“This has happened because the mortgage industry has effectively been nationalized (80+% of mortgages flow through a handful of Too Big to Fail Banks, 90% or so of mortgages are insured or guaranteed by the government, and the totalitarian Consumer Financial Protection Bureau arbitrarily fines and scares the heck out of lenders)…

…Today’s “nationalized” mortgage industry (versus the pre-crisis one) has much higher loan origination costs (thousands of dollars per loan) due to the myriad of new government regulations and lender fears of arbitrary government fines and class-action lawsuits, all of which is passed directly on to American mortgage borrowers. And today’s “nationalized” mortgage industry has substantially reduced competition; which has resulted in historically fat lender profit margins (and they are mainly just packaging mortgages for the government!), poor service, and no accountability. Bottom line, average American mortgage borrowers are paying over $5,000 more today for their mortgage than they were pre-crisis (and that’s a low-ball guesstimate on my part) today than they were pre-crisis, because of increased regulation and reduced competition. And what real, tangible benefit can anyone point to, that justifies this? I don’t see it.”, Mike Perry, former Chairman and CEO, IndyMac Bank

Excerpt from February 2015 Mortgage Industry Newsletter:

 

Anonymous Mortgage Loan Officer #1:

 

“Over the past several years my biggest frustration and concern has been with the wholesale and retail lenders I use not caring about or paying attention to the purchase contract deadlines or even lock expirations. Consider that I, as the loan officer, have no authority over anyone other than myself and an employee if I have one, but I am on the hook in the eyes of my borrower, their realtor, and the selling agent to meet all the contract dates in the purchase contract pertaining to the loan. I take these dates very serious, and I commit with every loan transaction to meet them or beat them to protect my borrower and keep them from falling out of contract.  But the second my processor turns the loan in for underwriting I am at the mercy of the company I’ve selected to do the same.  Unfortunately for me and everyone else, I find that these companies care more about their internal processes and policies and protecting the feelings of their underwriters and other internal team members than they do the contract, their clients, the borrowers, the realtors, or anyone else on the hook to deliver. I understand that they have to have policies and processes, and that LOs have to turn files in quickly. But time and time again, even with ample time to complete, these lenders are still missing appraisal deadlines, title deadlines, loan condition deadlines, closing deadlines and funding deadlines. They cause the parties to have to repeatedly execute extensions. They cause extreme stress, and in some cases they can cause borrowers to lose thousands of dollars in earnest funds and the property they wanted (that’s not happened to me thankfully) if the seller refuses to extend because they have a stronger offer in line. That’s becoming common in our hot markets.”

 

Anonymous Mortgage Loan Officer #2:

 

“The industry has been restructured so everyone can go after the loan officer for liability, however no one is talking about any liability falling on the lender who has some control over whether that purchase agreement’s deadlines are met or missed. They can take their sweet time sending out an appraiser, approving the loan, signing off on conditions, title docs and the appraisal report, and they can drag their feet on sending over figures, docs and finally the funds. I’ve seen it take 3 business days to sign off on one single document and voila!  The HUD just expired.  Or we’re expecting a CTC any minute and instead we get ‘sorry, your bank statement expires tomorrow’ even though they’ve had that statement for 2 months.  What!?!  Or our favorite: ‘I don’t see that document in the file’, even though you’ve uploaded it 3 times. No matter how much I protest, complain, push, demand or otherwise pressure the lender to consider the damage done by missing these dates, they may act like they care, but they still don’t speed up their delivery. They give lip service that they are working hard to get things done, but they still come up with last minute requests that should have been included in the first round of conditions (sloppy), and then they are late to clear the loan to close and everyone is scrambling to figure out how to keep the borrower in contract.  It’s not just one or two lenders, it’s a lot of them, and it seems to be more common with lenders that centralize everything so they have to handle files on an ‘as received’ basis. A more decentralized unit could be capable of paying closer attention to which loans need to close first and prioritizing them so they don’t become a crises (like in the good old days). I understand there are a lot of lenders that are really fast, or they say they are.  But there is really no accountability required of them.  I can get in a lot of hot water as an LO for a lot of reasons, but what about lenders that take unreasonable amounts of time to finish up a CTC or to release figures or to order the wire? I am tired of taking the beating for their delays, and losing repeat and future business for something I can’t control, but the lender can. Whether everyone’s reaction to this by taking it out on me is reasonable or not, it’s still a beating.”

Posted on February 20, 2015, in Postings. Bookmark the permalink. Leave a comment.

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