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  1.    #41  
    yes there have been state efforts -- some more aggresive and comprehensive than others. There was a NYT?? article that detailed state efforts recently.

    The state people were quoted as saying that they realized that the problem was a national one -- but that they felt like they had to step in because the federal govt was doing nothing.

    In the short term, you're right -- it will be kinda self correcting. There will be no loans -- and no need therefore, for mortgage brokers.

    The whole securitized house of cards bond bundling mortgage mechanism has crashed -- it will be a while before it can resurrect itself.

    Too bad really. I, as I wrote earlier, benefitted from that system -- without it I probably couldn't have gotten my house.

    One of the primary sources of the problem was the absolute disconnect between the specific mortgage broker and the consequences of the loan that he foisted on his victims.

    He was incentivized with bigger commissions for making unsuitable, inappropriate, doomed to fail, loans.

    What motivation did HE have for ensuring that his customer did well -- not just himself ???
    Last edited by BARYE; 08/29/2007 at 04:20 PM.
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  2. #42  
    Quote Originally Posted by BARYE View Post
    yes there have been state efforts -- some more aggresive and comprehensive than others. There was a NYT?? article that detailed state efforts recently.

    The state people were quoted as saying that they realized that the problem was a national one -- but that they felt like they had to step in because the federal govt was doing nothing.
    I suspect these are cures for what ales ya - not neccessarily preventative.

    In the short term, you're right -- it will be kinda self correcting. There will be no loans -- and no need therefore, for mortgage brokers.

    The whole securitized house of cards bond bundling mortgage mechanism has crashed -- it will be a while before it can resurrect itself.

    Too bad really. I, as I wrote earlier, benefitted from that system -- without it I probably couldn't have gotten my house.

    One of the primary sources of the problem was the absolute disconnect between the specific mortgage broker and the consequences of the loan that he foisted on his victims
    .
    This can only be corrected via more strict liscensing requirements.

    He was incentivized with bigger commissions for making unsuitable, inappropriate, doomed to fail, loans.
    Correct and in many cases it gets worse. The Underwritter i.e. representative for the lender would educate the broker on how to commit absolute fraud against the lender itself.
  3. #43  
    Quote Originally Posted by BARYE View Post
    What motivation did HE have for ensuring that his customer did well -- not just himself ???
    Exactly NONE. There was and is virtually NO accountability. However bear in mind that these loans were reveiwed and approved by the lending institution.
  4. #44  
    Quote Originally Posted by BARYE View Post

    People who, as you wrote, who were sweet talked into predatory loans will become homeless -- and they will still do NOTHING.
    they won't be homeless... from what I'm seeing, they will go back into their mobile homes (trailers), and apartments where they should have stayed in the first place.

    Hate to sound so rude, but I have a couple of people going through this... one lady even lost the family land that had been in her family for generations after the arm exploded in her face like a nuclear device (she had the land as collateral).

    Another person is already getting his boxes ready to move into an apartment... although, he told me he is going to empty his savings in an attempt to keep his house. No way in h*** would I do that... I'd stop making payments on the house and then move once the police came to kick me out. Never know when you will get sick and need savings...
    01000010 01100001 01101110 00100000 01010100 01101000 01110010 01100101 01100001 01100100 00100000 01000011 01110010 01100001 01110000 01110000 01100101 01110010 01110011 00100001
  5. #45  
    Hate to sound like an A**hole, but here I go....
  6.    #46  
    Quote Originally Posted by theog View Post
    they won't be homeless... from what I'm seeing, they will go back into their mobile homes (trailers), and apartments...
    a weird side effect of this crisis is that renters are going to be amongst those hurt by it.

    Sad in as much as most never were in on the ride up.


    Turmoil in mortgage market hits renters in the wallet
    By Noelle Knox, USA TODAY

    As the credit crunch shakes up the mortgage market, one group that's suffering some severe collateral damage doesn't own a home at all: renters.

    Already, one in four renters are paying more than half their income on rent — the highest level in at least two decades — according to a study being released Thursday by the Center for Housing Policy. That's up from one in five renters in 1997.

    And the squeeze on renters will probably get worse.


    HOUSING SQUEEZE: Plight for renters gets tougher

    Rents are projected to rise about 4% this year and next. In part, that's because of a shortfall in apartment construction. At the same time, more renters are renewing their leases because they can't qualify for a mortgage. And rising foreclosures are turning some homeowners back into tenants...
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  7. #47  
    I will be raising my rents. But not to take advantage of their situation. Its because the property tax base has gone up about 40% which equates to about a 10% increase in payment.
  8.    #48  
    what do you know about the specifics of mortgage broker compensation --

    How much did they typically receive ?? was it a percentage of the total package plus escalators depending on stuff like exotic ARMs ?? Bonuses based on raw number and value of mortgages ???
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  9. #49  
    Quote Originally Posted by BARYE View Post
    what do you know about the specifics of mortgage broker compensation --

    How much did they typically receive ?? was it a percentage of the total package plus escalators depending on stuff like exotic ARMs ?? Bonuses based on raw number and value of mortgages ???
    Yes. Yes. and Yes. As for loan packages, it would depend on what the vender was having a special on that month. One month would be option arms the next might be NO-doc, etc... You could always tell what the special was as they were pushed hard regardless of the consumers best interest.

    I would say the typical compensation not counting quota bonuses and "special of the month" loan incentives are 2-3% These checks are split however with the Brokerage. The amount of the split varies with each brokerage and/or negotiated between the broker and the officer.

    They recieve a typical 1% origination fee (borrower paid). This is all the consumer thinks the poor MTG broker that worked their little but off is being paid. They lobby very hard to keep it that way. However they are wholesalers. Meaning that if they get the loan at 6% but get you to accept 7% there are bonus checks for that. It's whats called the "back end". It's the same in the car finacning business. These figures are typically shown on the Settlement statment but not as an itemized figure. They are labled POC (paid outside of closing) and in the lender column to the left of the itemizations. I have even heard some lenders explain the figure in such a way that the borrower thinks it was a "gift" by the MTG Co. used to help buy their rate down. (disgusting!) There is tremendous incentive to "screw" the client.

    It's not uncommon for the fabulous loan that was promised to change with an interest rate hike the day of closing or an unexpected pre payment penalty that "can't be avoided" etc.. Especially if they were giving a .5% origination as a "favor". Most consumers simply sign as they have little options. Usually they have given notice to a landlord or have to be out of house they sold, or if relocating they have given notice at work etc... Not to mention they face being sued for default by the seller if they choose not to close the deal. Sometimes I could fix it sometimes not. If so it usually meant a day or two delay to have docs redrawn which was a hardship to say the least. It meant getting a gracious extension from the seller which depending on the market was easy. Sometimes the sellers would hope for defualt if the value went up 20k during escrow. It also meant they left their stuff in a U'haul for an extended amount of time etc.. and thats if I was fixable.
  10. #50  
    I don't mean to imply the entire industry is vile...

    As with any business there are TONS of reputable lenders that have the clients interest in mind. The problem is that there are NO regulations in place to ensure this.

    Unfortunately, the typical buyer shops the laon on "promised" interest rate and/or origination fee, and has little knowledge or concern for the total closing costs or the lenders reputation until its too late.
  11.    #51  
    Thanks --

    could you give me some simple examples --

    i.e.:

    100,000 30/yr fix: MTG broker commision =

    100,000 5/yr ARM: MTG broker commision =

    100,000 5/yr ARM no doc: MTG broker commision =

    100,000 5/yr ARM payment optional: MTG broker commision =


    does the broker make any money from deals that have mortgage insurance on them ?
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  12. #52  
    Quote Originally Posted by BARYE View Post
    Thanks --

    could you give me some simple examples --

    i.e.:

    100,000 30/yr fix: MTG broker commision =

    100,000 5/yr ARM: MTG broker commision =

    100,000 5/yr ARM no doc: MTG broker commision =

    100,000 5/yr ARM payment optional: MTG broker commision =


    does the broker make any money from deals that have mortgage insurance on them ?
    Don't have specifics and as mentioned it would depend on the Vender specials.

    As for mtg insurance that is actually an insurance policy that is taken out by the lender (countrywide etc..) and I would imagine is regulated by the insurance regulations. Meaning that compensation for procurement cant be paid to anyone that is not a liscensed insurance agent. Now that being said, typically those are less than ideal loans that would translate indirectly to higher compensation via interest rates or prepayment penalties etc...
  13. #53  
    Every loan product has what's called a "par" rate. This is the rate for that loan. Obviously it fluctuates with the buyer credit worthiness. The "par" rate for any given product fluctuates by the vender all the time. The backend compensation is calculated on the difference between PAR and what the borrower accepts. The specifs for the examples you asked would change daily.
  14.    #54  
    Quote Originally Posted by sxtg View Post
    Every loan product has what's called a "par" rate. This is the rate for that loan. Obviously it fluctuates with the buyer credit worthiness. The "par" rate for any given product fluctuates by the vender all the time. The backend compensation is calculated on the difference between PAR and what the borrower accepts. The specifs for the examples you asked would change daily.
    cool -- I understand that it would vary depending on all those variables -- but any approx. examples would be good.
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  15. #55  
    Quote Originally Posted by BARYE View Post
    cool -- I understand that it would vary depending on all those variables -- but any approx. examples would be good.
    I am not a broker and don't have a par sheet in front of me so not really. also which one paid more would fluctuate daily.

    Its not that option ARMs paid more than conventional or visa verse. The abuse with option ARM was that people that couldn't afford a house were able to with them. Or people that shouldn't borrow more than 200k were now able to borrow 375k. some of these people had no idea what the governing factor in their buying abililty was. And the 20 somethings really cant comprehend intrest rates ever reaching over 7%. Easy money has been around for quite some time. Again, appreciation has offset the ignorance, but that is not the case at the moment.
  16. #56  
    I heard a Ric Edelman say that the mortgage problem won't turn around until (1) sellers recognize that properties are not worth what they think; and (2) buyers stop waiting for "rock bottom" pricing. He shared some Real Estate Agents horror stories:

    One seller refused to lower his price from the $1M price tag to the more realistic $850K, becuse he didn't want to lose money. Upon further inquiry, it was discovered that he paid $400K for the property.

  17.    #57  
    Quote Originally Posted by shopharim View Post
    I heard a Ric Edelman say that the mortgage problem won't turn around until (1) sellers recognize that properties are not worth what they think; and (2) buyers stop waiting for "rock bottom" pricing. He shared some Real Estate Agents horror stories:

    One seller refused to lower his price from the $1M price tag to the more realistic $850K, becuse he didn't want to lose money. Upon further inquiry, it was discovered that he paid $400K for the property.

    Hey Shop !!!

    (groan...)

    you're right -- the bottom is likely a ways off.

    At least a year -- probably 5 or more.

    Things will begin to turn when sellers finally surrender, when you begin to see them engage in a reverse of the auction that buyers were forced into on the way up -- when they start to lower their asking price almost before they're asked...
    Last edited by BARYE; 09/05/2007 at 11:04 AM.
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  18.    #58  
    the article below refers to horrible conditions in the housing market, as reported for July -- BEFORE August's collapse in the mortgage securitization market:


    July pending home sales index falls 12.2%, Monthly index lowest since Sept. 2001
    By Ruth Mantell, MarketWatch Sep 5, 2007

    WASHINGTON (MarketWatch) - The U.S. housing market showed signs of major disruption in July, with a 12.2% monthly decline in contract signings on existing homes -- the largest drop since the pending homes sales index started in 2001, the National Association of Realtors reported Wednesday.

    The index hit its lowest level since September 2001, and pending sales were 16.1% below their year-earlier level. The July data reflect trends before August's mortgage meltdown.

    "This is disastrous," said Ian Shepherdson, chief U.S. economist with High Frequency Economics Ltd., in a statement. ...

    ... this collapse in pending home sales predates the turmoil in the markets and the subsequent jump in jumbo mortgage rates, even for prime borrowers," Shepherdson said...

    ... the housing market has continued to weaken throughout the summer. Inventories of unsold single-family homes have been high, while prices have fallen. In July, inventories were at their highest level in 16 years. ...

    House prices are down 3.2% in the past year, the biggest decline ever recorded in the 20-year history of the Case-Shiller home price index. A year ago, home prices were rising at a 7.5% pace nationally. At the Federal Reserve meeting in Jackson Hole, Wyo., Robert Shiller, chief economist at MacroMarkets LLC, said 50% declines in home prices in some regions were entirely possible...
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  19. #59  
    There are signs of improvement in the market place but nothing to get excited about yet.

    You're right Shop we seem to be in a "stand off"
  20.    #60  
    Quote Originally Posted by sxtg View Post
    There are signs of improvement in the market place but nothing to get excited about yet.

    You're right Shop we seem to be in a "stand off"
    what are the signs of which you write ??

    Are you seeing a light at the end of the tunnel ??

    the latest I've read is that the nation's biggest housing lender (and mine) Countrywide, has announced that its laying off 20% of its workforce (toward 50-60% or more before its over), that jobs creation was down when consensus had it at 100,000+, and that previous month's jobs numbers have been readjusted downward -- all while junior's Fed was still worried about inflation...

    I've read that possibly 7 million homes could maybe be foreclosed on, that in some parts of the country housing prices might fall by half, that consumer confidence and spending might contract like a prune in the sun...

    Is it possible that the light you're seeing is atop a locomotive ??
    Last edited by BARYE; 09/08/2007 at 01:35 PM.
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