Less Choice = Less Chance
I haven't gotten one of these e-mails (below) in a number of years. Well, since 2008 to be precise. Perhaps you recall where you were during real estate's protracted 9/11, a period when the housing industry was imploding and we didn't know who would be left when the smoke had cleared.
How's this for a walk down The Nightmare on Elm St.?
"Several weeks ago, SunTrust Mortgage, like many competitors, announced that we will realign our business to a smaller overall mortgage market. As mortgage lending has become more complex and increased interest rates have reduced refinance volume, we must sharpen our business focus and a few key areas.
To this end, we will cease Mortgage Broker Lending, effective December 31, 2013.
This was a difficult decision, given how long we have been in Broker Mortgage Lending and the loyal relationships we have developed."
I want you to focus on a key phrase above: "As mortgage lending has become more complex..." Put through my BS meter, this should instead read: 'The oppressive and ill-conceived regulatory reform of Dodd-Frank, coupled with the very real possibility of a staggeringly costly CFPB audit, has led us to believe it is less risky to leave this channel of business altogether than make loans compliant with rules nobody yet fully understands.'
And the rules? Yep, the same ones aimed at "protecting the consumer."
Many of us in the industry have feared that Dodd-Frank financial reform will not primarily and effectively prevent future sins. The too big to fail banks are bigger now than they were then. The rules will, however, directly and immediately prevent present choice. This is EXACTLY what I see happening above and it's a sobering consequence of what our legislators continue to fail to grasp. We cannot grow and return to health when reducing the chance of negligence is brought about by reducing choice in the marketplace. You cannot retroactively right the wrongs by actively restricting the good that remains. In the end, the consumer always loses. I brokered but a handful of loans to Suntrust in all my years of lending, but even so, losing an option is always a bad thing and I hate to see them go.
And we all deserve better.