“The bigger point is that there are no young people coming into this (the mortgage) business…We used to get massive requests for interns, and now we rarely get asked. As originators, we used to brag about our industry at dinner parties, and I doubt that is happening any more…

…now they are disenchanted by our industry. What is going to happen in 10 years when a huge number of originators are retiring?”, December 2014, Mortgage Industry Newsletter


“In my opinion, these young people are making a very rational decision. If you read this daily mortgage industry newsletter (as I do most days), you would find that it is filled with information about bullshit, form-over-substance government regulations, compliance tips, and government enforcement actions. What young person in their right mind would want to be in an insanely (and unfairly) regulated industry like this? Recently, I have read article after article noting material errors and fraud being found (at very higher percentage rates) in NEWLY originated mortgage loans. If this is going on (even if it’s not true and I suspect it is not), how in the world can any mortgage originator, meeting its fiduciary duties to its shareholders (and if a bank the FDIC), safely originate mortgages and get them guaranteed or insured by Fannie, Freddie, and FHA, when these government entities recently made lenders pay them tens of billions (and buy back billions more in mortgages) alleging mortgage errors and fraud? How can that possibly be prudent, given we now know how they act when they suffer unexpected losses on their guarantee/insurance books of business?”, Mike Perry, former Chairman and CEO, IndyMac Bank


Another Excerpt from that same December 2014 Mortgage Industry Newsletter (to help make my point):

“SP writes, “Hi Tom: You can’t make this stuff up. A client was paying mostly cash (proceeds from sale) towards her new home. She was approved (by a large wholesale lender who recently jumped ahead of B of A in volume) for a $200,000 loan but requested to reduce the loan amount to $140,000 a few days before closing after re-calculating what she would want to have left in the bank after closing. We submitted a change in circumstance (“CIC”) form to request reduction in the loan amount and, at the same time, we submitted another CIC to reduce our borrower-paid origination charge accordingly. The lender dutifully reduced the loan amount and origination charge but said that the loan now failed QM because the origination charge was ‘fixed’ when it was disclosed and that the original amount had to be used to calculate QM because there was no change in “terms” on the loan (as we know, reduced loan amount is not a change in term). According to the lender, our only options were to change the interest rate, loan program or loan term if we wanted the reduced origination charge to be used in the QM calculation. No amount of foot stomping or table banging would change the lender’s mind (not really – but you get the point).We reduced the interest rate from 4.125% to 4.050% (yes, you read that correctly) which saved the client $6.09 per month in payment but cost her .46% ($644) in premium.  It would have taken her over 8 years for the meager monthly savings to recoup the lost premium.  I fail to see how this is in the client’s best interest. But all’s well that ends well. Shortly after the interest rate was changed and re-disclosed the client came by and we had her sign a new CIC form to change the interest rate back to 4.125%. We didn’t know how the lender would react to this but they dutifully changed the interest rate back to 4.125%, re-disclosed again and closed the loan on that basis. It used to concern me that young people are not entering the mortgage business but now I take solace in the fact that if I ever wanted to go back to being a wholesale account executive, my advancing age would not be an impediment.”


Posted on December 15, 2014, in Postings. Bookmark the permalink. Leave a comment.

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