that doesn't always occur).

Now, the potential unintended consequence is that fewer people will be able to afford homes with stricter guidelines for funding.

Best of wishes on your new career.

My little story of the mortgage brokers screwing people out of the origination fees is dated by at least 1 1/2 years.

My clients were flying back from Europe and sitting next to some mortgage brokers. They said the brokers were laughing about it as they explained their scam.

It's good to know that the flim flam artists are being drummed out of the corps.

Honest Injun!!!

Chas

BTW, they tell me that I'm part Cherokee. And I have noticed that whenever I toss down too much firewater, I have an overwhelming urge to lift a few scalps.

[Rex E.]

When does personal responsibility come into this? If you don't have the money and know you don't have it then no one in the world is to blame other than yourself. Not the lender, the agent not anyone but the person who took the loan.

[Oerets]

Originally Posted by Rex E.

When does personal responsibility come into this? If you don't have the money and know you don't have it then no one in the world is to blame other than yourself. Not the lender, the agent not anyone but the person who took the loan.

Under your analogy the Nigerian Prince who needs a check cashed in the USA is not guilty but the person who is taken in is? Sure most people don't get snookered but a few do.

When you have the whole sale marketing of home loans that was going on then it was easy for some to be fooled.
Between the Realtors / Home Builders, Banks and appraisers all fueling the fire people got caught up.

This was a profit driven feeding frenzy caused by the quick money to be made in Closings, Origination fees and such. The banks got there money then bundled, sold most of the loans before they went toxic. Or were bailed out of any losses that they did get stuck with.


Then you have the people who had good credit and bought a home they could afford. But now the balloon payment is do and the home is worth 1/2 so no bank will loan them the money. So walking away from the home becomes an option they consider.


Barney

[BlueStreak]

Originally Posted by Oerets

Under your analogy the Nigerian Prince who needs a check cashed in the USA is not guilty but the person who is taken in is? Sure most people don't get snookered but a few do.

When you have the whole sale marketing of home loans that was going on then it was easy for some to be fooled.
Between the Realtors / Home Builders, Banks and appraisers all fueling the fire people got caught up.

This was a profit driven feeding frenzy caused by the quick money to be made in Closings, Origination fees and such. The banks got there money then bundled, sold most of the loans before they went toxic. Or were bailed out of any losses that they did get stuck with.


Then you have the people who had good credit and bought a home they could afford. But now the balloon payment is do and the home is worth 1/2 so no bank will loan them the money. So walking away from the home becomes an option they consider.


Barney

I would have to agree. I flipped a couple homes between 1996-2005. The real estate agents and lenders were always pushing me hard to buy something WAY more expensive than I could afford. I didn't fall for it, but I can easily see how some would.

At what point does the behavior of the so-called professionals become unethical? I would say that if you know you're pressuring someone to buy a home they have no chance in hell of affording-------This is that point.

I honestly don't understand why our friends on the right want to condone such unethical and unprofessional behavior. Can someone please explain that to me? Is it some sort of--"The businessman can do no wrong. Telling him he's an ass might upset him, so we have to blame anyone and everyone else." mentality?

Seriously. I'd like to hear your thoughts on that.

Dave

[Charles]

Originally Posted by BlueStreak

I would have to agree. I flipped a couple homes between 1996-2005. The real estate agents and lenders were always pushing me hard to buy something WAY more expensive than I could afford. I didn't fall for it, but I can easily see how some would.

At what point does the behavior of the so-called professionals become unethical? I would say that if you know you're pressuring someone to buy a home they have no chance in hell of affording-------This is that point.

I honestly don't understand why our friends on the right want to condone such unethical and unprofessional behavior. Can someone please explain that to me? Is it some sort of--"The businessman can do no wrong. Telling him he's an ass might upset him, so we have to blame anyone and everyone else." mentality?

Seriously. I'd like to hear your thoughts on that.

Dave

It was mass psychosis.

Everyone was watching "This Old House", standing around the water cooler talking about their new 4-plex, even the guy on the ass end of the garbage truck was a real estate mogul.

It was "no money down" and the financial laws of gravity have been suspended. Everyone was getting rich and no one wanted to be left behind.

It was greed, pure and simple. Everyone was busy putting the pencil to how much their net worth had increased instead of putting the pencil to how in the hell they were going to pay for it all.

Even the "buy now before housing becomes unaffordable" crowd failed to see the obvious flaw in their logic.

For a brief period of time, the interest I was receiving on a lowly IRA was higher than the interest I was paying on my home loan. At the same bank. Hell, I even had a 15K loan on a credit card at 0% interest.

Times wus good!!!

Now there were two ways to view a situation such as this. One is to borrow just as much money as you can, because you can't lose. The other is things are fixin' to change.

Fortunately, my crummy little crystal ball told me to chose the latter.

Chas

[bhunter]

Originally Posted by BlueStreak

Yeah, it does get a little disconcerting trying to follow whether liberals are "pussies" or "thugs", the teabaggers keep changing it back and forth on us.

Dave

Simple: Union Thugs; Regulators and Environmentalists Pussies. Two distinct groups.

[bhunter]

Originally Posted by Rex E.

When does personal responsibility come into this? If you don't have the money and know you don't have it then no one in the world is to blame other than yourself. Not the lender, the agent not anyone but the person who took the loan.

Further, if the government wasn't distorting the market, the whole bubble wouldn't have occurred. Firms are much more careful lending their own money. The ridiculous part is attempting to place blame on evil corporations without acknowledging the nanny state's role. I seem to recall the Bush Admin trying to get stiffer regulation, but being thwarted by the left in Congress.

[merrylander]

Let's see - we have a system where the mortgage broker finds a lender, takes a 'point' off the top and disappears. The lender takes two, maybe three 'ponts' off the top, securitizes the loan, and disappears.

The miracle is that it took so long for it to blow up in everyone's face. I am beginning to believe that all financial rules here were designed by thieves for thieves. When SCOTUS declares bribery is legal and later says corporations are citizens (even if they are based in Switzerland) what else can one expect.