Main blame was the easy cheap money.  Remember houses always go up in value, NOT.

07/16/2008 11:24 AM

by John Walters (Specialized Real Estate)

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You are right. There is plenty of blame to go around. It would be hypocritical for us to not shoulder that blame together.

Ron Lambright
Regional Director
HOPE USA
www.hope4usa.com
ron@hope4usa.com

07/16/2008 11:26 AM

by Ron Lambright (HOPE USA Inc.)

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You are right. There is plenty of blame to go around. It would be hypocritical for us to not shoulder that blame together.

Ron Lambright
Regional Director
HOPE USA
www.hope4usa.com
ron@hope4usa.com

07/16/2008 11:26 AM

by Ron Lambright (HOPE USA Inc.)

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Mike,

This is a great post.  This all comes back around full-circle to greed:  greedy investment banks, greedy lenders, greedy LOs, greedy REAgents.  This implosion could have been easily avoided by normal documentation and amortized or interest-only payments (no negative am!).

 

07/16/2008 11:27 AM

by Wisconsin Home Lending, Inc.

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Mike,

I agree there is plenty of blame to go around. How about some of the national builders with thier own in house mortgage companies?

07/16/2008 11:40 AM

by Chris Coley - Wells Fargo Home Mortgage (Wells Fargo Home Mortgage)

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You know I don't know the real estate agent in your example and I certainly don't want too, but I can tell you that in my experience I have never asked a mortgage professional to increase earnings of an applicant or any other falsifying of loan documents. I am not suggesting that all money lenders do this type of thing anymore than you are suggesting that all realtors do. What I really want you to think about is why so many lenders broke so manuy rules that are on the books regarding this issue. Also when the bank hires an appraiser, they should not be coercing them to appraise properties just to just to support inflated values.

07/16/2008 11:45 AM

by John Guiney e-PRO, CBR (Keller Williams Realty)

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There are many to blame it just comes down to who you point the finger at as the scapegoat.  There are the investors that offered "out of the box" programs.  Also the LOs who pushed them like a salesman.

I partially agree taht agents are to blame.  The market determines the value of a house and if buyers armed with these programs were able to bid up listings then that's how it is.  RE agents and brokers have to deal with the market and have to go with the flow to help both buyers and sellers.

07/16/2008 11:46 AM

by Compass Real Estate Consulting

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Mike - I disagree with you on this one. Do you know how many first time buyers came to me already pre-approved? Everyone and their brother had a "friend" in the business. How many of their "friends" still do mortgages?

How many buyers let their fingers do the walking after they were turned down not by one, or two loan officers, but many. They just keep trying until they found one that said yes.

I can't speak for other Realtors, but I always give my clients 3 mortgage lenders when asked for a referral. I don't do mortgages. If that lenders then calls me and says no can do, then it's no can do. Period end of story.

 

07/16/2008 11:46 AM

by Guilford Connecticut Real Estate Agent, Sandra Cummings (William Raveis Real Estate)

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Mike,

Recently I met a Realtor after the subprime bust.  First think out of her mouth was that she was looking for someone who could get her bad credit buyers approved.  She had someone that could get the good stuff done.  Needless to say I didn't like her approach and have not followed up with her.  Realtors talk about their ethical code but they have bad apples too.  I don't know how many times I turned people down to see them get the house, because their Realtor took them to another lender.  I wonder how that worked out for them? 

07/16/2008 11:58 AM

by Jimmy McCall~Clarksville's Mortgage Consultant (Legacy Mortgage Services, Inc. ~ Clarksville, Tennessee)

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You make a good point, but I have to say Lenn was right. 

I work with only refer to reputable loan officers and depend on their ethical, professional work.  I do not see the client's credit report or application nor do I want to.  I do not shop for the answer I want, I want the truth!

07/16/2008 12:04 PM

by Randy L. Prothero - Hawaii REALTOR® (Century 21 Liberty Homes)

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John - I know I'll catch a little heat here.  Can there be a main blame?

Ron - That was good enough to be repeated (LOL)

WI - Thanks - everyone is to blame

Chris - them too!

John - Maybe the Agent didn't specifically ask to change their income, maybe they just asked "Is that all they are qualified for?"

Compass - My point was so much that agents are to blame as much as I disagree with Lenn that Agents are NOT to blame.

Sandra - Thanks for the visit!  Yeah, borrowers are to blame as well.  Once again - I contend that no one is free of all guilt.  Payment Option ARMs were sold to so many for the wrong reasons.  I've had clients go elsewhere (on their own) because I didn't want them to do a Neg Am Loan - they went next door and got the 1%!  Woo Hoo! I've only done 4 POA in my life.  I'm not a saint, it just wasn't the right loan for the right person.  Conversely I was just reading this:  Downey Savings Paid Brokers up to $50k Commission ON EACH LOAN! Man, I wish I could have made $50,k in rebate.  But I digress.  This isn't about me.  This isn't about you.  It's not about what we do or what we didn't do.

07/16/2008 12:10 PM

by Mike Mueller (Mike Mueller, Inc.)

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Mike,
But still.......the final decision to make or not make the loan is with the lender, not the agent. 

07/16/2008 12:12 PM

by Cynthia Tilghman, Realtor® Onslow County NC Home Specialist (Kingsbridge Realty, Inc)

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I too read with great interest what Lenn Harley had to say...

Folks, let stop the blame game... Are there that many agents out there that put the "screws" to a mortgage officer because the people didn't qualify??  I may live under a rock but come on... trillions of dollars of loans weren't made because a few rogue REALTORs got p--sed off at the lender because the buyer didn't qualify...  If you see the stats of the loans taken and Given in 2005 you'll see that the refinances OUTSHINED purchases by quite a bit...  In fact, many of the short sales and foreclosures I am seeing are people who have owned their homes for over 5 years, they refinanced, spent all the money, or bought a new one and dumped the old one.. no REALTOR involved.... only lender.   Pretty sad...

But I am not blaming... look at the facts... I was a lender for over 15 years before I got my real estate license.  When I was in lending I was a loan officer/producing sales manager and VP for lending in AZ... but prior to that I was an underwriter, prior to that a processor.  We had guidelines... set forth by Fannie and Freddie... mortgage backed securities that meet the guidelines are purchased by Fannie and Freddie and then sold to investment companies hedge funds etc etc.  So... although Fannie/Freddie are not government regulated, the Greenspans of the world are appointed by the Pres... What does the Fed do when they want to stimulate economy??  Provide easy money..  Now, I don't know who came along and told Fannie to relax the lending criteria do you??  Who told the Indybanks of this country that it was ok to lend money without any real collateral??  There have been 10 boom and bust cycles in this country since the early 70's... 10 with this being the 10th... do you think there is history to be learned from the previous cycles??  Its a fascinating.. and we have come out of it in the past and we will this time...

So... lets not all be 3rd graders and start the blame game.  When this all passes we have to work with each other... lets blame Fannie and Freddie if we have to..... whoever they are. 

Gloria

 

07/16/2008 12:15 PM

by Gloria Handley, CRS, GRI, ABR (RE/MAX Achievers)

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You're both right.  How about that? 

I read Lenn's post and about a 100 comments or so before I commented.  I agree with Lenn that ultimately it is the underwriter that says yes or no.  If they had all said no, then the mess would be less (still there, but lessened)

Did agents participate in making the mess worse.  Yes.  I sold a home in the peak that did not appraise.  The agent and mortgage officer shopped the appraisal to three different appraisers until they found someone that "gave them some love" (mortgage brokers words) on the appraisal.

The agent knew about the low appraisal and rather than writing an addendum to adjust the purchase price participated in finding an appraiser that would come up.

Utlimately the underwriter could have said No, the original appraisal was low, we won't lend.  So Lenn is right in that had they stuck to good lending practices situations like this one would not have happened, but agents did help to perpetuate the cycle by not acting in the best interests of their clients.

I agree with Lenn that cleaning up admission requirements for real estate agents is what our industry needs to do.  Our lack of educated and well trained real estate agents did contribute to the problem, but lenders have to be responsible for their own business practices.

07/16/2008 12:31 PM

by Melina Tomson, M.S. Salem Oregon Real Estate Specialist (Tomson Burnham, llc)

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the finger pointing and the blame game have been interesting to watch. There are MANY reasons for the "mess" we are in. Nice to be able to follow different points of view. Thanks, Mike.

07/16/2008 01:07 PM

by Nick Bastian - Tempe, AZ Real Estate Agent (Realty Executives)

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Mike, I love the post. But the deal here is everyone trumped the system; broker, agent, borrower, lender, securitizers, rating companies....literally everyone was in on it. And I am about sick and tired of hearing, "well, we just did what we were told".....that is C**P! Good lending standards have been around and in place for years and doing the right kind of lending is not rocket science. It is based on solid risk based principles that were completely abandoned in the last 6 years. Shame on everyone!

Thanks for the post!

Bo

BTW, I believe that everyone deserves the right to have a home, but to gain that right, certain requirements must be met first and people must have patience to build credibility.

07/16/2008 01:22 PM

by Bo Hussung/ Title services in all 50 states (Cogent Closing Associates)

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Jimmy - We've all heard that one haven't we?

Randy - My point isn't that this is about you.  It's an industry.  Accepting blame for an entire industry doesn't make you guilty by association.  If it did, I would be guilty as all those LO scumbags I write about.  My industry is chock full of scumbags.

Cynthia - Yes.  Well actually it's the underwriter.  But yes the final check and balance is the Lender.  I never said it was the Agent.

Gloria - Loved the 3rd grade reference.  Thanks!  Good points.

Melina - Yes we are.  And I'll say it again, This isn't about Lenn personally.  She's probably up on a pedastal higher than 99% of the people here.  This is about the indutry and the forces that drive sales.

Nick - I though my pont of view was widely held.  I was surprised by Lenn's POV.

Bo - Thanks for the love!  I agree with you on the right to own.

07/16/2008 02:40 PM

by Mike Mueller (Mike Mueller, Inc.)

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Have you seen Mike Jaquish's post that says if someone tells you, "there might be a way around that..." RUN!

Well - I don't agree with that either.  If you have a borrower, and you're asking me if there's a way to make it work - and there IS a way to make it work - do you want me to tell you?  Because I can for darn sure GUARANTEE that if there's a way to make the deal - the agent has ALWAYS been ALL ABOUT finding out how to do it!

How many times has a "new loan officer" been to see an agent and the agent pulls out a deal from the "bottom" drawer just to see what the "new guy" can do???  If the deal's REALLY dead - you've been told by other lenders - WHY ask the "new guy???"

You make a VERY valid point - there are plenty of places to point the blame.

07/16/2008 03:04 PM

by Eleanor Thorne, Cary Mortgage Loans (Meridian Residential)

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The lenders are the keepers of the proverbial gate, they hold the key to the kingdom of cash.

True, some agents, just as some clients, will try to persuade the lenders as best they can, to reconsider their assessment of ones credit worthiness.

I really don't see how that equates to it being anyones fault other than the lender they gave the money, or the buyer that accepted it.

It doesn't appear lenders are now bowing to this horrible strong arming by agents or clients, so why was it so difficult to say no (and stick to it) then? They had the resources and rules in place to prevent this, and disregarded them.

The loan mills were churning out loans like mad, and they would have done so with or without a borrowers agent being part of the sale. I can assure you, people that had no agent at all, had no problem borrowing money. Do you really think having a Realtor made a difference when it came to the loan? Its preposterous.

07/17/2008 03:41 AM

by Michael Creel (Brio Realty Inc.)

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Michael Brio,

With all due respect (I really mean that)...

Strong-arming absolutely WAS alive and well in this business for the last 5 years or so. Ask any loan officer. Realtors WERE testing every mortgage rep and company to see if they would do the deal or not. If not...pass....move to the next guy...and the next and the next and the next. Stop only after you got the deal made no matter what ethics were sacrificed along the way (by all parties involved) or whether the interests of the buyer were ever a concern to anyone, Realtor included.

If YOU are the kind of agent who did NOT do this strong-arm tactic, then great. But for any agent to vehemently deny that it was going on is the most ludicrous thing I've ever imagined reading.

The strong-arming has stopped....for two reasons.

The "ethically challenged" agents had a tough time staying in this business and many are gone (thankfully)...and the lending industry has tightened up so much that you can't just go down the street and get the loan funded anymore.

If you could...the strong-arming would still be present...and many, many, MANY Realtors would be guilty.

By the way...you're right that many buyers who had NO agent were also getting funding on loans because of their own poor ethics, along with their willingness to do whatever it took to get the loan. But I'm guessing that the percentage who bought without an agent is miniscule. It's just not the norm. MOST of the homeowners facing the wrath nowadays bought WITH an agent...and even though the lender had the ultimate responsibility of saying yes, the Realtors were relentless in their pursuit of the company that would do whatever it takes, under any circumstances to give them their commission.

Why the Realtor community won't own up to at least being a part of the problem is beyond me. I've never witnessed this much "I had nothing to do with it" defense mechanisms in my life. Talk about denial!!!

In fairness...perhaps we're fortunate enough to only have the good Realtors here at ActiveRain, especially if the bad ones are out of the business now. I guess that's a welcome thought. But it seems the prevailing sentiment around here is that it's simply insane to think there are/were any agents out there who don't do their jobs well.  

All of us know better than that. But if you're comfortable defending them, so be it. That's your right.

I can't...and I won't.

Dave

07/17/2008 04:15 AM

by David Daniels (Owner of FlyersToYou, Inc. and "ex" Top Realtor)

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I just posted a comment on the other blog that this one is replying to.  I agree that agents have a responsibility to their clients to become more informed about loan programs and lending practices.  It is also my personal goal to try to sit down with my clients and work out a budget that they can live with.  I can tell you that I have had lenders give them a pre-approval amount and not go over the payment amount for that loan.  The buyer then just wants to look at home and buy one.  However, without the proper information, they could be making a huge mistake.  I always talk budgeting with my buying clients and tell them to sit down and go over their monthly bills and make sure that they can make their mortgage payment comfortably before they decide on their loan limit.  I always tell them this, "Don't let a loan officer set your limit for you, you have to live with this payment for years and you have to be comfortable making it."  So what if they are preapproved for $500K.  They may only be comfortable making payments on $300,000 due to the fact that they have day care, private school bill, etc that the loan officer did not even ask about.

So, we all need to be more proactive in helping our clients make better decisions about how much they can afford when buying a home.  I want to build lifetime relationships, not just collect commissions.

07/17/2008 04:21 AM

by Tina Beasley (Real Estate Professionals, Inc.)

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Why does anyone have to be blamed?  Here we are, now what are we going to do about it?

07/17/2008 04:39 AM

by Georgina M. Hunter R(S) e-Pro Maui Real Estate Sales (Jim Sanders Realty Inc. - Maui)

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David, I don't for one second believe that if you removed Realtors from the equation things would have gone differently. It's only because Realtors made money off the sale people are pointing fingers at them. Do you think FSBO's have not fallen into this mess?

The bottom-line irrefutable fact is that banks sell secured bonds backed by these home loans. THEY have a legal (not moral) obligation to follow the rules, regulations, and laws that govern lending. They are federally insured, and that comes with huge obligations on their part. They disregarded all of that, and paid themselves huge bonuses and salaries in the process.

There is absolutely nothing Realtors could have done to prevent any of it from happening, there is an incredible amount of things banks could have done to prevent it, and should have. This absurd notion that Realtors were putting some type of Soprano tactics on the poor little lenders is silly at best and ignorant at worst.

To say "banks wouldn't have loaned all that money out if those mean ol' Realtors wouldn't have been so tough on them" is insane. Give me a break.

So at the end of the day one fact is clear, Realtors could not have stopped this from happening, Banks could have and were obligated to do so. They failed in that responsibility. That's not anyone's fault but their own, and many of them will go to prison for it.

07/17/2008 04:41 AM

by Michael Creel (Brio Realty Inc.)

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David, heres an example of the type of lending schemes going on in those little mortgage companie that we "pressured". This is an actual letter sent to a lender requesting a short sale. the names have been changed. (sorry it's so long Mike) 

Jenny McCann                                                                                                                                 5/31/06

Loss Mitigation Specialist

Ameriquest Mortgage Co.

Re: Request for Short Sale of loan(s) # 0087836xxx and # 0087839xxx

PLEASE BE AWARE THAT THIS TRANSACTION IS UNDER INVESTIGATION.

I am requesting an approval for a short sale on the above 2 loans (1st and 2nd) associated with the property at xxxx xxxth Ave SE Bellevue, Washington 98006.

I, Marcy the sole borrower listed on both loans, worked part time as a loan officer at xxxxx Financial Group, owned by Joe Smo, President and CEO. In February 2005, I was offered a fulltime position as the loan processor for company VP, Julian Crook. which I accepted. While there I observed him doing several things:

 
* Utilizing a "stated loan" option where the lender allowed the buyer to state their income and/or assets without written documentation, pay stubs or W2's to verify the information.

* Transferring money into the buyers accounts to meet the lenders' reserve condition.

* Creating/changing bank statements to show income history.

* Using "Platinum Computer Co", a fictitious company for job verfication (Julian had purchased a business license and had a 1 800 #, The lender would call the 1 800 # asking for the verification from the Co. and they would actually be talking to Julian who would verify the information).

Then Julian brought up an opportunity for me that he said he used a number of times. He would find property to buy, help me get a loan on the property, he would pay all mortgage payments and cost of repairs and renovation, and then resell the house. I would get $10,000.00, after the property sold and my credit score would increase due to the property value and payments. I told him I was possibly interested.

I saw it as an honest, profitable real estate business of buying and ‘flipping' homes. With (my) credit and Julian's abilities in real estate and sales (once I saw one of his 2004 bank statements it showed one month deposit of over $100,000), I saw it as a very viable and credible venture. I learned many months later, that these types of loans/schemes are referred to as Straw Loans, and the person who's credit is being used and buying the property is the Straw Buyer.  

On September 22, 2005 I signed the papers for the property. I "knew" it wasn't right, but I trusted both Julian - and the company, I looked forward to doing the work needed and building a new little enterprise. 

Unfortunately, Julian did NOT inform me that:

1) He was a fugitive from the law, wanted in both Nevada and California for Parole Violation. (Soon to be picked up by a US Marshal and sent back to Prison in Nevada).

2) That the appraisal, paperwork and loan he was putting together for the purchase of the property was overstated- and that the whole ‘venture' was a front in order for him to put together yet another fraudulent loan.

He then proceeded to do several things.

Then early October 2005: Julian was picked up by the authorities and extradited to Nevada and then later to California. Not knowing, I - and everyone - was shocked. Joe immediately pulled me into his office regarding this loan. I still had no idea that it wasn't an honest appraisal and loan; but it was approaching the first mortgage payment time (which Julian had agreed to pay).

Joe MADE ME promise that all mortgage payments would be made on time, he was very clear that he did not want another loan foreclosed on. I promised, as I had no idea of what I had gotten into. Joe assured me that if I couldn't make the mortgage payments, he would pay them (he made one month's payments).

I finished processing and got funded what loans we had in the pipeline, but then found myself without a job (as my boss was in prison), and I had/have my own personal residence, and expenses to handle.

I (tried) putting the house on the market, but was not able to get an offer of the necessary total (the amount owed to you the mortgage co) as again, the loans are $80-120,000 more than the property is actually worth.

Julian (even from jail) and Joe, the co. both assured me that the house and all expenses would be taken care of. So to keep up on the obligation, in time I put $20,000.00 on my credit cards (which are now also in payment hell).

Julian was released in January or February 2006, out on parole through the Prison System. Still reassuring me that one of them would handle the situation (and my evaporating money supply) I kept on until the end of March 2006 when Julian and Joe both informed me that they would NOT be going forward with their agreements and/or promises with regards to handling the payments, expenses and/or purchasing the property to get it out of my name. Leaving the property, loans, expenses and the credit card debt on my shoulders to handle.

Once I finally "got it" and realized that I had been taken, and that the property was not sellable at the needed amount, I stopped the payments. I needed the funds just to be able to make ends meet for me personally (which they aren't).

I went to authorities who found sufficient evidence backing my allegations and it is my understanding that the authorities are taking this situation VERY seriously and that the investigation is going forward.

It is alleged - and investigators are following up on:

1) That Joe, owner, President and CEO of XYZ Financial Group, Inc. knowingly allowed and participated in, the use of fraudulent (pushed) property appraisals. He was aware, and used people that were interested in either purchasing these properties or (by using their credit) participating in what was presented as "house- flipping".

Then allowing the processing at XYZ, of manufactured loan documents to fit the scenario, in order to receive fraudulent funds at closing (the difference between the seller's price and the pushed appraisal price).

2) That individuals involved in the handling of the appraisal, loan, (lender side) processing - knowingly manufactured their paperwork to show values more than the property was actually worth and/or manipulate the system in order for the loan(s) to close and be funded.

3) That the escrow co. knowingly, at minimum, dispersed unauthorized and illegal check(s). In this/my case: $72,000+, to Julian, the loan officer and VP (my boss).

I hope that you will view this situation, for a short sale, favorably. Know, that NO ONE is more sorry and regretful about all of this than I. This has almost destroyed me literally, and financially. If approved, I know that it would be a bright light in a very, very dark situation. I can't tell you how much I would appreciate this.

Thank you so much for your time and consideration. I look forward to hearing from you.

Marcy

07/17/2008 04:46 AM

by Michael Creel (Brio Realty Inc.)

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Come on Michael,

I think this guy is just trying to defend the mortgage industry from the agent's blog that attacked them first.  I agree with you that this is all a bit silly, but, we should all agree that REALTORS and lenders both have a responsibility to their clients.  I do personally feel that some lenders really made this market crash much more quickly by refinancing the "spenders" over and over again and not telling them "Hey you idiot, stop refinancing and taking out all of the equity you have built up."  I have personally had the displeasure of helping several people sell their homes because they basically refinanced themselves into a mess.  Payments just ended up too high for them to manage, etc.  So, I too feel that lenders have a little more responsibility for this market mess.

However, we all have a responsibility to try to do what is ethical for the client first, not for our pocketbooks.  Sometimes, we just have to tell them that buying a home now is just not in your best interest.  Then, we can help them get into a position that in the future, they can buy a home and be comfortable making that purchase. 

And lenders do need to turn people down instead of putting them into a future foreclosure situation.  I know that we all need to make a living, but making it like a "shark" is just wrong.

07/17/2008 04:55 AM

by Tina Beasley (Real Estate Professionals, Inc.)

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Please feel free to speak for everyone EXCEPT me.

If I get a no from one lender, and contact another... I'm contacting the other to see if they can do the loan.... knowing there are different programs, investors, and debt ratio margins... NOT to ask them to fudge the numbers or do something unethical or illegal.

Cameron Novak
The Homefinding Center
Corona, California

Chat with me about real estate

07/17/2008 05:04 AM

by Cameron Novak - Featured Short Sale Specialist (The Homefinding Center)

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Michael,

Looks like we're both up late cruising AR for a good debate. LOL!!

I understand the point you're trying to make. But I guess you haven't read all of the posts on this topic as of late. OF COURSE there are bad lenders!!! No one is disputing that. The only thing that's seemingly being disputed is whether there are any bad Realtors too.

The good lenders said no. The bad ones said yes. And tons of Realtors ignored all of the no's until they found the yes, that's all. If that ALONE doesn't make them culpable I have no idea. They looked for the crook who would do the crime, and they TOO profited handsomely!

And I already acknowledged the role of FSBO's. However, statistically throughout the years, FSBO's have only made up approximately 1-1/2% of all real estate deals closed in any given area. So while I agree they contributed, I'm very comfortable knowing that the majority of the problem sales involved a Realtor. Whether they were culprits in those deals is obviously debatable. But they were there...and SOME were absolutely guilty.

I also enjoyed reading the story about the crook named Marcy, who worked for a crook named Julian and a crook named Joe. Marcy, too, basically claims innocence in the whole matter just like Realtors do. I find that comical.

Which reminds me...the only thing missing in that short-sale story....

was the name of the crook Realtor who sold them all of those properties.

I'll guarantee there was an agent "in bed" with Julian and Joe. One who not only KNEW what they were up to, but facilitated it...and made a ton of money during the process.

And forgive me, but the absurd notion that many Realtors were NOT using Soprano tactics on the poor little lenders is not only ignorant, but terribly naive. 

Dave

07/17/2008 05:11 AM

by David Daniels (Owner of FlyersToYou, Inc. and "ex" Top Realtor)

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I suppose we could banter endlessly about what happened and why and who was responsible-

however we live in the here and now. 

After Rome burned it didn't really matter much who had the match.

07/17/2008 05:31 AM

by Allison Stewart REALTOR ®St. Cloud Florida (Florida Pines Realty, Inc)

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I do agree that everyone is to blame---I remember a few years ago a particular loan officer at a respected local bank who called me and said that unless my husband (the local appraiser) could met her  demands, she couldn't use him anymore. She wanted me to "talk" with him.  Can you believe that one?  She isnt' in the business anymore.

07/17/2008 06:04 AM

by Diane Bell, Hilton Head Real Estate, Bluffton (Charter 1 Real Estate, Hilton Head, Bluffton, SC)

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Mike,

I guess there needed to be a large fire lit today. I haven't seen Lenn chime in but I'm sure she is thinking about what her rebuttal will be. Unfortunately what's done is done. My question is how can two different companies be able to come up with one approving and the other not. And I'm talking logically...we all know it happened but you would think the final approval would be looked at a lot closely if they knew they were denied by the first one..I don't get it? Maybe because I'm generally on the listing end. The bottom line is with whoever made the final decision in my opinion.

I never understood how anyone could be strong armed other than the word greed now and repercussions later.

07/17/2008 06:20 AM

by Neal Bloom-Realtor ® Assoc.-CRS-Weston FL (RE/MAX Premier Associates)

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Very well thought out, and presented!  Thanks for the post!  Great job!

07/17/2008 06:22 AM

by Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta)

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Dave, I'm actually not up late, it's 2:27 here in Iraq, and I just returned from lunch in the lovely 115 degree sun. My point is simple Dave, the banks collapsed because they failed to protect themselves, which was their duty and obligation. When you hold the keys to the vault, yes, some folks will lean on you for loans and favors. However, that absolutely is no excuse for caving in to them. They held the keys, and whom they let in, is on them.

As for the homeowners that defaulted on their loans having Realtors, well, they likely had an escrow company also; is it their fault as well? Agents are part of the process if asked to be, it's not obligatory. Any person can walk into an open house and make an offer without representation.

As for the person that wrote the letter, she turned herself in to the DA and confessed to what she did, I wouldn't call that denial or claiming innocence. She has no immunity offer, and there were no Realtors involved in any of the deals mentioned in that letter. Zero.

07/17/2008 06:38 AM

by Michael Creel (Brio Realty Inc.)

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  I am very big on taking responsibility...was your headline a "point getter" ? I am not sure that in and of itself, asking another lender is necessarily a bad thing...it can work in reverse you know.  Just when you think all the flakey lenders are gone...we discovered two new ones introduced thru AR that we though initially were "trustworthy." In both cases, had we not looked further, and without some experience, I am guessing most agents would not...had the loans closed neither buyer could eat with the money they had left !

07/17/2008 06:43 AM

by Sally & David Hanson, Southeastern Wisconsin Realtors (First Weber Group)

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Of course there are unethical real estate agents too. Maybe they were looking for different loan programs. Maybe the buyer was pressuring them. Maybe they were pressuring the buyer. Maybe the loan office 'fudged' an application. Maybe anything. But guess what?

The BUYER is the one who signed his/her pretty little name on the application and mortgage documents. So really, if they didn't understand or think they could pay then THEY shouldn't have signed.

Now, I agree that in some cases a buyer may not have understood exactly what was going on but in most of these present pre-foreclosure cases the buyer was not sure that they could make that payment. Maybe they could but if one spouse lost their job for even a short time they knew they couldn't.

People need to take more responsiblity for their actions. And yes, this includes everyone involved with a real estate transaction. But again the Buyer is the one who is ultimately responsible for signing their name.

07/17/2008 07:15 AM

by Cape Coral Real Estate Broker | Susan Milner | Florida-Future-Realty.com (Florida Future Realty, Inc.)

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As I said on another blog, at age 18 we all become responsible for our own actions.  The banks are responsible for the laws they broke in giving out loans to unqualified buyers, and the buyers are responsible for taking out loans they could not afford and putting lies on their applications.

07/17/2008 07:31 AM

by Michael Creel (Brio Realty Inc.)

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Thanks for trying to pass the buck but I'm not accepting it.

I'm sure there were (and probably still are) real estate licensees who leaned on lenders to bend the rules to make the deal but I believe the majority of us did not.

Ultimately lenders make the loans, not the real estate licensees.

07/17/2008 07:44 AM

by Jim Lee, Knoxville Tennessee Realtor® (Realty Executives Associates)

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I echo many of the others in this thread - there is plenty of blame to go around.  To say that Realtors are innocent of any part of this mess would be an incredible leap.  I think it is time to  stop pointing fingers and start working to do the right thing everyday.  When those unscrupolous types are identified, we as a community should deal with them.  This may be in form of a formal complaint to the board, or a group within the township pulling the alleged behind closed doors for some good ole fashioned counseling.

In the end, we are in this hole together.  We can either keep digging, or realize it is probably time to put the shovels down and work together to climb out.

07/17/2008 08:19 AM

by Tim and Pam Cash - Clarksville TN Real Estate Professionals (Crye-Leike (Sango))

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Personally I think this whole argument is a total waste of time. What useful purpose does it serve to throw blame around? Move on already.

07/17/2008 08:20 AM

by Kelly Sibilsky ~ Lake Zurich RE/MAX Real Estate Agent (RE/MAX Unlimited Northwest)

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Michael and David -    Good stuff.  Love the spirited conversation.  Iraq?  Wow please be safe!

To all - Yes, I am stirring the pot here.  I even said so right at the top.  But I also believe in the stance I took.  One point that needs to be continually restated here is we're not pointing a fickle finger of fate at any single person, we're talking the industry(s) as a whole. 

If your comment starts with "Well, I for one have never..."  You're missing the point.  Take twenty steps back.  Keep going.  This isn't about you.  This isn't about me.  We're both probably much better people than our co-workers.  This isn't about them either.  Let's consider the industry as a whole.

For years I had  "Sleeze Bag Mortgage" operating right next to us.  They were the ones that sent you all that crap mail offering payments as low as 1%.  They didn't have Loan Officers they had "Closers".  The building has thin walls and I could clearly hear the conversations over the phone.  These people would flat out LIE to consumers about the Neg Am loans they were selling them.  They made a lot of money ripping off people.  They are long gone.  The damage they did is with us today. 

Am I a Sleeze Bag because of these guys?  Guilt by association? 

07/17/2008 08:57 AM

by Mike Mueller (Mike Mueller, Inc.)

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I agree with an earlier comment, let's stop the blame game.  Let's face it, without home owners/sellers, real estate agents and mortgage brokers/lenders there would not be a crisis!

And agents/lenders are still trying to get buyers with good in homes with low/no money down with the grand programs!  While I do feel it too much to ask that every buyer have 20% down, in my opinion, if they can't handle at least most of the closing cost and/or a small downpayment, maybe they shouldn't be buying.  But then, our market would really be bad...  ok, off my soap box.

07/17/2008 09:17 AM

by Judi Glamb, Associate Broker, ABR (Coldwell Banker Hearthside)

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I don't think blaming any one group will hold water.  There is plenty to go around -greed will make humans do terrible/stupid things no matter the industry.  However, I do think that one giant piece of the puzzle is the brains behind the  80/20 type 100% financing where there was no mortgage insurance?  In the past, all buyers with less than 20% down had to pay some sort of mortgage insurance and there was a reason for that.

I don't know that MI could sustain all the troubles that the market is currently experiencing, but I do think that banks wouldn't be in the condition they are in if they would have stuck to the "rules" and some common sense.

07/17/2008 09:19 AM

by Audrey June-Forshey, GRI, Gaithersburg, MD (RE/MAX Realty Group)

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Mike, I like you but your dead wrong. Agents didn't do the loans. Whether or not a mortgage lender felt the need to compromise their ethics or not in order to keep a client is not grounds to place the blame on others who did not and could not write the loans.

We all have to make a stand in our businesses and one either has ethics or one doesn't.

Unless and until Realtors provide loans, there is no case.

Sorry, nice try.

07/17/2008 09:24 AM

by Sacramento Real Estate and Luxury Homes, Assoc. Real Estate Broker,Gena Riede (Remax Gold, Assoc Broker)

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I agree with Gloria Handley comment, this situation did not happen with just a few rogue agents and lenders. Pointing fingers will not make the situation any better. What we all need to focus on is the solution.

07/17/2008 09:27 AM

by Lorraine and Loretta Kratz (Crescent Moon Realty, Inc. & Land N Sea Auctions.)

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Mike, First you are welcome and second, I 200% agree with you on this. In fact, I posted on this very subject yesterday. This is industry, not individual.

Thanks again for stirring the pot.

Bo

 

07/17/2008 09:57 AM

by Bo Hussung/ Title services in all 50 states (Cogent Closing Associates)

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Judi - I'd love to stop the blame game.  That's so very much more up my alley.  Lenn's post now has 300 comments.  As a featured post that I disagree with, I felt compelled to voice my thoughts. 

I don't have a problem not with the "It was them!" statements.  I do have a problem with the "Look, it wasn't us.  We had nothing to do with it."  There's a big difference between the two. 

• It was the Mortgage Brokers. 
• It was the Lenders. 
• It was Wall St.
• It was the Appraisers.
• It was the Underwriters.
• It was the Borrowers.
• It was the office next door.
• It was My Uncle Fred.
• It was ...                             (yes, also the Real Estate Agents)

Audrey - Not blaming one group.  Blaming entire collections of groups. 

Gena - So what your saying is that the typical conversation I mentioned in the post never happened?  Once again, I'm not pointing at you and saying that you said "Is that all you can qualify him for?"  Ask your favorite loan officer if he/she has ever lost a client to another loan officer over an approved loan amount.  Every Loan Officer has gotten that call. 

"Unless and until Realtors provide loans, there is no case."  is incorrect.  Mortgage Brokers don't provide loans either.  When it comes down to it, we submit loans, the underwriter approves those loans (or declines).  Following that same line of reasoning, Mortgage Brokers are free of guilt as well.

07/17/2008 10:01 AM

by Mike Mueller (Mike Mueller, Inc.)

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Michael,

Iraq??? YIKES!! The only thing I can relate to with that is the heat. Last week in Southern California we had record breaking temperatures...and of course my year-old Air Conditioning unit went out. Took them 5 days to get the new compressor...and during that time it was 108 degrees outside....and I don't even want to think about how hot it was INSIDE! Unbearable.

You'll find this interesting. I TOTALLY AGREE with you that the banks and Wall Street have the MOST blame. These kinds of loans had no business being created in the first place. Lenn believes (from an earlier post of hers) that Wall Street assumes the most guilt. But how in the world can THAT possibly be? I've never once seen a single securities dealer meet with a homebuyer to have them sign loan documents. That alone makes them not guilty. Is it the government's fault for not regulating things before they got out of hand? Apparently they have no culpability either. How could they? They obviously never met with borrowers to have them sign loan documents. They are both totally, 100% innocent.  ::: smirk :::

And sure...it was the LENDER who met with them, but since the loan simply cannot be made to a buyer if they don't sign the loan documents (no matter HOW unscrupulous the lender is)...I guess it's pretty easy to tell that it was the buyer alone who is the guilty party. NOT Wall Street. NOT politicians. NOT loan officers or underwriters. NOT IndyMac, NOT Countrywide. NOT the agent who found a crook to cozy up to. NOT the appraiser who bumped the value up.

I'm glad that's settled. Wow...it's actually kind of freeing to know that the entire mortgage mess falls squarely on the shoulders of the consumer. Woohoo!!!! Party time!!!! None of us are guilty!! Feels kinda good, actually.

But I have a final thought. You actually defend Marcy because she confessed???? Heck, 90% of criminals who willfully enter "the dark side" in the name of greed confess. That's nothing new. They hope it helps them in their case. She's no different. But she IS in denial if she thinks her guilt is in any way absolved or lessened by writing her letter...and explaining that as an adult she was "coerced" to doing something she WANTED to do. Quick money, higher credit score. LOL...how are you coerced into something you WANT to do?? She's a crook. Maybe not the one who held up the bank, but definitely the one who drove the getaway car.

I did find it interesting that no Realtor was involved in those cases. Kudos to the Realtors who turned those down. But UN-kudos to the agents who were involved with all the rest of them.

It occured to me last night while laying in bed (geeze, I hate thinking about real estate while laying in bed)...that all the evidence I need of "Realtors gone bad" is the monthly DRE Directive that comes out in California showing the ever-expanding list of licensees whose licenses are revoked, suspended, or surrendered voluntarily.

I'm fairly certain if you talk to any of them....their stories will sound a lot like Marcy's.

Stay safe over there.

Dave

07/17/2008 10:18 AM

by David Daniels (Owner of FlyersToYou, Inc. and "ex" Top Realtor)

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Mike, my mortgage broker turned down many loans and none of my folks got caught up in any of these risky loans. I know he turned down many buyers as I did.

The point is...if a buyer is unqualified, they are unqualified and those who arbitrarily gave them loan approval in my estimation had no scruples.

No, I'm not saying that what you said was untrue. I'm sure that you have heard that many times. It's a sane question. And if the buyer continues to look for a loan elsewhere, so be it. The idiot who qualifies an unqualified buyer is the person I have issue with and the underwriter who turns their head to the truth.

We all make choices in life and hopefully we rule with our conscience.

07/17/2008 10:24 AM

by Sacramento Real Estate and Luxury Homes, Assoc. Real Estate Broker,Gena Riede (Remax Gold, Assoc Broker)

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There was/is plenty of unethical people out there on both sides of the fence.  As long as the attitude of "do anything to get people in a house" is out there, problems will continue.  The attitude of oh, they don't have any savings but they have a job is not the right attitude.  Today jobs disappear overnight.  Once the job is gone, so is the money to make the payments.

07/17/2008 10:40 AM

by Karen Gentry>>Charlottesville, Virginia Real Estate Professional (RE/MAX Excellence-Charlottesville VA)

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Excellent post!  I didn't comment on Lynn's post either, but then I found your post and it pretty much says what I was thinking. 

One point that I didn't see you make that I was also thinking is this;  Was it really unethical for me to take a loan application from the burger flipper and when he was disappointed in what the agencies would approve him for, to then find him a loan program that he was eligible for?

If I didn't mislead the investor....as a matter of fact, I filled in the 1003 EXACTLY as they taught me to do and provided the documentation that they specifically required...and I didn't mislead the borrower and let's say that I even went the extra step and slapped the guy a couple of times and pointed out to him what his payment would be for the 27th time and he assured me that it wouldn't be a problem making the payment, was I truly being unethical?

To me, it's like the guy who owns the 7/11 selling cigarettes.  Yeah, he knows that the cigarettes are bad for his customer, but at some point he has to give his customer the right to make his own decisions.  As long as it was a legal product, I don't see the ethical problem in selling it to the consumer.

I know that this is not a popular position to take, but that's the way I see it!

Bob Mitchell

ValueList Real Estate Services, Inc.

07/17/2008 10:52 AM

by ValueList Real Estate Services, Inc.

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My comment is buried in there somewhere and I come from about the same line of thought with you.  I would have to say the fraudulent transactions were born of greed and are few and far between than one would like to think.

Now if one doesn't think that a real estate agent can be indicted for mass mortgage fraud, one should think again.

Dave and Michael's conversations are lively.  When you understand the case above and what happened (and I performed a BPO on a non performing loan on one of the 277 mentioned homes from the above,) sellers and buyers are just as guilty.  Heck even title/escrow agents, list agents and appraisers should have even caught the fraud. 

When someone is raising the list price by 10% to get a sale done, eyebrows should be raised by everyone involved.  Instead it just appears that everyone would lie on their backs just to get the deal done so that the healthy paycheck would come in time.

Should we let sleeping dogs lie?  No I think there needs to be mass investigations and prosecution for all the fraud and deceit against the people who borrowed money under fraudulent circumstances, who appraised property with raised values, who allowed an addendum to slip by on their listing for rebates after close, who cut the checks for those rebates, who sold a house with a jacked up value.

Is it the fault of loose money?  I believe it created this atmosphere, yes.

07/17/2008 10:53 AM

by Renee Burrows - Las Vegas NV Real Estate (Nevada Realty Solutions)

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The good old fashioned blame game! I have to agree with both if you it did have to do with lenders and it did have to do with real estate agents and it did hve to do with  lot of other people in the industry that were willing to "fudge" numbers a bit. Botoom line people got money hungry....now look whereit got us. At this point it doesn't matter who's fault it was....we can't change the past. The important thing is to move forward together and figure out how to get us out of this mess! 

Jessica