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Help, I can't make my mortgage payments.......

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The media, it's just news which is not always accurate. Sometimes the news is based on facts, sometimes opinion, and sometimes a combination of both.

I have read many blogs in the last several months taking one side or the other, pointing the finger at several of the different industries that are related to the world of real estate. Sure, some even mentioned that the consumer needs to be accountable for their actions.

What we have now is an epidemic of foreclosures and 1st payment defaults on loans across the United States. Did we see the writing on the wall? Or does the media have nothing else to report and is now picking on the foreclosure rates. Here is an excellent blog written by George Souto in regards to the media. News Media At It Again With More Scare Tactics!!!!!

Here is a break down of how I have viewed things. Just my opinions and thoughts in the 14 years that I have been in the mortgage industry. We have :

The lender
The loan officer
The builder
The real estate agent
The title clerk or title agency
The appraiser
Last, the consumer, aka the client, buyer, or purchaser

The lender : Certainly we can blame the lender for allowing less restrictive guidelines. Part of this is from Wall Street and this can be called greed. They saw an opening to try to make more money. I know some lenders that turn their head when a loan officer might be committing fraud. And until they get caught by the investor, they just tell them to bring these loans in by the dozens. But again, not all lenders are like this.

The loan officer : Here is a sticky subject. This is my opinion, which is based not only on what rants I hear from other consumers and realtors, but from working for the various lenders in my career. Another thing that has given me this insight is because not only am I a loan officer, but that I have been a Branch manager for several companies in the last 5 years. This just made me more aware.

Just this morning I met my dad for breakfast. I told him how I would overhear promise after promise from different loan officers. Here is what I am talking about in this blog. You are begging me to lie to you!!!! People Skills : Part 1 of 2 More than several of these loan officer's are just sales people, trying to get you into the door. Keep in mind, it's not always the company that you should be interviewing, but the loan officer that you want working for you. A larger name doesn't always mean better performance.

Overall, fraud can also be induced by the loan officer, just to get you, the client into that mortgage and new home. This has been a problem for over a decade for many reasons. Number 1 : Sadly to say, in most states, it's easy to become a loan officer.

The builder : Do you think the builder is looking out for you when they offer so many incentives to buy their homes? Now, don't get me wrong, there are some great builders out there. But at what expense to the borrower? Please read : Misleading advertisement, at what expense to your client or the client in general........ There were a few awesome comments in that blog. And another to read : Creative FHA financing -- No money out of pocket from the buyer!!! -- Part 1 This is actually a must read because of the comments talking about builders in general and the foreclosure rates in certain areas.

Summary, just be careful of the incentives offered and the mortgage company that is built into the contract. Do you think everything is free? Or are you paying it within your mortgage?

The real estate agent: In my honest opinion, you really can't blame the realtor in most of these cases. Not unless they tell the lender to get the loan done at all costs. Many of these realtors work with lenders that they have in the past, who they trust, and who they have good track records with. I say this for a reason, because if you trust your realtor, then trust their referrals. Again, just because the lender put it in writing or makes promises, doesn't always mean it's worth the paper that it's on. Trust these realtors. Do your homework. Shoppers that shop themselves right out of the market…….

The title clerk or title agency : They oversee your closing transaction. Sometimes this is called close of escrow or in some states, a closing or settlement. They really can't say anything unless they see something illegal. But if you are getting a higher rate than you should, higher closing costs at the table; they can't jump in. They are a 3rd party that is separate from both the lender and realtor. They just make sure that your title is clear of all liens and they witness the signing of your settlement documents.

The appraiser : Another sticky issue. The reason why is because I have heard appraisers in the past tell me that the lender will stop using them unless they get the value that is needed. This is one big issue in what will propel the foreclosure rates even higher. The equity might not have been there. What was your house worth? Sure, in some areas, the market conditions of properties have worsened, losing value. But this is not the case in every state.

The consumer : no symbol As you have read, anyone above could have a hand in your transaction, that could make your experience negative. Overall, you have the power and will always have the power to say no, even if you are at the settlement table. Sorry to say, but lenders will prey on some clients, knowing that emotions play a role in purchasing their new home. In respect to the refinancing cases, they back the client up against the wall. Some clients become desperate in the money that they need and they feel that they have no choice now but to go through with it.

Sure, borrowers should be held accountable for their actions later on, after they go to closing. You read the paper work and signed your name to it. Why go back and blame others. Sure, some lenders, as stated, switched the terms on you last minute. If this was the case, don't go through with it. Call your attorney right there. If you don't have a lawyer at that time, ask your realtor or the title clerk for a referral. And if the lender is not there, which usually happens, because they knew what was going on, call them. If they don't answer, now you have a better idea of what is going on.

Finally, if you ever find yourself in trouble down the road and you aren't able to make payments, call the lender that is servicing it. They don't want to foreclose on your house. Foreclosures: Banks & Lenders don't want your home, do they? Also, call your loan officer that originally helped you with your financing. I tell every one of my clients to call me, no matter what. DON'T WAIT. Things happen to anyone of us at any time. Things happen that you aren't in control of. Loss of job, a death in the family, etc, etc. Bottom line, things happen. Pick up the phone, there is no shame in this.

Conclusion : Overall, this is not intended to be a rant, but a little venting. My purpose here is to educate not only the consumer, but those in the real estate business. Hopefully this information helps you, whether you may be a realtor, a loan officer, a title clerk, or even an appraiser, .

And I wanted to share this with you. What inspired me to write this was because of 2 people. Amy Bergquist wrote a blog which was a rant about the sub prime market. But I couldn't list the blog because it was for members only. The other person was George Souto's blog which I mentioned above.

Here are some other links that are all related to this topic.

RUMOR ALERT..... 100% loans fading/non-existent.... but are they?

As PROFESSIONALS, we need to RAISE the bar & educate consumers.........

Russian Roulette.... Are you killing yourself with certain loan programs?

As a consumer, is your credit bad enough to deserve the worst scenario? -- Part 1

Does your client's loyalty cost them money?

What's the difference between a mortgage banker and a mortgage broker.

First Time Homebuyers & what to look for in a Mortgage Lender before you apply or make application; may it be buying, or refinancing. (Also, info for people refinancing or that aren’t first time homebuyers.) shorter version PART 1

The Myths about ZERO point mortgages instead of paying points upfront……

Shoppers that shop themselves right out of the market…….

Buying your first home can be intense.......

Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 04/15/2007 03:40 PM

Comments (27)

real estate, fraud, mortgagtes, jeff belonger, fha, hard money, foreclosures, payments, cash out, jeffmortgageman, new jersey

27 Comments on Help, I can't make my mortgage payments.......

APR

2007

Jeff, this is the best posting on this subject yet!

I can't blame any of the entities listed above for the increase in foreclosures.

No one hog tied the buyers to want bigger and bigger homes.

No one falsifies documents to qualify them, they merely fit the buyers into existing boutique loan instruments.

If there is any blame around, and I don't believe that there is, look to the Federal Reserve who raised interest rates 17 times in about 2 years at the peak of the real estate market expansion.

Then go to Fannie Mae who is so busy covering their butts from the ciminality of Franklin Raines that they continued to loosen the guidelines even as it was clear that the consumers were not sophisticated enough to handle these complicated loan instruments.

Then go to HUD, that famous consumer protection entity of the Federal Government who is so busy looking for Fair Housing violators under everyone's bed, that they relinquish the responsibility for providing a viable resource for qualified moderate income buyers and sent them to the sub-prime market.

FTC and DOJ are so busy trying to put REALTORS in the poor house that they ignore the value of good agents who do the Yeoman's work of protecting home buyers in their quest for a home for their families and themselves.

We, the agents, lenders, consumers, are all mere pawns in the way of big government expanding and protecting it's own.

Franklin Pierce never did have to account for his perfidy in the S&L scandal in the early 1990s.

Nothing has changed.

Sure there are lenders who will wink at the overstated income. Sure there are appraisers that over price. Sure there are agents who fail to understand or protect buyers, but they are not the persons responsible for the guidelines and surely not the ones who raised the interest rates to squeeze buyers out of the market.

Now ask me what I really think.

Lenn, the only problems I have with your response are the following:

There are those out there that do falsify documents to qualify borrowers.

Though I don't know of anyone being "hog tied" to buy a house or take a loan, I do know of those who were lied to in such a fashion that is classified as fraud.

I regularly field calls, faxes and emails of people shopping for an appraiser who will hit the number they need. If there were not appraisers out there acepting such illegal assignments, the request would stop.

I agree government actions and inactions have a significant impact, but the government is ultimately controled by the "pawns" that vote or fail to vote.

Jeff:

There is certainly enough blame to go around. However, profiling anything including the "poor" borrower takes away the sensationalism and makes for poor press. Blame everyone BUT the borrower and it makes for a great "helping the little guy" story.

I have repeated most of your same subjects to the local press and they didn't receive it very well at all.

Danny.... thanks a lot for that compliment, much appreciative.

Lenn.... I think you offer a lot of good advice, comments, and opinions. But I will have to disagree on most of what you mentioned. People do falsify documents, both lenders and the consumer. I have seen it all. New Century, a top 10 wholesale lender is under investigation for fraud.

Blaming the Federal Reserve for raising rates 17 times? Rates are still low. Even 2 years ago, they were still lower than they were in 1995 and 1996. If I am correct, I think even in 2000. The biggest and quickest rate hike came in November of 2001, right after 911.

There is more to talk about, but sorry, there have been many appraisers that adjust appraisals to be higher than the actual value. I know of a few deals personally that were appraised for $30,000 or more. It wasn't an opinion. Ameriquest was famous for this.

Again... I do appreciate your input and feedback. We just see differently on this.

Update: 4/17 Lenn.... you did bring up so good points about Fannie Mae & Franklin Raines. It shows that you do pay attention. And the comment about HUD was good.

I guess overall, it was the comment about nobody falsifies documents to qualify someone. I actually of 3 people first hand that have been caught and fired. And you see many other reports out there. Sorry, but this is reality and can lead the blame to some of the problems. Thanks again for your input.

Greg..... wow... I just read your comments as I made my response to Lenn. We seem to agree almost word for word. thanks

Lenn... Greg to bring something up that I didn't. We could pull back on what to lend, but it still comes down to the consumer. We just need to educate more.

Steven...... a great point and basically hitting the nail on the head. Thanks for your input.

Jeff, thanks for the mention. I think with all the blogs that have been recently written if people take the time to read them they will come away with a much better understanding of the process, and what is going on in the Lending industry.

Jeff, I think you have just been SPAMMED.

Great Post Jeff....

I do have to disagree with you on a Lenders willingness to consider "working with you" from personal experience. Been there....and they didn't do that. It was pretty much..."so sorry! your problem"!

APR

2007

HUD missed the boat with the rising real estate market and failed to achieve it's stated objectives. In a vacuum, market forces (you define as greed from Wall Street) attempt to fill the void. Free markets, in my opinion, are the best way to solve market problems. The challenge is that free markets are not always kind to the fringe players.

I don't see a problem. Homeownership was at 55% five years ago, today it's at 65%. If we lose 5% of the homeowners due to the losses from the recent credit expansion and more recent tightening, we net gain 5%. How is that a bad thing?

Chicken Little is alive and well and is on the front page of your local bird cage floor...errr...newspaper.

Who are Norm and Mike and did they need a tow truck to drag their nerve in here?

I thought the post was outstanding, by the way.

Loan Officer: you're right - it is easy to become one. That's why licensed mortgage brokers are important in many transactions... sadly many states don't regulate people that originate loans and they especially don't worry about those that work directly for big name lenders!

I think that this is also a derivative of the AE providing "miracles" to qualify people and telling certain types of loan originators "just put THIS in THAT box and the underwriter will be ok with it"

George,,,,,, I agree.... and we will always have opinions. But with this post, I was trying to get people to realize that blame can be placed anywhere. But most of all, is should be with the consumer. And giving them advice on what to do if something happens during the process, at closing, or after closing. And my pleasure about your post.

In regards to that other person's comment... that stuff ticks me off. As you can see, I deleted it.

Joan...... in regards to your comment. Many lenders do want to work with you. It can be a hit or miss issue, because not everyone has the same ethics in this business. And thanks for the compliment.

Brian.... I can agree with your comment in regards to HUD and the market. I just couldn't go on about everything about Wall Street, because the post would have been to long. Wall Street did get greedy though.

In regards to home ownership. That is an awesome point that is not talked about much ... and I didn't think it was appropriate for this topic. Or would it have been? As stated, because of these programs, many people have enjoyed new ownership... yes, some failed at it... what is missed is ... at a small price which has been blown out of proportion.

Thanks for your thought provoking comments.

Chris..... I deleted that. Talk about being rude.

And Thanks for yout awesome compliment.

David... you flew below the radar as I was typing my responses.

In regards to your comments, some great points. Thanks for your feedback.

Yes, consumers have "the power and will always have the power to say no". And so do we. It is a collective effort to get the best loan available for our customers. We work with customers, and customers have to work with us.

Jeff, I think you forgot one problem. The media. The media told every one that they can get a "low rate". I have heard so many "advisors" on Today, Good Morning America, etc "advising" customers that they can but a $500,000 for an absurdly low payment; "take an ARM fora lower rate"; yada yada yada. Now it's the media who is saying that fraud is the reason, ARM's are no good, and stated loans are despicable (to the point where they are trying to outlaw them in PA!). I have been in the business since 1995. To my knowledge, I have had only 2 customers loose their homes to foreclosure. Both due to a loss of employment. Should I blame the government for that? Because it wasn't my customers fault, and it certainly wasn't mine. They both were full doc loans, both had some assets, appraisals were strong, title was clear, there were no exceptions with the underwriting guidelines.

It's true, everyone wants to blame someone. But the truth is "stuff" happens.

And thanks for point out that banks do not want to foreclose. In fact, the rule is they loose money to foreclose. If a customer is in trouble, they will do what they can to work together (there's that phrase again). I actually had a customer tell me that they were afraid to buy a house (it was a land lease purchase) since the appraised value was so much higher then the sales price, the lender would come and take it so they could make a profit.

Educate, educate, educate (I know you never advise that LOL).

Finally, a post that is not pointing fingers! It's refreshing to see.

I agree 100%

overall the "buyer" needs to know what he/she can afford and not to overextend themselves.

We can get you a loan but you must feel comfortable paying each month.

And yes if somehow you fall on tough times contact the LO and lender so they can work with you

As always well written

DOMINICK GACCINO

Branch Manager

First Suffolk Mortgage Corp

Great job Jeff! I've bookmarked for future reference. The mortgage side of the business is something I would love to get into much more because I find it fascinating on many levels. This is a very well written post with valuable information. Thanks for sharing your insights with us.

Ann..... I did mention the media in the beginning. I just didn't go into detail, because this post was long enough to begin with. But you do bring up some valid points in regards to the media... thanks.

Yes, banks don't want to foreclose.... and yes, we need to educate now, more than ever before. Too many people writing information that is misleading. I just read a post today that someone wrote that buying points now is a bad thing. And didn't mention the tax write off of points. To me, this is misleading the public. And someone even made a comment stating, thanks for this good information. Don't get me wrong, I am not god, nor perfect, or that I know everything. But I do know the general basics of mortgages and financing.

Overall, thanks for your input, feedback, and the polite compliments.

Dominick.... thanks for stopping by and for giving us your feedback on this. And thanks for the compliments.

Lisa..... thanks for the enthusiastic compliments. Much appreciated... And glad that you find it fascinating. So do I... and you know that you can call me anytime with any questions. thanks

Jeff-oh and look at that, media is even in bold! I must have forgotten because you are so detailed with your information ;-)

APR

2007

Ann..... lol don't worry about it. Thanks for stopping back.

That is great. Glad to see your not just letting one person have it everyone gets it

Ben

Jeff,

Nice article, funny thing is I had a similar discussion with a number of agents locally. I always look at the source when determining blame. Obviously in the sub-prime market loans are sold at the Wall Street level. Wall Street of course is a broad term for the market in general. The market is made up of investors looking at cashing in on a supposed investment that should be secure and backed by mortgages. Sub-prime by nature is always considered less secure, and often sub-prime borrowers refinance when possible to jump to a better loan, thereby depriving the "investor" of long term high yielding loans. Furthermore sub-prime banks dropped their rate's to compete with prime companies, and from 2002-2006 sub-prime sometimes seemed mainstream, just look at the Argent rates for the last two years. Furthermore niche lenders began springing up offering "stated" loans that required NO MONEY DOWN. I personally was flabbergasted when I saw these programs in the early part of the decade and wondered how they'd keep foreclosure rates in check.

Luckily for these lenders Florida, California, Nevada, and other area's of the country had breakout years in terms of real estate gains, thereby modifying the risk to these lenders. Therefore a 100% stated loan really became a 80% risk to the lender within 6 to 12 months, thereby reducing the risk of being upside down if they needed to foreclose. It also allowed a number of borrowers to skim equity to pay their mortgage payment through deferred interest loans ( pick and pay, or option Arms).

So the investors wanted better returns but rates continued to be reduced by the Federal Reserve. Wholesale banks wanted bigger market shares, and the result were riskier loan programs offered to brokers across the country.

So I guess you can ultimately blame investors, the federal reserve, and wholesale lenders.

I'm sure there have been unscrupulous mortgage loan officers, real estate agents and title officers, but bottom line is the economy and the market have the biggest impact over time.

I can only speak for me....refer three or more trustworthy loan officers to client....they can pick whom they feel comfortable with....if they pick their own I make sure and stay on top of it from the beginning.

Agents; We have a few multi-tasking agent/loan officer/escrow officer combos here and by all means are something to keep an eye on.....but majority are looking out in their client's best interests. I did have a client in 05 who insisted he was going to get a stated loan....BOTH the loan officer and I tried to talk this guy out of it....BOTH loan officer and I had to split the credit to buyer to cover closing costs....and you know what? This guy is still going strong!

So who's to say who's the cause....if all parties are not working together then of course you have a big bang......bottom line....I tell my client's don't believe everything you read.....over here the "news" on the market changes every week. We have agents writing articles that change every week. I tell my client's that we are not fortune tellers and cannot predict the future....so all the "economists" that predict this or that about our market....or whatever else must definitely be some super wizard!

Benjamin..... thanks for stopping by and for the compliment. I wouldn't truly look at it though as letting everyone have it. But more so, educating everyone in regards to where the blame could rest. Giving insight to so many different areas and not just one-side.

Karl..... I think we should have more conversations like this, especially with our counterparts and the consumer.

I am glad that you added a little bit more insight on Wall Street, because I wouldn't have made this post to long. You make some good points about the percentage and the equity positions.

Lenn did bring up the federal reserve and that is a valid point.

Overall, thanks for your input and feedback... and for the compliment.

Sally.... well, that's a start in regards to who you would recommend. I have seen some realtors though, throw in a 3rd that they don't even care for. So why does it have to be 3? There is no real law, just a semi rumor between realtors. 2 can be good. The main thing behind giving 3 out is that the realtor doesn't want to be blamed for an fault of the loan officer, if they gave one out. And fear of any type of law suites. SO... curious, if fearful of this, why even refer these individuals? I was always curious of that though.

Yes, it's so easy to believe what you hear, see, and read. As I stated, so many just make promises, knowing that they will be broken or have a good chance of being broken. Sad....

Thanks for your input.

APR

2007

Jeff,

As usual I started to write a comment on this and got a little wordy. So I reedited and posted it separately at: Slow Death By Factoids I hope it answers your questions.

By the way I enjoyed our conversion, I just hope we have more time, next time,

Bill

APR

2007

Bill... thanks... I am heading over now to read your link. thanks again...

OCT

2007

Very good post, I read a lot but dont often comment. Very nice!

Eric.... well, then I guess this is a double compliment. Thank you very much. In all honesty, I thought I did a good job on this one and thought it should have been featured. I told it was a little long. I know so many people like and prefer to read shorter blogs, no matter how good it might be. Ironically, I have seen plenty of long and or longer blogs that have been featured. In any case... thanks again.

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