Mortgage Brokers will be your only ally against the big banks

It’s been several years since the real estate and financial crisis began. For my old company it started in the beginning of 2007 and has continued with little relief over three plus years. With the instant evaporation of the subprime product and subsequent elimination of option arms, neg ams, stated income, and others, the real estate market continues to slump.


And while the private money that funded loan volume in the past disappeared the government stepped in with FHA loans and the increase of purchases by Freddie Mac and Fannie Mae. But the government didn’t stop there; they decided there was something wrong with the rules and guidelines that led to the crisis.

No one can argue that there were not significant problems within the mortgage industry. In fact, many of us in the industry started sounding alarm bells in 2005 and 2006 seeing that guidelines and underwriting standards has greatly declined.

So where does that leave us now? Many insiders know that when a financial crisis happens, we all fall back to the big banks. Those big banks have taken a big the opportunity to seize market share and now control effectively all mortgage lending in the nation.

How did they do this you ask? The banks have quietly taken the stance that the mortgage broker was the sole factor that led to the decline of western financial civilization. But there is one problem with that analysis; the brokers had NOTHING to do with underwriting guidelines. That’s right, how can the broker be blamed for creating and spreading a product created in the offices and cubicles of the biggest investment banks.

Were there bad brokers? Oh yes, and bank lenders, appraisers, title companies, escrow companies, funders, reviewers, executives, investment bankers, ratings agencies, and pretty much every position along the mortgage chain.

But now the government has gone too far and it continues to make changes both legally and legislatively that have little to no basis in reality, and worse, do little to help and only seem to force higher costs on consumers.

The bottom line is if the government would have enforced RULES ALREADY IN PLACE, many of the problems we are experiencing today could have been limited. Sure we would have had adjustment in values as has happened on multiple times.