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Mortgage Meltdown - Loan Officer's the one to Blame?

I am tired of mortgage brokers being thrown under the bus and catching most of the blame for this housing and mortgage crises. It's very easy to point a finger at us because we don't have the voice that these huge banks have.

We weren't the ones to create these loan programs, the investors were.
We didn't approve the loans, the wholesalers did.
We didn't add prepayment penalties on to borrower's loans, the banks required them.
We didn't create ridicules index's and margins that would make it impossible for a borrower to make their payments once the fixed portion of the loan was over, the investors did.
We didn't create stated income, stated asset loans to 100% of the value, the investors did.
We didn't create cash out loan programs that would allow a borrower to pull out all of their equity, the banks did.
We didn't allow self employed borrowers to use a CPA letter to prove they were self employed; the banks told us to get their CPA to prepare the letter.
We didn't approve stated income loans that had a borrower's income at double the amount of their total liquidity, the banks allowed these loan guidelines.
We didn't allow a borrower to use rental income from renting out rooms in their home; the banks gave us the loan program and told us to make it happen.
We didn't create this mess, the banks & investor's greed did!!!

I am tired of hearing about loan officer's being the root of this problem. We came to work everyday and every morning we received rate sheets from hundreds of different lenders giving us detailed information about their new great aggressive loan programs they had available. We advised clients and gave them all of their options available. You were the one that underwrote, approved and packaged these loans to your investors. Now when investors and banks are loosing billions of dollars we are the problem, we are the reason that all of the things I wrote in this article are happening?

Posted by Alex Aguilar on 02/05/2008 10:56 PM

Comments (5)

mortgage meltdown, loan officers, blame, mortgage investor greed

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5 Comments on Mortgage Meltdown - Loan Officer's the one to Blame?

I don't agree with you whole heartedly. I think there are some reputable loan brokers out there. However, I know of too many loan brokers that were pushing the Neg Am loans to clients because they made so much money off them. (Not everyone, of course). But those loan programs were so difficult to understand. Personally some of my clients got involved with those and now are in so much trouble because they did not have a clear understanding of what they were getting into. So, regardless if it was the banks offering these programs, it was the loan brokers that were selling them.

Your comments above sound like "I was just following orders."

02/05/2008 11:11 PM

by Paul Kaplan, MidCentury Properties, Condos, 1st time buyers, in Palm Springs (Christies Great Estates/Pacific Union GMAC Real Estate)

I agree with you totally but these banks were making even more money from the minimum loan payment and prepayment penalty's. At the end of the day they were approving and funding these loans. The margins they sold these loans with were ridicules and should have never made them available to many clients.

Neg-am loans were good for the right borowwer sucj as investors or people that understood them and how they worked but they were made available to everyone and this happened because the banks liked the yields they were receiving from these loans.

02/05/2008 11:21 PM

by Alex Aguilar (Axia Real Estate)

The bottom line is the "market" purchased the product. It was a societal occurence caused by many factors. If someone got a mortgage with unfavorable terms, they "signed" the papers and read the contract, did they not? If they didn't, they should have. If they were an investor who bought the house like a stock, betting it would go up so they could flip, then they made that decision, did they not? I don't blame mortgage brokers or even the investors who set the terms. If there is a market demand, then a product will be created to fulfill the need.

02/11/2008 08:22 AM

by Wendy Rulnick "Its Wendy!" Destin Florida (Rulnick Realty, Inc.)

Alex:

You have made some excellent points here. Blaming the loan officer is the same as blaming the realtor.

CONGRESS is the one to blame.

CONGRESS push for relaxed underwriting to promote home ownership & CONGRESS got them. Now CONGRESS is pointing the finger elsewhere.

02/11/2008 10:56 AM

by » Bill Burress Nationwide Mortgage Originator

In my experience, too many loan officers promoted loans that were "bait and switches" and then a customer finds out the day before closing that they were in a subprime adjustable rate mortgage. Additionally, over the last few years I had to squash several deals where the mortgage broker reccommended that the customer apply for a primary residence loan for the purchase of investment properties. I am sure you are not one of these Mortgage Brokers, but you were in the minority during the "boom".

03/07/2008 02:32 PM

by ERA Heavener Realty Co.

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