Continuing on our latest theme Industry Checks & Balances ... for those of you who entered our industry since the Fall of 1998 (the beginning of the last industry cycle that just ended), this will be important news for you especially.
Unlike the way things have been during your career to date, traditionally the wholesale lenders always would complete their ‘due diligence’ investigation to begin with, when a mortgage broker first asked to submit loans to them for funding. In your experience, if you had a loan, the wholesalers would accept it, and pretty much would care less who was presenting them with the customer’s funding needs. Although this may seem like a small barrier for entry to you, once proper investigation kept a lot of the riff-raft out of the business. A critical check and balance to safeguard the wholesale lender's future. An essential ingredient which might have kept a hundred or more of them from closing their doors a short time ago.
Recently you may have become aware, many wholesale lenders, like Wells Fargo to name one, are starting to require certain production volume from mortgage brokers, or they will no longer do business with them … those that are 'cut-off' and new brokers will have to pay a fee to be reconsidered. This is one way to get rid of the deadwood, and leave a smaller population of producing mortgage brokers, but it doesn’t necessarily address the issue of having only quality mortgage brokers submitting transactions for consideration, it is a step in that direction, but a tiny one. However, this approach is another typical one at this point in the cycle for wholesalers.
All of them, requesting more extensive verifiable documentation from every mortgage broker before they can get approved to do business with wholesale lenders will be next, as they move through this industry cycle. Before long, gone will be the days when if a mortgage broker has a potential loan, then anybody would accept it … the consequence will be fewer mortgage broker shops, better customer/borrower loan portfolios, and a badly needed cleaner stronger more solid industry for everybody. A long overdue return to old-fashioned sound business practices.
FREE FOR LIFE
Get Mortgage Lessons with Free Lifetime Upgrades
Enjoy the freedom of a lifetime of learning and earning potential. Our trademarked series, Secrets of the Mortgage Industry™ CD Lessons consist of nearly a dozen and a half, low-cost wide-ranging core instructional materials for young Mortgage Professionals just like YOU! Check 'em out HERE
We're now pleased to offer Free complimentary upgrades to all our students; just return the old one, and we’ll send you any updated version if you’ve done one since you got yours. Currently we’re on version 8.5. Use Discount Code: 6BPDQGD and Save 25%
Mortgage Licensing System Expands
The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators have announced that six more states will begin using their Web-based mortgage licensing system on July 1, bringing the total to 14. The new additions to the Nationwide Mortgage Licensing System are Connecticut, Louisiana, Mississippi, North Carolina, New Hampshire, and Vermont. The system is designed to automate and streamline state licensing of mortgage lenders and brokers. The states already using the system are Idaho, Iowa, Kentucky, Massachusetts, Nebraska, New York, Rhode Island, and Washington. More than 5,000 companies and nearly 17,000 loan officers are being managed by the system, the organizations said. "This unprecedented adoption rate is the result of hard work begun several years ago by state regulators as we envisioned a new regulatory framework that would begin to address some of the gaps we experienced in state and federal oversight of the mortgage industry," said Gavin Gee, Idaho's director of finance and chairman of State Regulatory Registry LLC, the CSBS subsidiary that developed and operates the online registry.
Over 400 Charged with Mortgage Fraud
Over 400 individuals have been charged with mortgage fraud as the result of a national "takedown" led by the Department of Justice and the Federal Bureau of Investigation. The law enforcement operation called "Malicious Mortgage" netted real estate agents, mortgage brokers, appraisers, and others allegedly engaged in lending fraud, foreclosure rescue schemes, and mortgage-related bankruptcy schemes. So far, the three-month sweep had led to 287 arrests and 173 convictions, and 82 individuals have been sentenced, the DoJ said. The Mortgage Bankers Association and the American Financial Services Association welcomed the crackdown. "We support efforts to prosecute unscrupulous operators who give the mortgage industry a bad name," AFSA president Chris Stinebert said. MBA president Kiernan Quinn said the sweep shows that federal authorities are taking the issue of mortgage fraud seriously. "We will continue to work with the FBI to help them target these kinds of crimes," Mr. Quinn said. The FBI said it has set up 42 task groups and working groups around the country that are investigating 1,400 mortgage fraud cases.
Panel Sees Secondary-Market Bright Spots
While the private-label origination market for mortgage-backed securities has largely failed to revive, resecuritized deals are getting done, an active whole-loan market exists, and the GSE market is relatively favorable, according to panelists at the Securities Industry and Financial Markets Association's due diligence conference. These types of transactions are "the bulk of what [the secondary and securitized markets] will be seeing for the foreseeable future," said Susan Barnes, a managing director at Standard & Poor's. The government-sponsored enterprise market in particular is "moving," and while it is not as large as in years like 2004 and 2005, "the trend is good," said Rick Sorkin, vice president of structured transactions at Fannie Mae.
| |
