If mortgage brokers make all of their money in the form of commissions and kickbacks for "getting you into a loan", wouldn't they necessarily be strongly motivated to "get you into the loan" that's paying them the highest commission or kickback, versus the loan that is truly right for you?
Also, follow-up question - is there a way to go direct to the loan source and earn the commission or kickback the filthy mortgage broker would have made for yourself?
September 19, 2006
HousingPanic Stupid Question of the Day
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19 comments:
Duh. Yes, of course the mortgage brokers have incentive to move the sheeps into the most profitable loan--for the broker!!!
However, the sheeps ALSO have the responsibility to look out for themselves and NOT get crammed into a suicide loan. Shame on them if they don't read the fine print.
Regarding "going to the source" and cutting out the middleman in the mortgage loan, to whom is the sheep supposed to turn? Fannie Mae or Freddie Mac directly? Or even further up the chain, why not go directly to the Asian central banks, who ultimately hold more MBS than any other entity? Yes, I am being a little sarcastic here. Howver, my point is that the whole "Securitization" scam is one of THE greatest contributors to the housing bubble--and will be one of the issues that drags the entire world's economies into the abyss as the housing bubble collapse continues!!!
I bought a Home and told the MORT BROK at a National Company that
I wanted a 30-year fixed.
It became a heated discussion in which he insisted I wanted Interest Only. He kept telling me to Re Fi in a few years, and It was Cheaper. I said what part of “I want a 30 year fixed do you not understand.” I did not use him.
My Point:
I think they make bonuses and even higher commission for pushing and selling the "exotic" Loans. 125% LTV, Interest Only, ARMS
Ugh.
Oh.. its always about other peoples money isn't it keith?
He's making too much! This guy isn't getting enough!
WAAAAAAAAHAHAHAHAHA
Can Wall Street Withstand Weak Housing?
Some pros say the real estate slump may spell trouble for equities. Others offer intriguing reasons why stocks might be just fine
SEPTEMBER 19, 2006
News Analysis
By Peter Coy
http://yahoo.businessweek.com/print/investor/content/sep2006/pi20060919_269370.htm
If your nest egg is made of 2-by-4s and you're watching the real estate slowdown with a mixture of fear and nausea, then this article is for you.
The question: If real estate tanks, will stocks follow? Or will the market ignore housing? Or maybe—just maybe—will a decline in housing trigger a rise in stocks? It's something you really ought to think about if you're trying to figure out where to put your money.
Conventional wisdom, and some historical evidence, suggests that a decline in housing is associated with a fall in stocks. Evidence of a slump continues to mount: On Sept. 18, the National Assn. of Home Builders said its monthly sentiment index fell to a 15-year low. That's bad for homeowners, because it means that there's no port in the storm. But the case isn't completely closed: There's some tantalizing counter-evidence that stocks might do just fine in a housing downturn, or even benefit from it.
TIME LAG. Let's start with the main, bearish case. Making the rounds of investment advisers is a chart prepared by Merrill Lynch (MER ) showing the Standard & Poor's 500 stock index overlaid on an index of homebuilding activity from the National Assn. of Home Builders. The chart shows that the S&P 500 goes up one year after the homebuilding index goes up, and goes down one year after the homebuilding index goes down. (The correlation is 0.8, which means it's pretty strong.)
The scary part: The homebuilding index has plunged over the past year. If you believe that history repeats itself, the S&P 500 is about ready for a nosedive.
Another chart—this one from InvesTech Research—correlates changes in private residential construction with recessions. Going back to 1968, it shows that with just one exception, every time there has been a downturn in residential construction, a recession has occurred at the same time or shortly after. (The exception: 1995.) That indicator, too, is flashing red, because residential construction has shrunk over the past year. "Being a student of history, I would think I would want to play it very cautiously from a stock standpoint," says Standard & Poor's Chief Investment Strategist Sam Stovall.
WEALTH EFFECT. It makes some sense that a housing slump would be bad for stocks. First, there's the direct effect on jobs in construction, real estate brokering, mortgage lending, and so on. Goldman Sachs (GS ) estimates that housing and related industries account for nearly 10 million jobs (payroll and nonpayroll combined).
Second, consumer spending has been buoyed by the housing boom. People spent more freely because they felt wealthier and because they turned their homes into piggy banks through home equity loans, cash-out refinancing, and other means. Take away jobs and consumer spending, and it's no wonder that many experts expect a housing slump to hurt stocks.
By this view, stocks aren't a good choice right now. What, then? Barry Hyman, equity market strategist for EKN Financial Services, says that the same rising rates that have squeezed housing have given investors a nice alternative: money market accounts, which are yielding better than 4%, and bank certificates of deposit, some of which yield 5% or more.
"DOWN BUT NOT OUT." Super-bears on housing have different advice. John Talbott, author of the none-too-subtly titled Sell Now! The End of the Housing Bubble, recommends avoiding not only the stock market, but banks, too, since lots of banks could be hurt by lax mortgage lending standards.
But not everyone is convinced that housing will crush stocks. Why? Some figure that the housing slump won't be severe or prolonged. Robert DiClemente of Citigroup (C ) argues that the adjustment to a slower rate of sales is well under way. He says that the issuance of building permits is actually 10% below the rate of new-home sales. This process "will clear the overhang of houses within the next six to nine months," DiClemente predicts in a recent research note. The headline on his report: "Down But Not Out."
Others say it's too soon to declare the stock market dead because of housing. "Summing it up, I'm in the camp that says I don't know and the jury is still out," says Jeffrey Saut, equity strategist for Raymond James Financial (RJF ).
BACK TO THE FUTURE. Then there are the outright optimists. Bob Carey, chief investment officer for First Trust Advisors in Lisle, Ill., says that the stock market is 20% to 25% undervalued at current levels and should reach full valuation by sometime next year, which means: Get ready for a heck of a bull market. Carey says the demand for housing is driven by incomes and jobs, and since corporate profits are extremely strong, the outlook for income and job growth is good. Says Carey: "It's hard to imagine Corporate America doing well and somehow people not doing well on the employment side."
Carey has seen Merrill Lynch's chart showing a tight correlation between homebuilding and the S&P, but he says the pattern dates back only a decade or so. Before then, there was very little correlation, and he says the economy might return to that older pattern.
It's also possible that the housing slowdown could prod the Federal Reserve into cutting interest rates, which could boost stocks. Maybe, too, speculative investors will go back to dabbling in stocks instead of real estate, the way they did before the dot-com bubble burst and the real estate boom began.
TODAY'S MARKET. But the most intriguing evidence that the stock market might not go down because of a housing slump is simply this: So far, it hasn't gone down. It's gone up. The stock market is famous for looking ahead, and it seems that investors collectively may have decided not to blow a gasket over housing. This past June, the S&P 500 got down to around 1,220. Now, with the news about housing getting steadily worse, it's up to 1,321, and on the verge of setting a five-year high.
Even more intriguing is that stocks of homebuilders—a group that's been out of favor for quite a while—show signs of bottoming out. Since their lows in early September, Pulte Homes (PHM ) is up 14%, D.R. Horton (DHI ) is up 16%, Lennar (LEN ) is up 8%, and KB Home (KBH ) is up 14%. If the stocks at the very epicenter of the housing slump can show signs of life, why is everyone so worried about the market as a whole? Good question.
How can the stock market remain unaffected when this housing calamity begins to unfold? Someone explain that to me.
By the way, I'm in the loan brokerage business and YES, loan brokers get cash rebates (and more) for directing borrowers into exotic loan programs, and oftentimes it's structured in ways to avoid disclosure. I don't see how this will end in any other way than really badly
Not again you idiots, the "Stock Market" is rigged to move higher by Options managers and Inside Traders, the "truly" smart people of money. As long as Joe six Invester doesn't think there is a problem, it won't go down. The Stock Market hit record highs in October 29, even though the economy had gone into a recession the following August.
Enough of the stupidty on these boards, yes, the Homebuilders will get another nasty leg down with stocks and probably sooner than you think. The enonomy is no longer growing, but they don't know that yet.
It has been confirmed we are no longer in for a Hard Landing...it is more of a Crash Landing.
read on
http://tinyurl.com/l83l2
"Will a scumbag, commission and kickback-driven mortgage broker steer you into a loan that is most profitable for him and probably bad for you?"
Does Raggedy Ann have cotton tits?
the language that you used here is interesting. In my opinion, our kids learn that "our system isn't corrupt" in their classes and, specifically, bribes aren't part of our culture.
So what, then, is an incentive? For our politicians, that might be the promise of a future "easy job" or giving an "easy job" to a politician's kid.
I wish it was possible to get people to see this corruption but they don't.
"How can the stock market remain unaffected when this housing calamity begins to unfold? Someone explain that to me."
To me, it's the biggest money laundering system in the world and, therefore, it will continue to exist until that purpose can't be met-- possibly because the boomers start selling too many stocks.
When I bought my house in 1998 (30 year fixed, 20% down, call me old fashioned) I went right to the local national bank branch since I wanted to bypass the brokers. They all seemed a little scummy even then with the long lists of weird mortgages and their attitude of borrowing as much money as you can and paying huge points for an artificially low rate.
So I go to the bank branch manager, and they end up setting up an appointment with a bank retained roving mortgage broker. Not sure if he was directly connected to the bank, or the one they use for their loans. The point is the system is wired (rigged?) to include "brokers" as the low level manual labor in the business. You don't get to sit down with a real loan officer anymore, since its a computer anyway. You just need some slub to fill out the paper work for submission. Like RE agents, they make to much money for what they do.
And unlike many people on this board, I like it when people make *lots* of money bringing actual value. I don't mind a house builder making lots of money if you want to pay him a 2x markup for his house after land and materials. But he actually has to build it (with illegal labor) where mortgage brokers and RE agents are glad handlers who fill out basic paper work.
Yes, yes, brokers and RE agents will respond that their real value is being the bird dog who goes out and drums up business, much like an old fashioned con man or salesman.
Howver, my point is that the whole "Securitization" scam is one of THE greatest contributors to the housing bubble--and will be one of the issues that drags the entire world's economies into the abyss as the housing bubble collapse continues!!!
++++++++++++++++++++++
Exactly! America will rue the day it ever created this securitization of mortgage debt....
Hey panicearly, I hear Al Franken is looking for honest work. Slap one of those Supreme Leader uniforms on him, give him a saber, and you "Move-on" guys have a new leader for that big move on DC. Nancy Pelosi and Harry Reid said you can use their apartments to crash.
Classic!
...and i thought (still do) Hillary was Scary!
That Pelosi broad is a real piece o' Work!
How does one of such 'Colossal ignorance' get to that level?
I think I just answered my own question!
Colossal ignorance leads the leftards just like it did in the days of Marx, Stalin, Pol Pot, and now Pelosi.
some mortgage brokers commissions are based om the profit they make per loan relative to the risk, its no always the highest loans the are in demand.
Different lenders look for different loans.
much like an old fashioned con man or salesman.
Please do not compare confidence men to sales men, It is racist.
REMODELING
house loans Tips for building or remodeling your dream home.
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