July 04, 2007

When we look back at the housing crash years from now, it'll be the unlicensed mortgage officers most to blame

Realtors are licensed

Appraisers are licensed

Homebuilders are licensed

Banks are licensed

People who drive cars are licensed

Fishermen are licensed

Strippers (in AZ) are licensed (so I hear)

Yet the one group who had the most to do with the housing bubble, "mortgage officers", have no regulations, no licenses, no rules, no oversight, no nothing. Just get the sale at any cost, make the commission, screw the buyer, and move on.

And look where that got us to today.

The system got gamed. An unregulated rouge collection of con men, swindlers, call center jockeys, bartenders, strippers, used car salesmen and generally the scum of society banded together under the seemingly professional title of "mortgage broker" and "mortgage officer" these past few years and screwed America.

And nobody in government thought it would be a good idea to step in.

Hmmm... maybe because the National Association of Mortgage Brokers, the National Association of Realtors and the National Association of Homebuilders, who wanted to maintain the status quo, have your corrupted leaders in their pockets?

Here's a report from the cesspool of mortgage fraud and fraudsters, Phoenix Arizona:

Rules sought on mortgage officers
Bill to require licensing would help curb fraud, backers say

Many of the people in Arizona who help home buyers finance what is often the biggest purchase of their lives are not licensed. In the rapidly growing mortgage industry, many of these unlicensed people who handle home loans can put consumers at risk.

It's estimated that there are as many as 18,000 unlicensed people taking mortgage applications, negotiating rates and getting loan commissions statewide. Many are enticed by the Valley's housing boom, exotic and often risky mortgages and no licensing requirements.

"I know of mortgage people working out of their bedrooms and selling stereos on the side. They got into the business six months ago and don't know a lot about it. They can give the industry a bad name," said Rick Allen, a branch manager with the Valley mortgage firm O'Dowd and Associates.


jorghis said...

The only real impact that the mortage officers had was approving people for way more than they should have been approved for. Thus enabling people making 50k a year to buy a 500k McMansion (or in the waning days of the bubble a crackhouse in compton)

If you want to fault someone for approving buyers for way more money than was really appropriate though it should be the banks. The brokers are just the middlemen, they may get payed more than they deserve but they arent to blame for this mess. Would you have them turn away business when the banks are willing to laon and the consumer is willing to buy?

San Diago Homeowner said...

You cant just point the finger on one person for this mess we are in. What about all the greedy flippers, consumers who thought they could use their home as piggy banks, large mortgage institutions (Ameriquest), scam artists (straw buying). Everyone was patting each other on the back when times were good, but now, let the finger pointing begin!

dufus mcpanic said...

It was the government and investors buying those 105% LTV loans with no income verification

Anonymous said...

Mortgage brokers are Nazis

Anonymous said...

I disagree Keith. It was a lack of oversight on Wall St. which caused an orgy of highly leveraged instruments to go into hyper drive.

By the way, for anyone astute in finances, look what's happened to the dollar since the Bear Stearns news broke.

Anonymous said...

The root of the entire problem is the one thing, that if you fixed, would have made none of all this possible.

paper money is the root of the problem. If the money really had a stable value, lenders wouldn't risk it so easily. Government wouldn't solve problems by borrowing, they'd have to FIX the problem. Until the very medium that is the common entity in all these problems is fixed, they will keep occurring.

But the day of reckoning will come on the money bubble, just like it did with the housing bubble. When you live by borrowing, you will end up paying much more in the end. I'm trying to move all my money into hard assets but I'm waiting for a pullback in those (real estate etc).

Frank@NeverColdCall.com said...

Strippers (in AZ) are licensed (so I hear)

With the AZ crash in full swing you'll see stripper licenses skyrocket in propotion to the number of realtwhores who get flushed out.

It's back to dancing for dollars at the strip club, realtwhores!

desperate in dc said...


Stock brokers are licensed too (Series 7).

Didn't stop stock brokers from f*cking over clients left and right in the 1990s.

I've lost track of how many near death experiences I've had at the hands of Licensed Drivers. My favorite is when they come to a sudden complete stop in the right lane on a divided highway (2 lanes on each side), turn on their left turn signal. And then try to turn across traffic so they can get to the McDonalds in the median strip. Unf*cking believable. I'm sure truck drivers would have plenty of horror stories about Licensed Drivers too. lol

buyerwillepb said...

No - it's the appraisers mostly to blame. They could've stopped this whole scam in its tracks.

Anonymous said...

Fiat currency is the root cause. No doubt

Anonymous said...

Every one has missed the culprit. It is all about money... When someones income is based on commission then someone will be getting a raw deal....not always, but lets face it. Mortgage Borkers, Realtors, Bankers(for letting their loan officers get out of control), appraisers(until recently many didn't get paid for their work until after they turned in their work) and lets face it why does anyone net 10 2nd homes or countless #'s of negitive income producing properties.

Sixpercenter said...

This is your most on target post ever!

Yes, it's the cab driver turned money peddler who aided the fraud.

Ultimately it was Wall St trying to close sales on an enormous cohort of unprepared, yield starved retirees that bear the ultimate blame. After all, the peddlers are not smart enough to think this up on their own.

Anonymous said...

it's the getting paid at closing structure that is to blame. Commissions for all should be put into an escrow account, and funds should be released 6 months or so later after the buyer has made 6 payments

Anonymous said...

I blame the salespeople alot for the lending crimes that took place .A loan agent is suppose to just quote rates and than collect the paper-work from the borrower and submit it to underwriting .

These loan agent salespeople helped the sheep commit fraud for their own gain. The realtors set the buyers up to buy over-priced housing ,knowing they didn't qualify and they sent them to agents that would help them get a loan they didn't deserve .

Wall Street set up the means for funding these toxic loans that were based on models that had no basis in true risk . Whoever started giving low down stated income loans to sub-prime buyers should of had their head examined ,(nobody with sound mind would make a loans like that ).

I would say that the advertising groups were so powerful during the housing run-up that the media didn't question the faulty lending and run-up , and all crimes were expected to be covered by real estate going up.The borrowers,realtors, and loan agents were brainwashed into thinking that any acts of dishonesty were justified by real estate going up .

The final loan investor was lured by the higher yields on this junk paper ,but they were promised a safer investment than they got .

Just because rates were low and money was available for loans was no cause for lenders ,realtors,Wall Street , and borrowers to ignore good faith in business dealings ,

Anonymous said...

I believe that Greenspan and the Fed are most responsible.

turdly said...

Mortgage brokers can only offer programs instituted by Federally chartered banks that are not regulated by the State in any way whatsoever [there are a few local programs but this isn't about specifics]. AZDFI has no jurisdiction whatsoever over the people that make the rules.

If I am a mortgage broker and have 160 different programs at my disposal I can offer only those 160 programs, again, the AZDFI cannot regulate the programs. If Mrs Borrower walks into my broker office, lies to my face, lies on the 1003 and fits a program I have, I CANNOT TELL HER NO! She would sue my ass off because I discriminated against her because she's a christian, or fat, or a cenobite, or whatever will make the jury cry. As a broker I absolutely have to listen to her buyer lies, make her fit a program, and then follow through.

Licensing has nothing to do with it. Appraisers are licensed and they are the ones who create the biggest lie of value. Any appraisal that is not based on the highest and best use of the property being 'rental income' is a lie. Period. Nothing else to say about that, absolutely no defense for the value being based on anything else except teardown.

Earlier this year a bill failed in AZ that would of licensed l/o's. It failed because of lobbying by the federally chartered banks. The wording was changed so that local brokers l/o's would need licensed but the l/o's of federally chartered banks would not. What lieing ass turds the fed charters are....

Nevada l/o's had to start getting licensed a couple of years ago. It was put through the state legislature on a bill lobbied for by the online educators that handle the continous education requirements. NV licensed the l/o's not top keep a handle on them, but to participate in the revenue generated by the required ongoing education.

rufus10 said...

While there were numerous ingenuous brokers and loan officers out there, the majority of the blame shouldn't go to the front line....LENDERS KNEW precisely what they were doing in engineering this debacle and must be held accountable. The buck stops at the TOP not the bottom.

jackpayne said...

The banks and financial institutions shelling out to cover the mortgages are the ones primarily responsible for the curent mess. Sure, Phoenix is a shining example of overpopulation of broker roles being plalyed by unqualified people. But, you still can't lay of the fact that it's those who slice the bread who control its distribution on the bread line.

--Jack Payne