Thread: Predatory Lending

I'll be the first to say it...

Our industry has been an over-saturated hot mess, for lack of better term, for quite some time now. No regulations on liscensing, the quick buck, etc etc. Delivery Boys and Burger Flippers out numbered the quality, honest, intelligent brokers/LO's.

HOWEVER...With all of our market changes over the past couple of weeks, these problems will be thinned out very quickly. LO's are dropping like flies, two have left my office already.

It has a been a sad two years, and now whether you participated in the fraud or not, we're all enduring the consequences.

The good news for realtors, is that only the strong will survive right now. You can be fairly confident in any Broker you choose to work with, for the simple fact that the kid from Pizza Hut won't be in charge of getting your buyer financed.

I've been in the mortgage industry for more than 10 years now and I've never liked stated income loans. That being said, I am troubled by these articles on predatory lending.

Every article I read in regards to predatory lending has exactly the same theme, "my mean mortgage broker made me get a loan that I can't afford".

In situations such as these the media either overlooks or just plain doesn't understand two important facts:

1) On every loan, regardless of documentation, the borrower signs the 1003 confirming that all of the information is true and accurate. If their income is incorrect or untrue the borrower has the responsibility of not signing it.

2) A borrower should know whether or not they can afford the payments on their loan. While each loan has guidelines as to the maximum debt load a borrower can carry, it is just that, a guideline. A few years back there were several lenders who would allow debt ratios of 60% or more, trust me, if your debt ratio is 60%, you cannot afford your loan. That is unless you are willing to give up eating.

As an additional note, I feel that the pay option arm loan is evil. Fortunately the companies who preyed upon borrowers by offering this loan will find themselves out of business very soon. Not just because of the losses they take on the foreclosures but also because of the fake money they are calling profits (accounting games).