Comments of the Week: How It Will Work On Getting Paid

Mortgage & Real Estate

One topic guaranteed to be near the top of the mind of mortgage executives is payday. Caps on how much loan officers can earn at 3% of loan amounts and an anticipated big reduction in mortgage volume caused by new regs like that one have many in the industry concerned.

So we got some reactions to a contrarian piece by industry analyst George Yacik that said despite all that, the mortgage business is still a land of great financial opportunity for skilled salespeople.

According to reader Gary Heinecke, the analysis sounds good when the average loan is 300k and much higher. Our average is low 100k. Been turning away anyone below this. All of a sudden too many companies telling us they will pay us 2.5% to 2.75%. I always tried to protect client’s identity and will not do a loan without having met with them personally. Bad for production and in best interest for the client. We will survive as we have survived a fire, the 2008 (sky is falling) and more.

Seriously, anyone that cannot see that the banks were at the helm needs to believe in Peter Pan. Guess I will join the numbers in obtaining a warehouse. Kind of feel like I am cheating. Only one got screwed is the public by higher rates, and third-party appraisals. Remember unrelated third-party processing is not part of the 3%. Just make sure it is not part of your company. Where there is a will there is a way.

Reader Joe commented: I’m not sure that I agree with the prediction that 2014 will see a drop in mortgage volume of 30% and 60% drop in refinance volume. Since February 2013, the bottom has dropped out of the refinance market with volumes already down 60% (or more). Many, many industry analysts (do a Google search) are predicting an upturn in the market due to new housing construction and sales (and the lightening of credit restrictions). I wish the author had done a bit more homework rather than opening his story with inflammatory (and perhaps unjust) analysis.

And an anonymous commenter wrote: The DTI will be the killer as there just are not enough qualified borrowers out there. Prices will drop until that underwriting threshold is met. The [stock] market doesn’t agree, but this is what my 27-year in the trenches experience tells me. FHA who went back to being the dominant player after the Great Recession just dropped the loan amounts in my [Maricopa County, Ariz.] market from $346,000 to $271,000! Happy New Year!

The Dylan Howard blog on the brave new world for mortgage servicers got some reaction as well.

According to reader Jeff: Yes, most borrowers know when their payments are due, but not all. One spouse might not know of a missed payment, as may other co-owners of property where only one of two borrowers is living in the home and supposedly making the payments.

Still, these rules do not really address the cause of the recent financial collapse. The problems were with origination, not collection. Borrowers got loans they could not repay once their home lost value. And the lack of any effective regulation allowed massive numbers of these loans to be sold to unsuspecting investors and pension funds because Wall Street’s “innovations” (really, Wall Street’s power over bank regulators) magically turned pools of these worthless loans into AAA paper.

Reader John writes: This sounds a little over the top. When does a mortgagor not know when the payment was due? The debt does not go away through nonpayment. The delays will extract an implementation cost on the rest of the servicing portfolio who meet their obligations without additional stress on the system.

I know this is the new ‘law’ but once again we find in our new society what you do is not your fault and the less fortunate need to (read that irresponsible borrowers) be coddled. Why not just get the mortgagor to sign a paper at closing that tells him/her to contact the mortgage company within seven days after the due date if unable to make timely payments? It is the borrower who is not complying with the payback agreement, not the mortgage servicer.

Final word goes to reader Tony, who replied to Johns comment. Dear John: I guess you think that all borrowers can go to a lender and demand that they receive loans at the current rate. These lenders are not stupid, just GREEDY. If not for the subprime loans that were given to certain area codes in the U.S. this may not have happened.

These banks knew what they were doing. Once certain areas were targeted, the lenders just raped all less fortunate who were denied prime loan rates. Then the lenders conspired with the insurance companies to inflate the home insurance, which caused for the increased monthly notes. After the homeowner was told of the increase in mortgage payments, they were told that the lender took the extra money out of the escrow to pay for the increase in the house payments. Also, that the owner would have to come up with escrow shortages, plus they would have to reimburse the lender for the false increases. When confronted with these issues, the homeowner was told that the increase would be added to their monthly house payments.

Now, that was very nice of the lenders to extend that policy to all of the less fortunate. Result, MASS FORECLOSURE.

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