It looks like Senator Dodd is finally going to do something about the mortgage problem. He wants to introduce a bill that would require mortgage lenders to make loans only that are beneficial to borrowers and that they are able to repay. Failure to do that could result in lawsuits against Wall Street firms and sub-prime lenders (If there are any still in business). Now how stupid is this! In my 35 plus years in the lending arena, some as a senior lender with a bank, I would love to make loans that will always be paid. As far as beneficial to the borrower, how does one legislate that! If I make a loan to someone who wants to purchase a vacation home for over $1million is that really beneficial to the borrower. How about stated income loans. I guess they are not allowed. How do you know if someone can repay, if you don't know what they earn. Going forward, we all must accept some of the blame of the mortgage crisis. Yes, all of us. The mortgage lender who wants to make loans only to earn a commission, and the Realtor who puts pressure on the loan officer to get the loan approved! We all know it happens. Look, we even have "in house" lenders in a Real Estate office. We allow that, yet it speaks volumes about fair and equal competition. My argument with the in-house lender is what does he do for the Realtor. Does he pay the Realtors benefits? Makes contributions to the 401 K plane? I doubt it, but yet the owners of the real estate companies want the Realtor to use them. Some of the Realtors tell me they MUST refer all buyers to the in-house lender for fear of loosing their jobs. I guess as a former Marine and Vietnam Vet. I have a problem with anyone telling me how I must earn my living. 2008 is going to be a very trying year in this industry. I believe that many of the practices that have existed in my industry must be corrected. I also believe that only the true professionals will remain in both sides of our business. I believe we all must do what is best for the buyer, sometimes that may not be what is best for US! Would love to hear from you. Let me know what you think we should do going forward.
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