There we have it HP'ers. The first mortgage broker to admit that mortgage brokers are going away. Now we just need a realtor to admit the truth - that realtors are going away too.
Mortgage brokers and agents will be first though. The banks and lenders are cutting them off, focusing on retail vs. wholesale.
So goodbye fraudsters. Goodbye conmen. Goodbye used car salesmen, bartenders and call center jockeys. You perpetuated the housing bubble (and crash) with your commission-fueled fraud. And you destroyed an industry. Your own.
Check out Morgan's post and also the REIC comments.
Dead Man Walking - Wholesale Lending is Marching Towards Extinction
There has been a whisper in the mortgage-lending winds, subtle at first, but growing louder everyday: wholesale lending by mortgage brokers is on its death bed. It hasn’t been proclaimed, in fact the big players are adamantly voicing support for their affiliated brokers, but the actions of large banks belie their big talk. For all of the kudos and reassurances as an important business channel lavished on top of brokers by lending institutions, the rug is slowly and silently being pulled out from under the broker population.
This isn’t a conspiracy theory - the facts are clear for all who choose to look past the PR spin put out by lenders; whose only motivation is to drain the last red cent out of this feeble business model before finally cutting off its oxygen with the heel of their mighty boot.
..The court of public opinion will demand a fall guy for this mess; and probably more than one. While everyone is pointing out Angelo Mozilo, watch for the mortgage brokers to take the brunt of legislative changes and regulatory action that will shut that channel down.
October 17, 2007
Morgan Brown @ Blown Mortgage predicts the death of the mortgage broker. "Dead Man Walking" as the channel shuts down
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38 comments:
cnbc 2;58 mdt
the mozz is on the run
5:10PM EST 10/17/07. Breaking news headline on CNBC. "SEC Investigating Andrew Mozilo". Reported by WSJ:
http://tinyurl.com/37yjc7
I guess they had to listen to public outcry, in the end. You've done a service Keith in getting the story out first.
The crap mortgages those storefront operations peddle is no longer in demand, by anyone. They can't even pawn them off for fifty cents on the dollar. My heart bleeds.
I feel so bad for the hard working brokers and realtors....NOT
I really can't believe this. HousingPanic is here. The day Andrew Mozilo is under federal investigation by the SEC is the day housingpanic begins.
This is not a popular news anchor pointing a finger. Or a state attorney general saying he's looking into it. Or a populist senator beating around the bush. When the SEC gets involved it's about forfeiture, jail time, f*ck me in the @ss prison, dragging your name through the mud, destroying your poisoned organization, thousands of people getting laid off, shareholder law suits, fortunes made and lost at the hands of bureaucrats.
10/17/2007. The night housingpanic started.
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.2:58 mdt....the mozz is on the run
Wow Keith!!
My immediate thought was the large number of people who are going to be affected by this decision and how many people are not going to have a job or career! I really can't see this happening but i have been wrong before! What are current mortgage brokers going to do if this happens? How are they going to fit in the workplace in a downturn? That is a lot of people!
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Jesus, what's next? Pink wristbands?
When I read this post, I swear I could hear a somber sounding taps being played in the background!
obscure fact, Taps' real name is "Butterfield's Lullaby"
Bye bye brokers, it was not nice to see you.
LOL...
That was only a matter of time. Mortgage brokers provided no useful service.
http://tinyurl.com/28fcgs
SEC Loking into Orangezillow!
-Trip
"Dead Man Walking". Doubtful. Sure the business won't be what it was for the past 5 years but there will be Wall Street money looking for a higher return. Most likely scenario: Brokers will become salesmen that assign a prospective borrower to a lender for a fee. The lender will do all the dilligence work to avoid the fraud perpetuated by the brokers. The easy money days will be gone.
Also, wholesale will be far from dead. There was nothing wrong with the wholesale model. It was the toxice product that they sold that blew up in their faces. Expect quality Alt-A to thrive once the credit crunch ends and home prices have fallen.
And Realtors...come on, they're like cockroaches. They will always be around if there is food (commissions) to be had.
I buy a house. I show up at the closing and there's a conference table ringed by people with their hands out. I'm the mama-bird bringing the worms.
I feed the seller, the realtor, the mortgage broker, the title company, the taxman, the mortgage originator (it was Countrywide of course)
But now I discover that some greedy little MBA metrosexual runt on Wall Street is making $$$$ off my mortage? WTF is that about?
The best thing anyone could do to stand up for their country is to walk away from a toxic mortgage. Vote with your feet and leave the Brooks Brothers Boys holding an empty bag!
Keith,
I agree that big lenders are doing everything they can to shut down correspondent and wholesale divisions. I also agree corrupt mortgage brokers need to leave the industry.
However, eliminating brokers altogether is bad for consumers. Whenever choices are limited it's a bad thing. Shutting down brokers eliminates competition in the industry and we already know some of the big players are looking at consolidation, i.e. B of A and Countrywide.
The results for consumers will be a few large banks making a virtual monopoly of the mortgage lending industry. Is that what you want?
I think you want accountability for mortgage brokers and I believe the only way to achieve that is to create licensing for every state.
Alan Greenspan, Orangezillo and David Lareah (spelling?) will top my list.
Bring on the Greater Depression!
News flash: the SEC has begun an investigation of CFC's CEO:
http://biz.yahoo.com/ap/071017/sec_countrywide_ceo.html
Death of the mortgage broker is no big deal.
I'd like to see the death of the Realawhore. And their effing 6%.
What? You mean no more episodes of Mortgage Gangsters?
http://www.youtube.com/watch?v=yjm4GaP8fmU
It is reminiscent of when the airlines pulled the carpet out from under travel agents. Travel agents went from receiving, I believe, a 20% commission from each ticket they sold to receiving only a $15-25 fee.
I work at a bank - a big one. and even the mortgage bankers think mortgage brokers are scum.
pwnd`
Give me one thing mortgage brokers on commission do that the internet can't
Orbitz and Expedia got rid of travel agents.
bankrate.com etc should easily get rid of the mortgage brokers, who in the end put consumers into products based on getting the highest possible commission, not what was best for the consumer
The fraud is over. Checkmate. Go back to your bartending, drug dealing and call center jobs. And you'll never see easy money like that again in your lifetimes. Hope you didn't buy a house with it.
Honestly, why should someone with a GED be making $200K for filling out paperwork? It's like the HTML "coders" who were making $150K during the late 1990's. After the dotcom ponzi scheme ended, those clowns had to find real skills or go back to flipping burgers. I have nothing against people making good money as long as it's deserved. I'm sick of seeing these thieves charging people $8000 just to process a loan.
I'm an engineer and I only make $70,000/yr and they're laying me off because they think I'm making too much. Luckily I found another job that pays more and only requires 4 days of work a week.
Don't forget about the watchmen who were supposed to be "oversight" duty during the past 6 years or so. Shouldn't they lose their jobs and also be held accountable! I suppose Alan Greenspan is on his way to "Judgment Day" but there are still so many others. Off with their heads, er... I mean reputations, stocks and in many cases jail time. I wonder if they have tanning booths in jail for "Orangezilla"?
This blog has gotten kinda stale and less amusing. Since I quit WoW, I need something else to entertain me - any suggestions?
What are current mortgage brokers going to do if this happens? How are they going to fit in the workplace in a downturn? Want fries with that?... or hey honey want a lap dance?
FU@K EM!
However, eliminating brokers altogether is bad for consumers. Whenever choices are limited it's a bad thing. Shutting down brokers eliminates competition in the industry and we already know some of the big players are looking at consolidation, i.e. B of A and Countrywide.
In the ensuing collapse, there might be as many as 2 MILLION people who will be kicked out of their homes, and we're looking at a 4 to 8 trillion dollar meltdown.
Granted - broker's aren't solely to blame - but they sure helped spawning those toxic ARM's and taking advantage of the gullible (for which we will ALL now have to pay). Don't get me started on realtors.
By what stretch of the imagination can you believe that more people would be hurt if this "competition" was taken out of the marketplace?
You CANNOT apply choices to loans the same way you apply choices to fruit at your grocers, or buying a car at your dealership. This is a big ticket item and standards (ie REGULATION) need to be applied.
Can you imagine if the nuclear power industry was as deregulated as the financial industry? Three Mile Island anyone?
Get real people - stop trying to apply basic free market economics to the whole bloody universe. Sometimes that model works quite well (like your car dealership or grocer). But this time it failed miserably. Get a clue and change your viewpoints - the definition of insanity is to keep doing the same thing but expecting a different result.
When you see that something goes so badly - how can you defend it and want it to continue for such moderate gain - such as 'more choice'? What does that even mean? The choice to sleep on the street or under a bridge?
I guess this explains so much why the hard core republicans and democrats never vote according to their conscience. Just keep making silent excuses to yourself and follow your party... over the cliff like a bunch of lemmings.
{/venting}
I'm sick of seeing these thieves charging people $8000 just to process a loan. I'm an engineer and I only make $70,000/yr and they're laying me off because they think I'm making too much.
Amen to that!
I remember all those computer "programmers" back in the hey-day of the dot.com. They could barely use Word or Excel. Heck, the UNIX 'expert' didn't even know the 'ls' command.
Everybody weaseled thier way in on pure lies.
You know... it's pathetic when a country pays more to their high school dropout assembly line workers than they do to university graduates such as engineers.
Not that I'm putting down the workers - they work hard too. But what kind of message are you giving your kids when you pay the garbage pick up guy or the government office clerk more than the engineers?
Essentially... you're telling em that going to school's a joke! It's for losers who are going to be paid less and have to put up with whinny bosses and be on call 24-7.
The anti-intellectualism on this continent has been going strong for the last 50-100 years. Now we're finally seeing the results. The 30K millionaires buying huge McMansions on a McDonald's salary.
And now they're confused as to why their rates are going up. Oh... how sad! My heart bleeds.
Still, maybe I shouldn't harp on them either - they're just as much victims of the system as the rest of us who tried to actually work for an honest buck. When the system breeds stupidity... what exactly were we expecting?
{/venting}
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Big deal photo,
My broker can put his head completely up his ASS!
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{venting} said...I'm sick of seeing these thieves charging people $8000 just to process a loan. I'm an engineer and I only make $70,000/yr and they're laying me off because they think I'm making too much.
I hear this a lot about Engineers. They are the "true elite" of our economy. Granted, engineering is a tough course. Great math and analysis skills, BUT there were many IT jobs that were tough also. It wasn't just HTML coders and UNIX players that had their jobs outsourced. I know this. I am an IT casualty. The husband works for a big defense contractor. The outsourcing of defense engineering has begun to Russia (how is that for national security?) and India. Drawings and analysis can be done anywhere on Earth for 1/2 the price they pay you, just like IT systems analysis. Perhaps we shouldn't be so smug.
By what stretch of the imagination can you believe that more people would be hurt if this "competition" was taken out of the marketplace?
I forgot to mention two other factors that make this trend bad for consumers.
First of all, brokers that work for a bank, don't have to be individually licensed. As an employee, they fall under the FDIC licensing umbrella.
Secondly, banks aren't required to disclose yield spread premiums they receive.
The virtual monopoly will result when the nations banks consolidate over the coming years and consumers can only get loans from five or six banks offering exactly the same products. Do you think that's a good thing?
There was nothing wrong with the wholesale model.
I beg to differ. When brokers have no serious incentive that loans are repaid then Houston, we have a problem. They will pass off as many time-bombs as fast as they can to securitized mortgage buyers because they are just earning commissions on loan volume.
If on the other hand, you are loaning your company's money, then your job and your salary is at stake if you loan money to home debtors that aren't going to pay it back.
Salt lake city mtg gut said:
The results for consumers will be a few large banks making a virtual monopoly of the mortgage lending industry. Is that what you want?
In my small town there are a half dozen local banks and credit unions who would be happy to give you a mortgage, if you can demonstrate that you can afford to make the payments. The only service provided by brokers was to get loans for people who couldn't get a bank loan or people who didn't know they could have gotten a much better deal at a bank.
When brokers can no longer get mortgages for people who don't qualify I don't see why they need to exist. Your monopoly theory makes no sense. Most every town has more banks then any other business.
The virtual monopoly will result when the nations banks consolidate over the coming years and consumers can only get loans from five or six banks offering exactly the same products. Do you think that's a good thing?
Oh stop with the monopoly theory. I prefer to do business with a local bank. I've had to switch banks 5 or 6 times in the last 20 years because my banks keep being sucked up by bigger banks. But there is always a new local bank to replace that one. Wal-Mart and other big box stores may drive the little local stores out of business because of their huge selections and low prices but a small bank can offer everything a big bank can, sometimes with a better price and always with better service. You keep saying the banks will consolodate but you don't say why. I offer actual reasons why there will not be a monopoly. Could you offer some reasons why there will?
What are current mortgage brokers going to do if this happens? How are they going to fit in the workplace in a downturn?
Brokers are just salespeople and good salespeople will ALWAYS have work. The bad ones.....who cares?
Drawings and analysis can be done anywhere on Earth for 1/2 the price they pay you, just like IT systems analysis. Perhaps we shouldn't be so smug.
Granted - but the reason why they can do it so cheaply is... because they're being paid so cheaply. And you can bet that the garbage pick up guy in Russia or India isn't making more than the engineer.
Whether we like to admit it or not - the rise in wages for blue collar jobs has caused prices to soar here while it hasn't in many other places. This started way back 100 years ago when Ford first opened his assembly line and paid his workers enough to buy his cars.
I believe that this is a GOOD thing. I WANT workers to have a good salary, a good education, a healthy life, etc. BUT... shouldn't the person who struggles through 4-6 years of University - pulling all nighters be rewarded in some way?
Yes... he might have natural abilities which make him excel in math and science - but so what? Do we not reward salespeople if they can sell? Is that not a skill (or an art) too?
Everyone complains how all the blue collar jobs are leaving. Well BULL-SH*T! We have been allowing all the brainiacs to come in since Tesla and Einstein. The only difference now is that they don't require them to move to the US or Canada - they just hire them where they are and pay a slightly higher salary. (Cheap by NA standards!)
Everybody keeps ranting how foreigners are taking high-tech jobs - but the fact is that the only difference today is we're not forcing them to take the oath of citizenship.
Why haven't we invested in our schools? Why haven't we invested in any of the 'true elite' in our economy? Because we decided that we can ALWAYS just import them from some other country, stick a flag up their ass, and teach them how to salute.
Like I said - this attitude has been around for over a hundred years. No one remembers Tesla - who gave away his patents. But everyone will remember Westinghouse or Edison - the bastards who knew how to exploit his inventions. Those are the heroes of the republic - those who can raise MONEY!
And so... after a hundred years of anti-intellectualism and 'greed-is-good' mentality... where do we find ourselves?
- Economy collapsing
- All manufacturing exported to China (the new world factory).
- Dollar collapsing
- Standard of living collapsing
- Education collapsing (war in Iraq could have qudrupled education spending for the next 10 years)
- Moral collapse
The music has stopped, and the piper is holding out his hand... but everyone here is still dancing listening to the music in their heads.
It's time to pay the piper...
{/venting}
Whew... that feels good getting it off my chest!
Well said "Venting".
As someone who used to be a Realtor until the early 90's recession, when I got out because I could not lie in order to sell. I have the ability to sit with cash and wait for future opportunity as I watch people who are academically smarter than me, play in the rat race.
This is a good blog, and it’s interesting to read some of the angry and jealous comments from those that are waiting for the collapse so they can take advantage of the bottom and be like the greedy people they mock.
VENTING said "Whether we like to admit it or not - the rise in wages for blue collar jobs has caused prices to soar here while it hasn't in many other places."
So you don't want to pay a living wage to the guy who hauls your trash away? What, you think your trash smells like roses cuz you have a college degree?
While you were indolently sitting behind a school desk your trash guy was paying his bills with hard work. You, dear, are a snob.
And it's NOT the blue collar workers who are stealing your thunder, genius. It's the million and billion dollar CEOs who are raping the economy.
The fact that you are jealous of the blue collar workers and blame them, who have virtually nothing, is proof that you may be educated, but you ain't too smart.
Here is my wish list of professions that should die:
Sarbanes Oxley consultant / accountant
These worthless overpaid $hitheads do nothing more than check that signatures our on documents and that some SOP is documented and that 50 people reviewed the most mundane stupid inconsequential transactions. YOU can not legislate ethics.
The Federal Reserve Board:
F'ing the middle class by destroying the dollar
Mortgage brokers - used car salesmen that I had to fight with back and forth to get fees, terms, products etc.. you name it.. one big game where they tried to screw you out of every dollar they could.
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