A few weeks ago I contacted a landlord that I had helped with financing one of her properties to the renters that had been in the property for 7 years. She had been very happy for the help and had even sent me other renters to help buy the homes she did not want anymore. 

The reason for my current call 6 months later was to have her update the Verification of the Private Mortgage(VOM) she had given to me during the purchase transaction so that I could now refinance the clients and help them save over $200 a month due to the lower rates available. Since she and I had a great relationship 6 months earlier, I expected it to be no hassle and hopefully get some more referrals from her; however, I was sadly mistaken.

Instead, she replied with a nasty tone in her voice, "YOU ARE THE REASON WE ARE IN THIS MESS! You are just trying to take advantage of these clients and add to their mortgage -I will not let you do this to them!"

   I was in shock when I answered, "Actually, I will be saving them over $200 a month and they will be recouping the Closing Costs in less than 18 months -I fail to see how I am taking advantage of them when they are saving money each month AND have a lower interest rate."

She answered by hanging up on me.

I still closed the loan after I explained the situation to the UnderWriter -they just used the original VOM - and the clients are now enjoying $200 extra each month and a lower interest rate.

But I was left scratching my head -what had changed in 6 months for this nice landlady to feel that I was now Public Enemy #1? Then I  remembered that she watched the news and that the news had been saying the mean old mortgage companies are to blame.

I took a look back at my past loans and really tried to see if I had taken advantage of anyone: I had never maxed out the fees on anyone or put them into a house they could not afford. I never lied about the income they made on a Stated income loan. Everyone I closed a loan for was better off than when they came to me -especially if they took my advice on how to make their credit better.

Then I started wondering: If I'm not to blame for this mess - then who is?  A couple of days ago this Wall Street Journal article written by Economist Russell Roberts was emailed to me.

It explained that this actually all started back in 1992,

"...Beginning in 1992, Congress pushed Fannie Mae and Freddie Mac to increase their purchases of mortgages going to low and moderate income borrowers. For 1996, the Department of Housing and Urban Development (HUD) gave Fannie and Freddie an explicit target -- 42% of their mortgage financing had to go to borrowers with income below the median in their area. The target increased to 50% in 2000 and 52% in 2005.

For 1996, HUD required that 12% of all mortgage purchases by Fannie and Freddie be "special affordable" loans, typically to borrowers with income less than 60% of their area's median income. That number was increased to 20% in 2000 and 22% in 2005. The 2008 goal was to be 28%. Between 2000 and 2005, Fannie and Freddie met those goals every year, funding hundreds of billions of dollars worth of loans, many of them subprime and adjustable-rate loans, and made to borrowers who bought houses with less than 10% down...."

And it has snowballed from there -makes sense doesn't it?

So I called the nice landlady and told her the good news and emailed the article to her explaining that I could not be the cause of this mess -I have an alibi: I was in college when it all started in 1992 and I did not start doing mortgage loans until 2000.

I haven't heard back from her yet...