If we as the industry professionals are not willing to stand up and let ourselves be heard we are going to continue to travel down the path of the lending industry but with increased acceleration. The man that’s power washing the sidewalks outside my office was once a very high producing mortgage loan officer. Suffice it to say that he is no longer in the industry. The knee jerk reaction of our political body has crippled an industry based on misguided policies that they themselves put into place.
The names of those in charge of this are not my concern so I will omit them. What is my concern is that it can be cured so easily but this requires people in power to admit that they had made a tremendous mistake. And admitting the mistake would undermine their body of work for the poor and disenfranchised. So instead of taking the correct steps they have taken steps to hurt everyone. Well hurting everyone at least keeps you from being labeled an uncaring capitalist and a slew of other names that lead to bad election results on your next campaign.
Banking and lending has been an ongoing industry for centuries. The Mortgage industry is rather new in comparison. What made mortgages possible in the US and profitable was that the vast majority of those people that took out a mortgage understood the responsibility of a mortgage and the repercussions from not paying it. So the lending industry created guidelines that would ensure repayment of the mortgage on a timely basis. When these time tested guidelines are completely wiped out and we provide mortgages to anyone with a pulse…s*#t happens!
No one has a right to a mortgage any more than they have a right to finance a Rolls Royce. Helping the poor with classes to understand credit and budgets would have been a great idea, but giving someone responsibility that they are not prepared for or understand is like handing someone an anchor and wishing them a nice day of boating.
Reading this makes me wonder if doing the right thing is next to impossible. I mean if a lender does not write loans, that lender doesn’t eat. but if he writes bad loans, it could be years before he suffers the consequences. Where does one draw the line? How much can or should the government be able to step in without stepping on our toes? It sounds like this is more of an ethical question than anything else. But what if the person doing the loans is an atheist? What then? Where do morals play in on this one? Okay, maybe we’re getting a bit out of hand here, but one still has to wonder. Are we able to self govern ourselves or does Big Brother need to step in and really put his foot down?
What worked in the past for decades should also work as we move forward. 3% down on FHA and 5% on conventional mortgages with credit scores and income ratios that make sense. Arbitrary increases to both down payment requirements and mortgage insurance along with other regulations have the pendulum swinging too far in the opposite direction from the days of “everyone qualifies”. It seems though that this is the new norm. Like gas prices which over time we have come to accept the real estate industry is experiencing the new norm and we just have to work a little harder to generate the same amount of business. It is not impossible but we have to provide a better service which in the long run will be a good thing for everyone.