California Mortgage Broker talks about Mortgage and the Economy
By Sean West on Apr 23, 2008 in Current Mortgage News
There are so many changes taking place and on the drawing boards for the Mortgage Industry it’s like living in a whirlwind, or maybe a hurricane, we’ll see.
It appears that regulators, law makers, reporters, and even some bloggers are trying to paint mortgage brokers as the bad guys when in reality:
Brokers did not design and create the flexible programs that let so many risky loans get funded.
Brokers did not underwrite the loan approvals that let so many risky loans get approved.
Brokers did not fund and package those risky loans into mortgage backed securities, CDO’s, and derivatives.
Brokers did not buy those packages on Wall Street and resell them in countless bundles around the world to investors who thought they would get above market returns.
All the mortgage brokers I know have always been in business to make a living by helping clients achieve their goals and dreams.
My personal take on it right now is that the more things change the more they stay the same. Well, let’s re-state that. The more things change, the more this business is getting back to being a responsible profession again.
When I first started in this business 22 years ago you had to prove to an underwriter that your client could make the payments and had a continuing likelihood of being able to make the payments. There were even courses offered by the investors on how to underwrite from tax returns. I took several. They were very tedious.
I still remember how shocked we were when World Savings first offered the "25% down no questions asked program".
"How can they do that?" was the question on the street.
It wasn’t too long before other lenders started experimenting with "stated income", then "stated assets", then "no income, no assets" loans. The horse was out of the barn and it took a meltdown of proportions never seen in this country to jolt everyone back to common sense.
Now, we once again have to prove to an underwriter that our client is a good risk.
What a concept.
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