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SECRETS
EXPOSED!
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Insights,
Opinions & Commentary
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Now
that we're in 2005, there will be many of us who
will re-think and re-tool our plans on operating
this new year. One thing's for certain, the refi
mania is going through a long-drawn-out death,
it's disintegration has been slow and
agonizingly for many. The Fed has promised us
they will increase the prime at a minimum of .25
or more, each time they meet in 2005.
For those of you who have be originating for a
mere 5 or six years, the steady march of
interest rates (as they rise) will painfully
effect your bottom line; since all you've seen
in your career has been loads of customers -
historically low rates and very little need to
do what all businesses in America need to do to
stay alive - advertise. Customers have
been everywhere so far in your career; good for
you! The money's been good and easy to come by
... but ...
This business however, isn't like that. It's
simply been like that due to a flood of
customers racing to take advantage of what the
Fed's done with rates - keeping them
artificially low for a long long time. For
the most part, all that business you've been
doing hasn't truly been your fault; it's been
the marketplace. If you look at anybody else, or
any company out there - origination numbers like
the last several years, have never been seen
before. In the 'old days' (and again pretty
soon) it took a great deal of (gambling) money
advertising and very hard work to do a third of
what's become common recently ... harder is
right around the corner ... so please let's all
be prepared.
So you don't become a statistic, now's the time
to get on the training & education
bandwagon. Knowledge is Power, the more
you know about our industry and how things work
(besides just your job), the easier it will be
for you to adapt to the coming changes. And
believe me, you'll see plenty of them this year.
We've watched wholesalers march upward from 70%
LTV on non-owner properties to 100%, funders
reaching for an ever growing market share. Also
we have watched more and more of them dipping
ever closer to 500 FICO 100% LTV Stated loans!
What's next Stated FICO? Both those loan types
(among others that are offered these days) are
wreckless, a dramatic lesson many of them will
learn the hardway.
As the applicants become fewer and fewer and
some of the crazy wholesaler programs tighten,
originators - many of whom are pretty casual
about how they operate - will be temped to cut
even more corners in their process simply to
survive.
My advice is to learn all you can about our
industry, and strive to do the right thing all
the time please, so you don't get caught in the
cross-fire. Tell yourself, you'll have Zero
Tolerance for unethical behavior and
questionable integrity issues when it comes to
how you'll operate in 2005. Translated, that
means you won't do unethical things, nor will
you let others you know (including wholesale
AE's) sell their integrity for pennies either.
Ethics is doing the right thing, even when it
costs more than you want to pay. CLICK
IT to discuss this on our Discussion Board
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So
much for inflated appraisals, using someone else´s
SS #´s, fake w-2, and pay stubs ... why bother
trying to clean things up? What are you as a
professional doing to get rid of fraud,
corruption and abuse in the mortgage industry?
There are many problems that simply are just not
taking care of themselves - to name a few:
* Property flipping and unnecessary refis every
3-6 months.
* Originators soliciting borrowers in states
where they are not licensed; then illegal
co-brokering arrangements.
* Run away employer indifference to the horrific
loan officers lack of training at their own
company.
* Processing full doc customers only to discover
they won't DTI, then flipping to 'stated' with
other income numbers
* Hiding one spouse from wholesaler due to poor
credit, only to add them on title after mortgage
funds.
* Borrowers being charged excessive fees and
prepayment penalties that are not disclosed
except at closing table.
* Loan officers selling 1.95% loans and not
properly disclosing all the details.
* Paying Realtors under the table to get market
share.
* Improper business models to recruit anyone
without the proper training before letting LO's
solicit customers.
* Deceptive advertising and low balling rates
just to get the loan hooked and off the street;
often with no APR.
* The wholesale AE said it was OK! (this is my
recent favorite excuse, whereby significantly
over compensated AE's are reworking loans
for LO's so they can 'put together' their
employers with loans that magically fit into
programs).
Recently in the news we saw Insiders Drive
Fraud.
The FBI has found that "80% of all reported
fraud losses involve collaboration or collusion
by industry insiders," according to the
agency's recent testimony before Congress.
Industry insiders are defined by the FBI as
appraisers, accountants, attorneys, real estate
brokers, mortgage underwriters and processors,
settlement/title company employees, mortgage
brokers, loan originators and other mortgage
professionals engaged in the mortgage industry.
So, they're plenty of blame to go around!
It's time to start to 'rat-out' those bad
apples in our industry!
CLICK
IT to discuss this on our Discussion Board
What About Your Viewpoint?
If you might like to write a short industry
relevant article (approximately 500 words) for
this monthly newsletter; please contact us. Your
own unique perspective could be fascinating to
our readers. There's a lot of changes going on
in our industry, your point of view is
encouraged.
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