More Mortgage Industry Punditry ... and a loaded question

Lenn

You would think that I would have learned by now to be exceeding guarded with phraseology when you're known to be in the house.  I was referring to real estate professionals in the generic sense which would include finance industry professionals.  Or so I thought.

Chris received a solicitation in the mail and assumed it to be safe to deal with a duly licensed mortgage broker.  I believe that it's an assumption that every consumer has a right to make. 

Predatory lending has reared its ugly head in every sector of our society.  Successful (trusting) executives are as likely to make bad choices as anyone else.  BTW: Chris is an accomplished chemist and quality control expert who took for granted that her loan officer wouldn't take advantage of her.

Dan

It wasn't a poke.  I include title agents and lenders along with real estate agents under the umbrella of real estate professional.  I don't find it to be a stretch since real estate is the broader topic addressed by the disparate disciplines.

The fees in this case exceeded $30,000.  The mortgage broker apparently preyed upon someone who was busy and lacked practical knowledge as to lending practices.  Chris could afford the new payment and would have hesitantly closed had I not intervened.  I doubt if she would had ever questioned the transaction at a later date.

I've seen more than one settlement sheet with similarly abusive charges.

Courtney

Thank you for your insight.  We need to learn that second opinions aren't threatening to us personally or professionally, they're a good thing for consumers. 

Missy

Title companies have an obligation to the consumer regardless of the source of the referral.  I hate to be so blunt, but in a strict legal sense, title companies really owe nothing to the real estates agents or loan officers that keep their doors open.  The obligation of loyalty flows directly to the consumer.  It's a difficult line for title companies to walk at times.

I've learned so much by blogging over the past year.  Many of my Title-opoly readers are regulators and elected officials.  I often exchange emails with them and have even met some of them in person.  It's important to report suspected cases of predatory lending to state regulatory officials.  Regulators can't take action if they're not aware of infractions. 

Lenn

As I was just saying to Missy, I've learned so much thanks to blogging.  I now have invaluable contact with a number of state regulators and public officials.  It's so very important, I'm told, to report predatory lending to state regulatory officials.  Regulators can only investigate the cases of which they're aware. 

Neal

A decade ago, I would have agreed with you about the right of everyone to earn a living, but now I feel a need to add a caveat or two. 

Your license comes with a legal duty to question matters that appear out of line.  Thirty thousand dollars worth of lender fees for a four hundred and fifty thousand dollar loan are a cause for real concern.  

I'll go as far as to speculate that a title company that would have closed Chris' loan in its original form would have had criminal culpability.  There would have been liability from the perspective of class action litigation as well.

In the past, it wasn't uncommon for real estate professionals of every ilk, to turn their heads and blindly accept that everything was ok.  That  day is gone.  It has been replaced with an age of staunch consumer advocacy. 

I tell every audience:  If you are uncomfortable acting as judge and jury of your peers, find another career.  

I hate to sound so serious, but I am. 

Lenn

Admittedly, complacency runs rampant among regulatory departments in most states.  We're thankfully seeing signs that regulators are becoming proactive when it comes to consumer abuse.  Erin Toll and her concerned staff in the state of Colorado are a perfect example.  It was a member of Erin's staff that this past week asked me to remind everyone to report wrongdoing to state officials.

Did it make sense to report suspected abuse in the past?   Probably not because regulators had a reputation for doing little or nothing.

I believe that we're witnessing a paradigm shift that favors the interests of consumers in real estate transactions.  I also believe that we're entering an era of unparalleled govenmental intrusion in housing markets.

Fran

It's an interesting dilemma that you raise.  I've met many title professionals who feel that they're under no obligation to question anything.  There's also a dangerous tendency to rely solely on the garden variety disclosures provided by title underwriters and lenders.

I suggest that title agents prepare disclosures for everything.  I certainly would have one signed whenever a YSP is charged.

People need to understand that title agents have more legal liability than any other player in a transaction.  The feds hold you to the same professional standards as a doctor or a lawyer.  There's no making excuses when something goes wrong. 

Dawn

Chris absolutely did not close with the original title company that was selected by the original mortgage broker.  I wouldn't have allowed it.  The title company is always involved in predatory lending abuse of this type.  Always!