An old joke concluded "I'm from the IRS. I'm here to help you."
Today the joke to consumers is "We're the government. We're here to protect you."
As well as being a business owner who finances mortgages I am also a consumer and I don't want any more government "help".
Many years ago I managed a Thrift and Loan. We made consumer and real estate loans. We were limited by law on the loan terms and loan size. There were also Savings and Loans and then there were Banks. To make the playing field a little more even there were limits that each entity could pay on passbook savings accounts. The banks could pay 4.5%- Savings and Loans 6% and the Thrift and Loan could pay 8.5%. The Thrift and Loan was more "riskier" because at that time they were not FDIC insured (they later were). We were regulated as to how much interest we could pay clients to make the playing field level and so that business could compete.
Today's government goes the other way. The big players "Too big to fail" or as someone told me recently "Too big to care" get all the advantages. They are the companies that are protected and given money to. They are the ones who have the money to lobby Washington and tilt the "consumer protection laws" to a perception that they want. Are the consumer protection laws to protect the consumers or the big banks?
As a mortgage broker I have to give a client a disclosure as to how much the fees are on a loan. The bank must also give a disclosure. I can give a client a loan at say 4.375% and no points with normal fees for my area. The bank can give a client a loan at 4.5% an no points but their disclosure will be simple to read and will appear to be less costly than my loan when it may in fact cost more. I used the 4.5% intentionally because on the surface it is obvious that my loan is better.
Clients ask me "How much does this loan cost me in fees?" I give them a Good Faith Estimate as developed by someone in the Government/Banking Co-op and their reply is "I can't understand it." Well, neither can I ! I am writing this on a Saturday and I am committed to making my own form the first week of 2012 that will be in addition to the required confusing Good Faith Estimate. It will be a form that the client can understand and it will be more helpful and honest. Of course I will still use the required forms but I want something my clients can actually understand.
Today the joke to consumers is "We're the government. We're here to protect you."
As well as being a business owner who finances mortgages I am also a consumer and I don't want any more government "help".
Many years ago I managed a Thrift and Loan. We made consumer and real estate loans. We were limited by law on the loan terms and loan size. There were also Savings and Loans and then there were Banks. To make the playing field a little more even there were limits that each entity could pay on passbook savings accounts. The banks could pay 4.5%- Savings and Loans 6% and the Thrift and Loan could pay 8.5%. The Thrift and Loan was more "riskier" because at that time they were not FDIC insured (they later were). We were regulated as to how much interest we could pay clients to make the playing field level and so that business could compete.
Today's government goes the other way. The big players "Too big to fail" or as someone told me recently "Too big to care" get all the advantages. They are the companies that are protected and given money to. They are the ones who have the money to lobby Washington and tilt the "consumer protection laws" to a perception that they want. Are the consumer protection laws to protect the consumers or the big banks?
As a mortgage broker I have to give a client a disclosure as to how much the fees are on a loan. The bank must also give a disclosure. I can give a client a loan at say 4.375% and no points with normal fees for my area. The bank can give a client a loan at 4.5% an no points but their disclosure will be simple to read and will appear to be less costly than my loan when it may in fact cost more. I used the 4.5% intentionally because on the surface it is obvious that my loan is better.
Clients ask me "How much does this loan cost me in fees?" I give them a Good Faith Estimate as developed by someone in the Government/Banking Co-op and their reply is "I can't understand it." Well, neither can I ! I am writing this on a Saturday and I am committed to making my own form the first week of 2012 that will be in addition to the required confusing Good Faith Estimate. It will be a form that the client can understand and it will be more helpful and honest. Of course I will still use the required forms but I want something my clients can actually understand.
I am committed to making sure that I get all of my clients the very best rate in the market and the lowest fees. I am frustrated that our government continues to blame small mortgage companies for the housing failure and the failure of the banking industry to regulate themselves. The banks designed and approved every loan that was ever funded. I can't remember the movie but remember the statement. "When Grandma passes gas we hit the dog with a newspaper and say "bad dog".
I don't mind competition for business but I do mind when government makes the playing field unfair.
Doug Jones
Mortgage Magic
NMLS 286668
Comments(0)