Pre-subprime, hard money lenders operated outside of our mortgage banking marketplace.

I’m back in the office now and want to respond directly to comment #114.

These federal laws, TILA, RESPA, ECOA and even the FCRA came to us in the mid-1970s during a wave of federal consumer protection legislation. Yes, banks and S&Ls were the primary originators of these loans, and brokers did exist back then, but we didn’t call them brokers.

We called them hard money lenders.

Brokers will adapt and survive.

I just read on the CR blog today that when BOA takes over C-Wide, that they’re going to do away with pay option ARMs and stated income. They’re not saying what they’ll be doing with wholesale.

However, there will always be borrowers with less than perfect credit and self-employed folks that can’t document income.

The future of the mortgage broker resides with hard money/private money lending, FHA approval, and conforming.

YSP has been mis-used for year, even if there are instances when it has helped the consumer. Because of the mis-use by many, I predict that the consumer will have to consent to pay the broker out of YSP, the way the GFE is trying to be changed right now.

The industry has no one to blame but itself. Pointing fingers elsewhere, such as towards politicians, shows our arrogance.

It is up to us who remain, to become leaders for changing these deceptive practices.

Roger…I’m not arguing against full disclosure of YSP. We do that now.
If regulators don’t understand that YSP’s can be used to help the consumer….then they never will. This isn’t something new. Although, I have met my share of auditors (fed & state) that need a little education. Hmmmmm……why haven’t the regulators taken any of the blame. For example…..Maryland Banking Auditors call us every 2-3 years, send us a questionaire to complete. We send it back along with a report of loans originated for the audit period. They select loans to audit from that report and request that we send electronic or copied files. You talk about a big gap in the fence!

What is useless to fight against is the battle over full disclosure of YSP’s, and the concept that the YSP is the borrower’s money, given in full knowledge by the borrower, to the broker, in whole, or in part.

Anything else seems to be a solely self-serving argument, and will probably not withstand the gauntlet of state and federal regulations coming down the pike.

Let me put my mortgage underwriter hat on for a minute and say that there are plenty of want to be borrowers – in a normal market, one that isn’t artificially booming – who are not in a position to purchase real estate.

Demonstrating the ability to save, demonstrating not only the ability to repay but also the willingness to repay debt – these are core to traditional mortgage underwriting decisions.

A traditional mortgage broker helps potential borrowers determine if they are ready for homeownership and, if not, tells them to save their money, gain stable employment and pay their bills on time. In this way a solid pipeline of business is built within your community. People will come back even years later, ready to step into homeownership.

It’s not about the fast buck. It’s not about playing the FICO game. It’s about the real life creation of homeownership that lasts – the kind that can last through most of life’s little bumps.

This is the tough love that traditional mortgage lending is all about.

The borrowers with money will be our only customers. I don’t see anything wrong with a broker who uses YSP as his only tool in the box as long as he’s/she’s not charging fees. I dare say that with credit card balances being at an all time high and savings being at a all time low, that borrowers with no or little money will be the majority of borrowers for sometime to come. Or if the Gov’t has anything to do with it, they may not qualify since they don’t have any money in the bank.