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mortgage007 · 09-19-2008, 08:04 AM

I have worked in the mortgage banking industry for 30 years and have been through many ups and downs of the market. The industry is regulated by several layers of state and federal laws that really are adequate to have prevented the current crisis we face in this country concerning credit, housing and real estate foreclosures. Most staes require that a mortgage broker take a course, pass a stae adminited test and then apply for a license to originate mortgage loans in that state. Of course these states differed in the way this was done and the difficulty of getting licensed. However, the states that are now suffering the greatest losses, such as California, FLorida, and Nevada, are the states with the most difficult exam and screening. On the federal level, the RESPA act, governs all mortgage and other lending activites and requires all states to comply with their rules. They are ridgid, explicit and well thought out if they are followed. RESPA is an acronym for "Real Estate Sttlement and Procedures Act". It is this act that requires the "truth in lending" disclosure and many other disclosures that explain to every borrower exactly what they are paying and how their loan will work. They require that documents be signed and redisclosed in a timely fashion if anything changes in the loan fees or terms. Lenders and brokers are subject to severe penalties and sanctions both civil and criminal if these laws are violated. There have always been strict undeerwriting guidelines to determine a borrower's ability to handle the loan payments.
Even the so called "no qualifyer" loans or "stated income loans " or no documents loans
required the lender to use the "test of reasonableness" concept when approving the loan. In other words, someone who wants a $500,000 mortgage and claims to have put down 20% of the sales price but works as a cashier at a grocery store and has no assets or lifestyle to support the income needed, should not be given the loan. Believe me when I say that the loan originator knows what is going on and knows when the borrower is lying about things. The borrower's credit report tells a lot about lifestyle and it alone can be reason to deny the loan. Of course, the problem is that you must have loan officers and originators that are basically honest people who do care about their actions. The rules in place now will suffice if they are enforced by the administrative side of government and therefor we do not need to legislate more regulation to be ignored as the present laws are. What on earth would we add to the current regulations that already exist. If you give me an example of a bad loan, I can tell you exactly where it should have been stoppped before it ever was funded.

Lets enforce the law and we will all be OK.

09-19-2008, 08:04 AM	#1 (permalink)
mortgage007 Upright	New Regulation: Not necessary I have worked in the mortgage banking industry for 30 years and have been through many ups and downs of the market. The industry is regulated by several layers of state and federal laws that really are adequate to have prevented the current crisis we face in this country concerning credit, housing and real estate foreclosures. Most staes require that a mortgage broker take a course, pass a stae adminited test and then apply for a license to originate mortgage loans in that state. Of course these states differed in the way this was done and the difficulty of getting licensed. However, the states that are now suffering the greatest losses, such as California, FLorida, and Nevada, are the states with the most difficult exam and screening. On the federal level, the RESPA act, governs all mortgage and other lending activites and requires all states to comply with their rules. They are ridgid, explicit and well thought out if they are followed. RESPA is an acronym for "Real Estate Sttlement and Procedures Act". It is this act that requires the "truth in lending" disclosure and many other disclosures that explain to every borrower exactly what they are paying and how their loan will work. They require that documents be signed and redisclosed in a timely fashion if anything changes in the loan fees or terms. Lenders and brokers are subject to severe penalties and sanctions both civil and criminal if these laws are violated. There have always been strict undeerwriting guidelines to determine a borrower's ability to handle the loan payments. Even the so called "no qualifyer" loans or "stated income loans " or no documents loans required the lender to use the "test of reasonableness" concept when approving the loan. In other words, someone who wants a $500,000 mortgage and claims to have put down 20% of the sales price but works as a cashier at a grocery store and has no assets or lifestyle to support the income needed, should not be given the loan. Believe me when I say that the loan originator knows what is going on and knows when the borrower is lying about things. The borrower's credit report tells a lot about lifestyle and it alone can be reason to deny the loan. Of course, the problem is that you must have loan officers and originators that are basically honest people who do care about their actions. The rules in place now will suffice if they are enforced by the administrative side of government and therefor we do not need to legislate more regulation to be ignored as the present laws are. What on earth would we add to the current regulations that already exist. If you give me an example of a bad loan, I can tell you exactly where it should have been stoppped before it ever was funded. Lets enforce the law and we will all be OK.