The growth of non-profit associations within the real estate sector can be traced to 1977 and the Community Reinvestment Act (CRA). At that time, banks began giving money to the non-profit housing sector in order to meet their CRA requirements.
Non-profit housing agencies perform many services for the community. First time homebuyer seminars, and then later, mortgage default counseling, preforeclosure workout assistance, help negotiating short sales, all for free or for a nominal cost.
Non-profits set up special training programs for loan originators and loan officers who want to be on the “approved
What about renters? Couldn’t they be adversely affected by any subprime meltdown? Don’t they deserve protection too?
Let’s seeeee….Sorry Minimum Wage, nothing in the report that addresses the problems of renters in relation to the current mortgage crisis. I suppose it could be argued that non-profits, and other social services may already be in place to help renters. But here’s a new problem that has recently come to light:
Other states are considering protection for renters who have been paying their rent “as agreed” while the homeowner was defaulting on the loan. The renters end up being evicted with very little notice.
The idea would be to give the renters more notice to vacate, beyond what is required by state foreclosure laws.
Jillayne:
Such a far ranging post!
I’ll start with what seems to be the main subject, the WA State Task Force recommendations.
I like the recommendation that there be a one page simple English summary of the loan. I do that for my clients already, but it would make much more sense to have a standardized form (provided it doesn’t get too fuzzied up in committee). The existing forms are not adequate for the complexity of products today. For example, the existing disclosure forms do not have a place to spell out in detail the terms of a prepayment penalty, ARM adjustments, or the PMI agreement. It seemed that you did not like that recommendation.
I agree more training is a good idea, and as you know, the licensing exam does not test the LO’s ability to fill out the forms correctly, or their ability to explain what they mean.
Regarding additional training in K-12 on financial literacy, I think it is already an area of concern for the education community, as witnessed by the uproar over math WASL standards. I would not mind seeing a greater emphasis in financial and/or business math, instead of the focus on specialized upper math skills that only engineers and mathmeticians need. How many people that took trigonometry used any of it after leaving their last grade of education?
I think the task force went a little wide of the scope of what they should have focused on (keeping taxpayers in their homes and paying property taxes).
The government making suggestions for compliance (as opposed to laws) is just plain stupid. It’s a battlefield out there, and if you surrender an advantage that your competitor does not surrender, you’ll likely lose. That makes it very hard for a broker to comply with suggestions, while his competitors are out there still breaking the law to win business (i.e. Linden Loans, et. al.)
It looks like the 1.6 million dollar fund is intended only for low income households. Are they the only homeowners at risk? Would they use the money to bring past due mortgages current? I had thought that I had read that in my first go at the document, but cannot find that reference now. Of course this is only a proposed legislation, I’m sure it will look much different in it’s final form.
The NACA stuff is interesting, and the fiduciary issue I’ll pick up later.
Good night! And thanks for taking this subject on!
Hi Roger,
So you mean now we need a disclosure form for the disclosure forms we already give to people.
Jillayne, you asked what if non-profit associations were able to do the job of loan originators?
The answer is that they can (and are) doing this. I don’t know if any NPO’s in WA are originating first mortgage loans, but Community Development Financial Institutions (CDFIs) across the nation are in the origination business. For example, a network of non-profit Neighborworks organizations originate loans throughout the US and the Ford Foundation recently funded a platform through the non-profit Opportunity Finance Network to build a loan origination business.
Jillayne,
Thanks for the Great Post! I had not even thought about this subject until now!
Wow! What a crazy income stream for the Non Profits.
Great read and information! Thanks!
P.S.
You did’nt even get sugar with the Cheerios? That’s just wrong! Even mob bosses in MI allow sugar with Cheerios 😉
Just when I start thinking RCG has ceased providing value, and I can safely consider myself out, Jillayne “pulls me back in!”
Jillayne:
Since the existing disclosure forms do more to confuse the consumer (and protect the lender) than to clearly explain the transaction, and many lenders and LO’s use it’s complexity to take advantage of consumers, than I would say yes.
Let’s use the warnings that you get with prescription medication as an example.
Would you rather have a 5 page document, in very small print, explaining every POSSIBLE thing about the medication that could go wrong, or clear concise short explanation of the risks that would cover 98.5% of the risks.
OK, so maybe not you personally, cuz you LIKE reading complicated documents (and we thank you) :), but let’s substitute “you” for the “average consumer”, and it makes a little more sense.
The average consumer does not want to invest the time in understanding all of the paperwork we are required to give them. This is not exclusive to subprime borrowers.
Sad, but largely true.
This makes a larger argument for the fiduciary angle. More later.
Hi laxtosnoco,
I found their website. It looks like the CDFI provides grant money to (among other things) non-profit housing agencies. I don’t see where an individual could apply for a mortgage loan through CDFI but maybe I’m missing something.
http://www.cdfifund.gov/what_we_do/need_a_loan.asp
I also found Neighborworks. I like what they’re doing in regards to foreclosure counseling, but it doesn’t show that they are originating loans, just assisting with homeowner training.
http://www.nw.org/network/neighborworksprogs/ownership/default.asp#top
Opportunity Financial Networks sure looks interesting. It looks like they specialize in “unconventional markets” which sounds like code words for urban, rural, Indian reservation, & immigrant loans but I could be wrong. I wonder what their underwriting requirements are like.
http://www.opportunityfinance.net/
I have to admit, you really have motivated me to set aside some time to read further into these organizations. I’m just finishing my Master’s degree at Antioch in Seattle and am now beginning to develop an interest in studying micro finance. Thank you for teaching the teacher something today. I’ve bookmarked all these sites and will dig deeper!
Hi Apella,
When my daughters and I watch Napolean Dynamite, there’s a scene where Napolean takes the phone and, with the very long phone cord, walks all the way through the house and out the front door so he can have privacy when talking on the phone. Since we rarely use our home phone, they think having to be tethered to phone like that is horrifying.
Hi biliruben,
Thank you for the compliment. Question: Do you think we should give 1.6 mil to the non-profits, save the money and up the responsibilities of the LOs, both or maybe something different?
Hi Roger,
I live to read complicated government reports and complex federally required consumer disclosures. Why even get up out of bed in the morning unless there was some decetive work to be done?
I assert that handing the average, random consumer a set of government required disclosure forms on the purchase or sale of their home is similar to a doctor handing us a stack of medical books and saying “here you go, let me know which medical procedure you’d like to select on that knee.”
If you look at a bell curve, on one end are the consumers who will never in a million years understand mortgage lending. On the other side of the bell curve are consumers who know more than we do. On each of these ends, the numbers are pretty small. The average consumer makes up the middle of the bell curve.
Mortgage LOs know way more than the average consumer. There is knowledge/power imbalance. An LO can decide to take advantage of that consumer. Many did, and many did not.
The LOs that are left when the entire meltdown is finished should consider setting the bar higher because for them it will be no big deal; they’re already acting as if they had fiduciary duties.
Hey Jillayne – This is the first I’ve thought about the role of non-profits, and that’s why I appreciated this post (and your last one, even a little more). I don’t have the time right now to give this topic the proper research to answer your question properly, but a couple of observations:
– I was very surprised at their (over-?)representation on the task force.
– Having worked for a non-profit in the past, that was essentially a rube of the insurance industry, that provided a thin veneer of respectability to give cover to what was essentially industry wide price-fixing, I don’t hold them in as high esteem as some.
– I don’t see the value-added if we were to legislate fiduciary responsibility. In the absence of that, I don’t see the downside of more competition without the gouging.
Jillayne:
I suspect you were swaddled in RESPA disclosures when you were a mere babe! 🙂
“The LOs that are left when the entire meltdown is finished should consider setting the bar higher because for them it will be no big deal; they’re already acting as if they had fiduciary duties.”
I believe that I have been always tried to act as such, without previously knowing what it was called.
I read the link you provided for fiduciary, pretty dense, so I went on a search of my own for the Reader’s Digest versions. Wikepedia had a pretty good discussion of it and Jack Guttentag has a bit of discussion on the matter.
http://www.mtgprofessor.com/A%20-%20Mortgage%20Brokers/are_mortgage_brokers_agents_or_independent_contractors.htm
as does Brian Brady
http://activerain.com/blogsview/14496/Do-Lenders-Have-a
The dissenting rebels mention that some fiduciary requirements are already in place in CA and MN. On a practical note, how has that served to improve the borrower/originator experience there, and create improved outcomes?
Hi Roger,
The problem with California’s law is that it only applies to the mortgage broker, not the LOs that are employed by the broker. Based on the number of defaults, foreclosures, and pay option, interest only, negative-am ARMs held by Calif homeowners, I’d say that more work is needed in that state.
RESPA came along in 1974, and I heard plenty around the dinner table about the implementation of that law, which took place in 1975.
Hi biliruben,
Thanks for your thoughts. I will consider these when I pen my next post on the future of the mortgage broker/LO.
Jillayne:
Thanks for that clarification.
I know from experience the mortgage broker is often less interested in acting “fiduciarily” than the LO is. The wise LO is more apt to view the client relationship as a long term investment (repeat business and referrals), whereas the mortgage broker is generally only looking at monthly cash flow and risk management.
Both intelligent choices, just different motivations
Looking forward to hearing more.
Hi Roger,
You could easily flip that around and make the same argument.
I wouldn’t say that the broker is less interested in fiduciary duties. From a long term business standpoint, moving towards owing higher duties to the consumer could be a way to create market differentiation which opens up avenues for long term growth and profitability.
It is easy to make this move if the business is healthy and profitable.
With newer, small companies profit is the key to survival when first starting up. In order to sell this concept to the smaller firms it must be done from the perspective of their needs (to become profitable) as well as the needs of the consumer to receive a fair loan process.
Jillayne:
Sure, you could argue the reverse.
It’s just that in my experience, I have never had a supervisor (in wholesale or retail) say to me “I think we are making too much money on this deal, go back and renegotiate it”! 🙂
Fiduciary duties do not mean that the LO would do a transaction for less money.
Jillayne, glad I could add to the discussion (I spent a number of years working microfinance). Moving into originating loans is a logical step for organizations that provide homeownership and credit counseling. Many NPOs are tired of preparing people for homeownership and then throwing them to the sharks. NPO counselors can tell clients that the loan they’re getting is a bad deal, but unless they can provide a competing product, many consumers will not listen.
The Opportunity Finance Network (OFN) model is an especially interesting one. They’ve teamed up with a number of lenders; last I heard Clearinghouse CDFI in SoCal was going to operate as the correspondent lender for some organizations, while other NPOs will act as their own correspondents. OFN was also hitting up pension funds and socially responsible lenders for capital. I think things have taken longer than expected because lenders and investors have gotten understandably skittish. Doing this on a nationwide basis is also tricky because of the differences in licensure requirements between states.
Under the OFN model, each non-profit can structure their operations as they like, but they all have access to products that are offered through the platform. Interestingly, they’re targeting both urban and rural consumers (from Los Angeles to rural KY), but they are specifically hoping to reach asset-poor consumers. The OFN model also removes some of the infrastructure barriers by providing licenses to Encompass and a web-based closing system.
Of course, the true test will be whether non-flashy non-profit loan originators can compete with slick mortgage brokers. Salesmanship sometimes trumps knowledge and good intentions.
laxtosnoco:
Sadly, salesmanship almost always trumps knowledge and good intentions.
Just ask any honest and well intentioned mortage broker/ILO. We could lay out the most carefully crafted plan to put the borrower back on financial track, and some doofus “slick” calls them up and wrecks it with a crap loan, sucking out tens of thousands of equity, for no real improvement in their situation.
It’s heartbreaking, really. Gotta keep on trying tho!
Bili,
Legislating fiduciary responsibility is not enough without serious enforcement. In CA, mortgage brokers (and their sublicenses) licensed by the Department of Real Estate have a fiduciary responsibility to their clients. Did that stop brokers from cramming borrowers into loans with high rates and fees when they could have gotten a better deal? I don’t think so.
There are some legitimate economic reasons for non-profit/government intervention in the mortgage markets. You have a group of borrowers (largely minorities and/or immigrants living in disinvested areas) who get an inordinate number of high cost loans, even when you take income and credit into account. Economists would call the uninformed borrowers the victims of information asymmetry (plain old discrimination plays a serious role in my view).
NPOs have been working for decades to better inform homebuyers so that can get a better deals. What many orgs have found is that the deck is so stacked against some borrowers that they need legitimate products to offer to clients to build on education.
Thanks laxtosnoco.
Well there’s another thing we agree on: laws without any kind of enforcement are like having no laws.
In your opinion, if we had fiduciary duties for all brokers and LOs, and then also enforced the law, do you believe these same borrowers could have been served at a traditional lender with, say, an FHA loan or one of the Fannie/Freddie first time homebuyer programs?
OK, I will third that opinion!
It makes no sense to pass laws that the regulators are unwilling or unable to enforce: doing so weakens the rule of law and damages the respect for the law, which is an essential component of a functioning civil society.
How many years have advertisers been illegally advertising mortgages on the internet? And why can they still do so now?
Having the laws be reasonable and clear, and changing them from time to time makes sense, but only if there is a intent and ability to enforce them. Absent that, it is merely political grandstanding.
Jillayne asked: “In your opinion, if we had fiduciary duties for all brokers and LOs, and then also enforced the law, do you believe these same borrowers could have been served at a traditional lender with, say, an FHA loan or one of the Fannie/Freddie first time homebuyer programs?”
Maybe, but not necessarily. Generally, I think borrowers get a pretty square deal when they use GSE products. However, correct me if I’m wrong, but Fannie/Freddie programs allow brokers to charge extra YSP for higher rates and collect premiums/overrides to goose their commissions. If a broker thinks he can get away with it, what’s stopping him from making some more commission on naive borrowers? Just because your client is a fiduciary, that doesn’t stop you from making him pay through the nose (exhibit #1, lawyers).
At least non profits can be upfront to confirm that they’re charging reasonable fees, but no YSP on their end. I think there is a fundamental problem with letting the private sector make a market in a publicly subsidized product (ex. GSE backed mortgages). The private sector will squeeze excess profits (rent seeking for you econ types) out of publicly subsided programs every time.
Hello Jillayne,
Two verses for your consideration. The first, is for the “loan originators”, courtesy of the deceased Oxford Don A. E. Housman.
The latter, is for you yourself. Can you guess whom the “originator” was?
Now in Maytime to the wicket
Out I march with bat and pad:
See the son of grief at cricket
Trying to be glad.
Whether that lady’s gentle mind
Still yet with her own form conbined*
Which scatters*, love as stars do light,
Finds* sadness where she* leaves* delight,
I dare not guess; but in this life
Of error, ignorance and strife,
Where nothing is, but all things seem,
And we the shadows of the dream,
It is a modest creed, and yet
Pleasant if one considers it
To own that life* itself must be,
Like all the rest, a mockery.
*poetic licence
Sincerely, Chris Worsley
Hi Chris,
Percy Bysshe Shelley?
The full poem is lovely.
http://ebooks.adelaide.edu.au/s/shelley/percy_bysshe/s54cp/section204.html
Thanks Chris, for a brief reminder, that there is poetry among the prosaic and mundane.
I think helping, educating, and training borrowers, to be better consumers is necessary because it promotes a healthy market. I am not sure if non-profit housing associations should orginate loans though, it would be a long way to go for them if they were to get in the loan originating businsess.
It’s nice to know that someone out there beleives the consumer should be educated about interest only and neg. am loans. I believe if this was done to begin with we wouldn’t have as many foreclosures out there, and we wouldn’t need to waste time ,money, or resources in developing this task force.
Consumers should be educated on their mortgage regardless of what type it is. If their LO cannot explain their mortgage, they should not work with them IMO; this is a crucial part of the Mortgage Professionals job.
I agree with you completely. I only mentioned the latter to go along with the content of the article.
I think that if non-profit organizations are able to originate loans, it should be for people who really need the help, low income, no credit. People who would not qualify under normal loan programs.
I think the non-profit and task force are here to stay and in some cases does take away from LO’s ability to market to select income level borrowers. It would be nice if LO’s could work along side a non profit to capture a pecentage of that specific market.
I also agree with the FHA secure program however Bush needs to expand and make the program more available to the masses. It just seems to easy to let people fall to the waste side. Again, homeowners and taxpayers generate the revenue that keep the wheels rolling.
It is nice to know there are such non-profit housing agencies out there available to the commnuity providing mortgaging services free or for a nominal cost . I can definitely refer some of my customers to them. I have met quite a few customers who are low income, first time buyers or with no credits (like new immigrants) desperately seeking low cost, affordable mortgage. It is hard to see them get into the mortgage which they can’t afford and facing foreclosure later. Besides the six figure dollar amount compensation, we still have to think about our conscience.
I would not worry about the competition from non-profit housing agencies because there are different level of customers out there in need of mortgage services. I assume there are requirements to meet in order to qualify for the free services.
It is a good start to have MB and LO to pass the licensing test and take required continuing education courses to regulate the industry practice. But it is far from enough. I have seen too many LO are just sales people instead of a qualified LO providing quality mortgaging services to the community. They need much more professional training and education. MB can enforce that when they hire LO.
by Debbie H Wang
Jillayne,
I did not know about the non-profits doing loans thanks for the eye opener. I think it could help people who couldn’t buy a home otherwise. are they operating in washinton state yet? some people might want to work there and give there knowledge to help get low income family renters into home owners.
This seemed to touch many areas. I too believe that the schools should be educating the students more towards economics and finance rather than these upper level math classes that may never be applied to ones life.
Education to all is a good idea. The loan officers and brokers are being required to do this, and probably should have had to do it a long time ago. I think that educating the borrowers is long overdue. In saying this…teaching a client “what I know”, is not always the easiest thing (whether its documents or just explanations). Maybe a good idea would be to teach the LOs the best way to educate the clients.
In California there are some lenders that already require ARM disclosures to go out for those clients that have decided to go with ARM products. It looks as though it will become across the board.
I side with a lot of the other comments that no matter what we do for CYA purposes, the consumer will not want to be further educated by reading through government regulated forms. They would rather work with a trusted advisor that gives them just enough information to be informed on what it is they are buying.
I’m not a big fan of added dislosures, because we definitely have enough as it is. But if there was a disclaimer signed by the client acknowledging that the LO went through various topics with them, that would then put the ownis on the client, because the loan officer clearly did his/her job. We all know that there are multiple occurances of cutomers having in through one ear and out the other earitis.
The concept of a non-profit organization originating loans sounds great in theory but has a few potential downfalls. I feel that the applicant would not have a true advocate assisting them in finding the right product based on their situation. The originator of the loan would now make the same amount whether they complete one loan or 20 loans in a week and regardless of whether or not the applicant is approved or declined and would not have the motivation to expedite the process. Another potential issue could be a reduction of qualified originators to do the work. The reduction of compensation would thin out the talent pool and ultimately hurt homeowners by reducing the amount of personal attention each transaction needs.
These concerns can be remedied, if addressed from the start, but a discussion about the value of the position needs to be had. Just as I feel we devalue our teachers by under paying them (and therefore not receiving the most qualified candidates to teach our kids), we could easily transform the position of originator in the same way.
I actually work for a brokerage that has a non profit housing organization as well that it owns and it really works out well for the clients. If ran properly, it can be a really great service to customers for present and future. I have had clients that I refer to them once I have interviewed them since I may feel that considering their currenty situation, they would qualify for a different program under the non profit umbrella. and vice versa, they may refer them to me based on the need or non qualification of an applicant for their requirements.
The worst case of Predatory Lending I have ever seen was with a non-profit group that does not exist at present. That experience has made me very suspicious of lenders set up as non-profit groups.
Just like in every industry the proffesionals who are best at their careers and for the public work in the private sector. Because that is where their hard work and special skills can be used and appreciated best. Some consumers will always use professionals who can help them and teach them things that they are not familiar with. For example, most people know if they need an attorney for somethng most know they will get the best care with a private attorney not one provided by the courts.
I can only hope that a non profit organization that provides help for those in need have very strict guidelines. Our market does not provide homes for low income – no down payment, unless they are in a very rural area that does very little for income improvement. As for the “task force” committee, it would be in their best interest to come up with a plan to keep homeowners, being threatened by foreclosure, in their homes, voting and paying taxes. Keep up the moral of the citizens of America, bring the confidence back up. As for the K-12, let’s get busy and teach them how to read fluently, write legiably and solve math problems easily, therefore, when they are in the big real world they will have tools that will help them be successful.
WOW! This would bring a great upheaval in the industry. I would hate to see something like this happen. I would never work for a non-profit. Or anyone else I know. This would be a good place for the losers to go. You know, the loan oficers who only do one loan a month! Get them behind doors and out of my way?? Might work!
I agree it sounds good in theory to have non-profits doing loans. I am new to the industry, but I can see the simplicity and objectivity without the $ signs in LO’s eyes. The regulations should be there to keep the industry honorable. Strict guidlines seem needed. Interesting how and WHO picked these members on the task force. Seems simple to keep it split even so to get a balnced view.
Interesting. It amazing what a group of self fullfilling LO’s can do to a industry. This certainly will open a lot of eyes when comes to fee’s charged.
We must in our positions with or without regulation understand that inheritantly we have a fiduciary responsiblity to our clients. This should go with out saying.
Non-profit organizations do a great job of keeping the playing field balanced.
Being a loan originator is a professional position. All LO’s should be will versed in every aspect of the business. All regulatory forms and programs should be well versed by all. It should be second nature to quote the appropriate program, rate and term.
Whether one works for a non-profit or not there should be no distinction in the service rendered by a mortgage professional.
Non-profits are good for helping low income homebuyers. I do believe these programs can help people get into a home they desire and the education that goes along with it is necessary for these individuals, so they know the risks and benefits involved. In regards to LO’s being informed and educated on laws and forms, it is critical so that the client is well informed.
Whether he works for a Non-profit or not, if an LO professional is sincere about helping consumers, then that fiduciary relationship is built. Being a professional, the LO should know the ins and outs of the loan process, forms and all. That knowledge coupled with the sincerity to help people is a recipe for premium service for their clients.
I was fortunate enough to be involve in a non-profit setup for an old employer. We did all necessary prep work from hand outs, pamphelts and powerpoint presentation. Unfortunately, the company did not get any business. Most of the potential clients were long ways away from purchasing a home. Everything was restrictive. Most of them was more interested in the free goodies that we provided. In short, I think that nonprofit association should originate loans. Hopefully they would have more success than we did in getting the business. They will probably realize what nonprofit really means. I just hope that they are nonprofit and not hiding behind some dummy corpotation.
It would be interesting to find out just how many homeowners in default used non profit agencies. Is there a way to do that?
Jillayne, I think it is a great idea to require all loan originators to receive education and training on how to complete federally required disclosure forms. I bet most loan officers don’t even know what they mean or how to explain them to a consumer. Maybe more money needs to be spent on educating loan officers so they in turn can properly educate consumers!
I’m not sure why I haven’t heard of NPO’s before but I think its a fantastic idea. Of course LO’s have a fiduciary responsibility to our clients-placing them in good loans and making sure they fully understand the terms is what we’re supposed to be doing already! Furthering the LO’s education will ensure it. Great idea.
Non profits doing mortgages.
There arent to many non profits going to pay six figures. I would imagine the LO’s working for the non profit will have little to no experience. These are exactly the possitions where experienced LO’s should be but wont. It sure seems like a good idea. Ive read several times in these blogs people saying if its to good to be true……
I think that Non-profit housing associations working as LOs is a great idea. I grew up in Renton, WA, which is an area that could definitely use some help obtaining loans for low to moderate income borrowers. Also, an area such as this would be a prime target for teaching the ins and outs of financial responsibility regarding homeowners. I don’t know if making it part of the WASL is the best route. I, for one, did not take this test seriously. Maybe if it were included as a class necessary to graduate.
I don’t see where having non-profit agencies originating loans would be a problem. There is always room for more competition. Unfortunately, there might be a steep learning curve in the office. The LO working for a non-profit company would more than likely be new to the industry. It seems to me that the person new to the business would benefit from others in the office with a higher level of experience to ask questions of.
Also, every profession benefits from continuing education. Some other professions pick a certain topic for the year so everyone is on the same page. Maybe filling out federally required forms should be our next yearly topic.
I believe if non-profits were to start originating home loans for first time buyers with less than stellar credit, it would be terrific for those people first of all. Helping good people obtain loans that they otherwise aren’t able to receive is a large part of what I do on a daily basis and what I find to be most rewarding. The task force is a good step in the right direction I think, but they do seem to be reaching a bit far afield in trying to forcefully educate teens on financial responsibility when they are thinking of homecoming. I like what they are trying to do however.
Both Broker and Non Profit have its benefits. I would love to take part in a non profit giving homebuyer seminars. I would get great leads that way, and as a broker I love teaching my clients how the Home Buying process works. If a client wanted a GFE from a Non Profit and me I could come in lower on rate or origination fee. I actually know many non profits that sponsor things such as Dare that give as little as 5% to the actual program. They need to be ran properly and it seems that the people and government still differ on what is appropriate.
I know its been said before over and over again but education is so important and applies daily to everything but especially when deciding on a home loan. We have a duty to educate and inform our clients of their options, the service should sell it self. We truly are trusted advisors and as you mentioned:
The LOs that are left when the entire meltdown is finished should consider setting the bar higher because for them it will be no big deal; they’re already acting as if they had fiduciary duties.
I could not agree more. This crisis we are dealing will result in a better market and more realistic expectations I feel, time will tell. as far as non-profit originating loans, again, it comes down to knowledge and credentials to educate consumers shopping for a loan. I’m all for the purpose of non-profit either way, more affordable options the better as long as it is presented accurately.
I agree with you. The mortgage professionals should be qualified. That means passing the State Exam is not enough. I have spent 10 years working with the consumers to get them into their own homes and I take pride in explaining all aspects of the loan to them. I do believe it is the responsibility of the Broker/LO to treat their customers fairly and uphold the integrity of their position.
I am in total agreement that the mortgage professionals should be better trained and have greater requirements for entry as we are paid very well in this industry and it’s no wonder our reputation is equivalent to a used car salesman. However, integrity is not something that is learned in a book or in classroom settings, it is hopefully taught in the home by example. As we all know in every industry there are the bad seeds. Purchasing a car, auto/home/life insurance…don’t get me started as there are so many opportunities to be taken advantage of. The disclosure requirements have become so overwhelming, there is far too much for a homebuyer to read and try to understand when all they want is to purchase a home!
Back to the question of Non Profits originating loans? I suppose the NPO will come in and rescue the day but I do not believe if the NPO’s would have been the sole originators in this current economic environment that it would have saved the market from this global mess. I do not see the Better Business Bureau saving consumers from poor business tactics. This economic downturn has been the result of much more than the subprime loans. Let’s start with corporate greed! Turn on the television and listen to how the media influences, twists and turns events. Has anyone read the article in the NY Times dated September 30, 1999 that illustrates the beginning of the pressure from the Clinton Administration and Fannie Mae to expand homeownership. Google this article and it clearly starts from the top. I don’t think even the NPO’s originating loans could have prevented the collapse of the US Housing Market.
Hi shelly,
Thanks for stopping by RCG. Many philosophical, moral, and business ethics theorists that have studied motivation in many settings have come to the same conclusion as you; that is, environment plays a critical role in human behavior.