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Why Do They Do It?

Well if Location, Location, Location are the words to live by in real estate than Fees, Fees, Fees are the driving force behind decisions made on many of the SIV (Special Investment Vehicles) messes we read about everyday. A typical fee is 1-1.5% of the total underwriting (billions have been underwritten).

So one of the reasons we have many of the situations we have today is the need to feed the beast. That beast being the investors and Wall Street that were craving sub-prime loans. This need lead to some poor decisions from the banking industry. Decisions such as qualifying loans on the teaser rate instead of the first first reset rate.

However, no matter what we say about investors, they still relied on the information provided by the Mortgage Broker. Recently a scheme was uncovered in Atlanta, GA involving collusion amongst a lawyer, mortgage broker and buyer. (See previous postings)

Please share with me what you think will happen to the mortgage industry in 2008?

Posted by Allen Wright CNS, AHS, REPS on 12/29/2007 07:38 PM

Comments (2)

economics, mortgage

2 Comments on Why Do They Do It?

I feel that this is the right time to buy with all the inventory. It is better that mortgages are tightening up so that this current trend will end.

12/29/2007 08:12 PM

by Gary Bland R (S) E-Pro, ABR (Century 21 All Islands)

One group you left out, Realtors. Remember, they get a commission too and if a client with a signed contract is turned down by a lender they have a commission at stake. Is it not beyond a Realtor to help them find a lender who will get them qualified. I've seen it happen. Also, how desperately a buyer wants a home. They find out from one lender why they can't get a loan and go to another lender knowing what not to say. There's a lot more than Wall-street and brokers to blame.

12/29/2007 10:27 PM

by Iam Gone (Until Next Time)

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