Letters to the Editor: December

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“Mortgage Meltdown Quiz”
www.rismedia.com 
October 18, 2007

Look at Lenders, Not Brokers

I have been in the mortgage banking industry for over 20 years. I am a Certified Mortgage Specialist and card-carrying member of the local and National Association of Mortgage Brokers.

Although there are rotten apples in every profession, including real estate, Roberts’ (Ralph Roberts, the story’s author) article appears to lump mortgage brokers into one distinct category, known in the business as “correspondent lenders.” The opposite is true. Most mortgage brokers do not pool mortgages and sell to investors at a premium. At best, we are small businesspeople who may, on occasion, tablefund loans in our own names. What that means is that the loan is underwritten to a particular lender’s guidelines (by the lender’s own underwriters). The loan is approved by the lender and then funded in the broker’s name at closing. The loan is then immediately assigned to the lender.

The average broker, on the other hand, will close in the lender’s name and not their own. My firm always closes in the lender’s name. There is no profit or markup in the transaction. I have often waived yield spread premium (YSP) and collected my fees on the front end in order to make the loan affordable for the borrower. It is the lender’s account executives who often encourage YSP on products that their employers design and market to the public through brokers!

Correspondent lenders are the only entities who are authorized to close and fund in their own name. Then they package and sell their inventory any time post closing and collect a Servicing Release Premium (SRP) from the lender. This is additional income for them. There is nothing illegal or unethical about it.

My point is that the broker is a tool of the lender. We market their products. We produce none of our own. How lenders motivate us to do so can encourage certain behaviors. More importantly is that professionals place their customers’ best interests ahead of their own.

Debra R. Napier, CRMS
Sr. Finance Consultant
TAMCO Capital LLC
Kissimmee, FL

No More Scapegoats, Please

I must tell you how disappointed I am with the article written by Ralph. It reminds me that we will never have an industry that is not prone to the big swings in guidelines as long as we keep looking for scapegoats to blame, as opposed to the serious lack of ethics and oversight the major lenders exhibit in their dissemination of mortgage products.

Lenders generally push the products that make the most profits, and that is an industry issue as opposed to a sales issue associated with one segment of the industry. Wholesale lenders have been traipsing through my office for years pushing and promoting the big yield spread premiums (rebates) for the less consumer-friendly products on their menu. At some point, the heroin dealers need to be blamed for the drug problems as opposed to the users of the drugs only, wouldn’t your think?

Craig S. Brown
Founder & President
Rancho Financial
San Diego, CA

“Readers Speak Out Against ‘Mortgage Meltdown’ Commentary”
www.rismedia.com
October 22, 2007

Mortgage Brokers: Own Up!

Give me a break! Saying that no mortgage broker came up with any of these questionable loan products, and that they are just “a tool of the lender” says volumes about why we are in the mess we are in.

Of course there are reputable mortgage brokers out there but, unfortunately, I tend to lean toward Roberts’ assessment. It is my experience that traditional lending institutions (banks), which are heavily regulated, do a much better job of putting borrowers in appropriate loan products.

In my research of “seller fees” in local transactions, I have seen as much as $20,000-$25,000-plus fees in some deals. In nearly all cases, these fees were paid to the mortgage broker/ lender, per my conversations with the buyers’ agents. In my practice, I have had some really bad experiences with mortgage brokers.

I don’t think that the majority of the “bad” loans were made at traditional banking institutions and it’s time for the mortgage brokers to submit to some meaningful regulations and federal guidelines. Until they do, I will continue to recommend that my clients seek a loan from a bank with proper governmental oversight and a reputation to uphold.

Ann Maree Matthews
Vice President/Broker
Crye-Leike, Realtors
Collierville, TN