Comments on: Democrats Weigh In On Solutions to Cleaning Up Mortgage Industry

By: JD Wilson

JD Wilson — Thu, 06 Sep 2007 06:52:36 +0000

1) You need an editor before you post publicly. Trust me on this. 2) The “teaser” rates on ARMs are actually based on a wholesale buydown rate, or reduced initial rate, and the pre-payment penalty is in place to make sure that the investor who provides the funds receives an equivalent return in the initial years. The borrower gets a significant savings in the early years and they only choose this loan because they need it to qualify for too-much house (whose fault?), they expect increased earnings in the future, or they plan to sell, move or refinance at the end of the buydown years. They sign a mountain of disclosures about how these loans work and agree that nobody is holding a gun to their heads when they eagerly sign up, drooling over their below-market rate and HUGE savings. 3) Wholesale lenders can and do recoup commissions paid to retail loan originators for failed loans, AND they cease to offer funds to wholesale banks and brokers who are guilty of unethical actions and/or have an inordinate number of loan defaults. 4) Wholesale lenders would love to operate with stricter underwriting guidelines; the relaxed-guideline loan programs exist ONLY because the consumer and all other parties invested in real estate transactions (Realtors and hundreds more) demand them. 5) Suggesting that lenders should have negative consequences for issuing mortgage loans to the public is moronic — the sado-masochist crowd is not in the loan biz or is spending their money on whips and dog collars — so who will finance your home purchase for pain without gain? That said, you got your wish. The lenders are failing rapidly now and you will soon have to save up the full purchase price under your lumpy mattress if you want the American Dream. Better buy a gun to defend your funds though, because millions of Americans that used to make a living in the real estate and mortgage industry are hungry and desperate to save their families.

By: author

author — Wed, 15 Aug 2007 03:08:42 +0000

yeah, something needs to be done. I don’t know if the Dems have the answer, but at least it’s on their radar.

By: Eric

Eric — Tue, 14 Aug 2007 18:33:12 +0000

I’ve heard of mortgage lenders that slam clients with ARM’s, knowing they will be in over their heads soon. They wait for a few weeks after their adjustment, then contact them again to get them in a fixed or interest-only note. They keep playing these shells games to continue to swindle money out of their marks.

By: Amber Yount

Amber Yount — Tue, 14 Aug 2007 15:59:04 +0000

The only thing I don’t agree with is the tightening of loans that require little documentation. I think that if you have great credit you shouldn’t have to prove your income – or more importantly, we’re self-employed and make over $120,000 a year, but can’t get a traditional mortgage, because according to our tax returns, we only made $8,000 that year! So we have to wait until our credit goes up enough to be able to qualify for one of those no doc loans.