Check this out!

[30A Skunkape]

From Times OnlineMarch 25, 2007

Man, 102, takes out 25-year mortgageBrendan Montague
A pensioner aged 102 has been granted a 25-year mortgage despite the fact he would have to live until 127 to pay the loan back.

The property investor from East Sussex has taken out an interest-only £200,000 mortgage and hopes to meet the £958 monthly repayments with income from rent as he joins a growing army of retired people hoping to cash in on buy-to-let schemes.

Most lenders set a limit at 75 years for mortgage applicants but a handful, including Woolwich, and Bristol & West, have no such restrictions. This has led to a rush of applications from older investors.

Jonathan Moore, of Mortgages for Business, an independent adviser based in Sevenoaks, Kent, told how he brokered the mortgage for the unnamed 102-year-old, one of hundreds he has arranged for pensioners. “This is a new phenomenon.Obviously there is an element of risk if property prices and rental income suddenly fall but there is no sign of that at the moment,” he said.

Richard Stone, 75, from north London, owns 10 houses and has taken out a £120,000 mortgage. The retired maths teacher admits such a commitment at his age can be “quite stressful”.

Charities supporting the elderly have warned that the stress of taking out a large loan could affect health and urge pensioners to seek advice before making such a financial commitment.

Gordon Lishman, the director-general of Age Concern, said: “It’s crucial that people think about the long-term implications.”

[SHELLY]

Jonathan Moore, of Mortgages for Business, an independent adviser based in Sevenoaks, Kent, told how he brokered the mortgage for the unnamed 102-year-old, one of hundreds he has arranged for pensioners. “This is a new phenomenon.Obviously there is an element of risk if property prices and rental income suddenly fall but there is no sign of that at the moment,” he said.

This dolt appears to have overlooked the "risk" of the 102-year-old geezer dropping dead and leaving an unpaid "interest only" loan on a depreciating rental house that someone with all their faculties wouldn't touch with a 10-foot-zimmerframe.

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[Bob]

There is Federal law prohibiting age as a factor for credit decisions, isn't there?

[Mango]

There is Federal law prohibiting age as a factor for credit decisions, isn't there?

The article is about a mortgage type in England.
I have attended closings there and in Holland, and your interest rate is based on age, weight, health, and color of your tinkles.

But yes, here in the USA you can not discrimate against age when decisioning a mortgage loan.

[Bob]

I would have to think the Brits are as over-regulated concerning discrimination as we are, plus am I correct that the vast majority of mortgages there are adjustables?

[SHELLY]

There is Federal law prohibiting age as a factor for credit decisions, isn't there?

If the law doesn't prohibit checkout clerks at Target from getting loans for $600,000 McMansions, I don't see why it would prohibit a 100-year-old man from getting a 20-year loan....the chances are even that neither would pay it back in full.

After all, once the broker pockets his commission from the sale and tosses the loan to the investors, who cares?


.

[Mango]

I would have to think the Brits are as over-regulated concerning discrimination as we are, plus am I correct that the vast majority of mortgages there are adjustables?

Wasn't so about 10 years ago. Not sure if regs have changed since then and what mortgage types are available now. I do know they had a run up in real estate like we did.

[Mango]

If the law doesn't prohibit checkout clerks at Target from getting loans for $600,000 McMansions, I don't see why it would prohibit a 100-year-old man from getting a 20-year loan....the chances are even that neither would pay it back in full.

After all, once the broker pockets his commission from the sale and tosses the loan to the investors, who cares?
.

Because here in this country, if the 100 yr. old man qualifies for a mortgage based on his income, we can not tell him he can not get a mortgage. He would not be able to do a no income or exotic no doc loan though for obvious reasons, but that is not considered discrimination. Telling him he can't get a mortgage if he qualifies is.

[Bob]

If the law doesn't prohibit checkout clerks at Target from getting loans for $600,000 McMansions, I don't see why it would prohibit a 100-year-old man from getting a 20-year loan....the chances are even that neither would pay it back in full.

After all, once the broker pockets his commission from the sale and tosses the loan to the investors, who cares?


.

Wow Shelly, all brokers now bypass wholesale lenders and sell to investors only. That's quite a change!

[SHELLY]

There is Federal law prohibiting age as a factor for credit decisions, isn't there?

Regulation of mortgage brokers is now starting to take shape:

"Help against predatory mortgage brokers could be just around the corner, according to Sen. Charles Schumer, (D-N.Y.), who says such aid would not only benefit the borrower but also those who own homes near foreclosed houses.

Schumer, who heads the Senate banking subcommittee on housing, told an audience in Massapequa yesterday that he and others in Washington are working on legislation to regulate mortgage brokers for the first time and to end loans offer based on false promises.

"It's despicable what some of these brokers will do," Schumer said after recounting a story of an ailing Queens man who refinanced his home on a broker's promise of a $1,400-a-month payment that changed to $4,000 a month after less than a year.

While the banking industry and its mortgages are regulated by the federal government, mortgage brokers go virtually unregulated, Schumer said, adding that it's such brokers who sell risky "subprime" mortgages to people with poor credit."

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[Bob]

Regulation of mortgage brokers is now starting to take shape:

"Help against predatory mortgage brokers could be just around the corner, according to Sen. Charles Schumer, (D-N.Y.), who says such aid would not only benefit the borrower but also those who own homes near foreclosed houses.

Schumer, who heads the Senate banking subcommittee on housing, told an audience in Massapequa yesterday that he and others in Washington are working on legislation to regulate mortgage brokers for the first time and to end loans offer based on false promises.

"It's despicable what some of these brokers will do," Schumer said after recounting a story of an ailing Queens man who refinanced his home on a broker's promise of a $1,400-a-month payment that changed to $4,000 a month after less than a year.

While the banking industry and its mortgages are regulated by the federal government, mortgage brokers go virtually unregulated, Schumer said, adding that it's such brokers who sell risky "subprime" mortgages to people with poor credit."

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I can see it now, another 1-4 pages of new federally mandated disclosure telling you to actually read your existing disclosure. That should really slow down the fraud!

[Mango]

Regulation of mortgage brokers is now starting to take shape:

"Help against predatory mortgage brokers could be just around the corner, according to Sen. Charles Schumer, (D-N.Y.), who says such aid would not only benefit the borrower but also those who own homes near foreclosed houses.

Schumer, who heads the Senate banking subcommittee on housing, told an audience in Massapequa yesterday that he and others in Washington are working on legislation to regulate mortgage brokers for the first time and to end loans offer based on false promises.

"It's despicable what some of these brokers will do," Schumer said after recounting a story of an ailing Queens man who refinanced his home on a broker's promise of a $1,400-a-month payment that changed to $4,000 a month after less than a year.

While the banking industry and its mortgages are regulated by the federal government, mortgage brokers go virtually unregulated, Schumer said, adding that it's such brokers who sell risky "subprime" mortgages to people with poor credit.".

I don't think it's too much to ask anyone, especially someone who is on the Banking committee to gain total understanding of all the regulations currently in place, like HOEPA , (predatory Lending Guidelines), HUD's Federal Guidelines, and in particular, the State in which you are a Senator in. Mortgage Brokers are monitored and regulated by the Banking Dept. in the State they are licensed, but they also follow to a large degree follow the Federal protections incorporated as well based on what the State Banking Dept. has incorporated.
Further, the Banks, whether monitored by the FTC or if they are a thrift, another agency, have to monitor the loans and actions of mortgage Brokers they approve to do business with based on their Regulations (which are pretty much similar across the Board)

You probably do not even know that the NYS Banking Dept. has been "Partners" with mortgage brokers and are even getting more greedy. Mortgage Brokers in NY pay a premium based on loan volume to the Banking Dept in addition to monitoring and audit fees (even if they do not get to audit you that year)
and now are asking for interest on application fees and any money held in your business account.
Brokers are also required to produce Volume of Operations reports that break down loan type, fees earned, what Banks they sold the loan to, what relationships you have with any vendors, the list goes on.

I encourage you Shelly to learn more about the current Federal regulations, Federal Disclosures signed at closing as well so before you spew out these posts.

if you did, you would see the regs/Disclosures are very comprehensive, not perfect like anything else, and there is always some room for improvement just like everything else.

1) Increase the High Cost test for loans less than 50K. (the formula is hard to understand, but it equates to about 6-7 points)
2) Require education standards and continuing ed nationwide (some States do already have LO reqirements)
3) Require each State to have level auditing standards (some are more lax than others)

This is just my short list and I do have other ideas.

But the statements about false promises being made is getting tiring, when there are disclosures and all these regulations in place to currently protect the consumer.

This is all I am going to say on this subject, unless someone has a specific question or wishes to have an intelligent debate regarding Disclosure and federal Regulations regarding mortgage Banking.

[rapunzel]

This is all I am going to say on this subject, unless someone has a specific question or wishes to have an intelligent debate regarding Disclosure and federal Regulations regarding mortgage Banking.

I have a specific question. Reading your posts about mortgages always reminds me of how I feel when people talk about HMOs...that it's easy to villify them, but few people understand how they should work. HMO's used to work and work well if people read their handbooks and followed the rules. There were a lot of regulations in place to protect patients, and those regulations generally worked. Over the course of the last 5 years or so, those laws have not been repealed but have for some reason ceased to work to protect the consumer. Internally, the attitude went from extreme mindfulness of regulations to blantant disregard.

So, my question is whether you've noticed a change in attitude and ethics within the industry in the last few years?

[Mango]

I have a specific question. Reading your posts about mortgages always reminds me of how I feel when people talk about HMOs...that it's easy to villify them, but few people understand how they should work. HMO's used to work and work well if people read their handbooks and followed the rules. There were a lot of regulations in place to protect patients, and those regulations generally worked. Over the course of the last 5 years or so, those laws have not been repealed but have for some reason ceased to work to protect the consumer. Internally, the attitude went from extreme mindfulness of regulations to blantant disregard.

So, my question is whether you've noticed a change in attitude and ethics within the industry in the last few years?

As far as continuing legislation to protect consumers interests there has not been any changes in attitude per se, as a matter of fact, there have been many legislators/ senators/ consumer advocacy groups lobbying Washington for things like 1) a Good faith Estimate that did not change at all after issuance, (which was rather ridiculous because there are certain thrid party fees which are beyond our control, changes in loan product/amt which could impact fees etc.)

HOEPA (see above) was instituted in 2002 and is extremely regulated. If a mortgage is considered high cost and passes the test, the worksheet must be in the file for auditing, additional disclosures at/and prior to closing, and if not, resulted in huge fines and penalties.
There were other laws and protections being sought, and enacted, but the list is extensive, I just offered some examples.

Qualifying adjustable rate mortgages at the initial start rate was the culprit for quite a bit of the existing problems. (something I could never get used to and didn't since this wasn't the case 20 yrs ago when I got in the biz))
Not to mention that in any industry with rates getting as low as they did post 9/11, you are stampeded by consumers in droves, mistakes did get made, and it also spread the cracks wide open for unscruplous types like in any industry.There just wasn't enough employees in all sectors of the industry to keep up. Mortgage depts. literally had contracted employees working on bankers boxes.

But the bottom line is when people went to closing, regardless of the loan type, prime or subprime you signed, signed and signed again disclosures until your hand cramps up. The documents were printed by the closing agents (in my State attorneys only) and explained at closing. Further quite a few people attended refinance closings without the benefit of counsel, however they still had a 3 day legal recission period to back out without incurring any costs whatsoever.

There wasn't any blatant disregard for regulations I found, especially when you are audited and regulated so throughly, but yes, mistakes were made, and do get made when you are bulldozed for an extended period.

I am wondering why in your industry the past 5 years the laws ceased to woek for the consumer?

[spinDrAtl]

This Schumer guy sounds like a politician to me.

The fact is, we get calls all the time from people in adjustable rate mortgages who say 'the lender didn't tell them' they were in an adjustable mortgage when in fact the disclosures were there, it was plainly spelled out on the closing papers, etc. etc. Now everyone knows there are a lot of papers to sign, blah blah blah but the fact is that the TIL, the note and several other places PROMINENTLY show the rate and terms of the loan.

God forbid someone would read a document before signing it and take a little personal responsibility. If the broker or lender switched on you, don't sign. On refinances, you also have 3 days to change your mind. Get someone else to read it. If you are unsure of what you are signing or not confident in your intelligence, should you really be signing documents obligating you to hundreds of thousands of dollars?

Yes, their are unscrupulous people out there who take advantage of the elderly or ill but the majority of customers in these loans are not in that boat, in my experience.

End of rant.

[kathydwells]

The article is about a mortgage type in England.
I have attended closings there and in Holland, and your interest rate is based on age, weight, health, and color of your tinkles.

But yes, here in the USA you can not discrimate against age when decisioning a mortgage loan.

What is a tinkle?

[Mango]

This Schumer guy sounds like a politician to me.

The fact is, we get calls all the time from people in adjustable rate mortgages who say 'the lender didn't tell them' they were in an adjustable mortgage when in fact the disclosures were there, it was plainly spelled out on the closing papers, etc. etc. Now everyone knows there are a lot of papers to sign, blah blah blah but the fact is that the TIL, the note and several other places PROMINENTLY show the rate and terms of the loan.

End of rant.

and Charles Schumer and cronies like Bloomberg put this out for immediate release stating that our financial markets are in serious risk because they are stifled by too stringent regulations. and oh, this is the best......
they want to create an international financial zone in the Apple after they loosen up these stringent regs. I suppose those who took their Wall Street offices to CT and NJ post 9/11 did so because of those strict regs.

and Spindr, I think the best call I ever had was a man who shopped his mortgage to death, then called me asking for the 30 yr. fixed with a 3 yr. pre-payment penalty which was only .125% lower on the rate. I suggested he didn't take the pre-pay to no avail.
Six months later (rates dropped) I get a call from Indy Mac Bank that he hired a lawyer, and stated he signed without knowing he had a pre-pay penalty. Indy couldn't locate the signed docs they claim, and asked me if I had him sign anything. (which I did not have to do legally as a Broker) But I did have him sign a disclosure, that we made up in my office, clearly stating he was requesting a pre-pay loan, lucky for them.
So that case got thrown right out the window.

What is a tinkle?

Something I need to do right now.

[drsvelte]

This Schumer guy sounds like a politician to me.

You are much too gracious.

[SHELLY]

SUBPRIME MORTGAGE BAILOUT


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[Bob]

The CNBC video intimates anyone who qualified for a subprime loan could grab an FHA loan, but were led astray by unscrupulous brokers and lenders. More disinformation!

[SHELLY]

The CNBC video intimates anyone who qualified for a subprime loan could grab an FHA loan, but were led astray by unscrupulous brokers and lenders. More disinformation!

I recall Mango commented on this situation in another post.

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[Mango]

The CNBC video intimates anyone who qualified for a subprime loan could grab an FHA loan, but were led astray by unscrupulous brokers and lenders. More disinformation!

I recall Mango commented on this situation in another post..

YOU RANG? Dragged back to this thread again?

Couldn't watch the whole video due to disconnectivity issues like rain,
but yes seen people who could have qualified for a standard prime loan put in subprime before because the LO monkeys didn't know better.
Yepper, seen it, been there. Not all unscrupulous, just st00pidity and ignorance.

[SHELLY]

Not all unscrupulous, just st00pidity and ignorance.

Two traits we all look for in a person who is paid to guide us through the most expensive and important purchase of our lives.



.

[Bob]

Two traits we all look for in a person who is paid to guide us through the most expensive and important purchase of our lives.



.

Mortgage brokers are paid to bring the least expensive money to the table, but a guide to that transaction would be an attorney or a real estate agent who isn't going to transaction broker mode.

[aubbieone]

As a wholesale lender rep, I am amazed that there are some who still feel that the borrowers that sign and close on these type of loans are not to blame! Contrary to popular belief lenders do not 'target" borrowers to take their homes. Our business is based on borrowers making mortgage payments and providing us with a stream of income. The longer the borrower stays in the loan the better for us and our income. Each of these borrowers signs documents that state they have read and understand everything, these are grown adults. Yes, it cam be confusing, however it is not rocket science and there is enough information on the web to learn ANYTHING. Please lets stop pointing fingers at brokers, lenders, appraisers, title companies, and secondary markets. Responsibility ultimately lies on the borrower.

The mortgage broker industry has an extremely powerful trade organization, the NAMB, that protects them. I can almost guarantee you that there will be no legislation limiting the broker industry. PERIOD. I personally feel there should be more selective requirements to enter broker industry, but there is not and will not be any time soon.

[SHELLY]

As a wholesale lender rep, I am amazed that there are some who still feel that the borrowers that sign and close on these type of loans are not to blame! Contrary to popular belief lenders do not 'target" borrowers to take their homes. Our business is based on borrowers making mortgage payments and providing us with a stream of income. The longer the borrower stays in the loan the better for us and our income. Each of these borrowers signs documents that state they have read and understand everything, these are grown adults. Yes, it cam be confusing, however it is not rocket science and there is enough information on the web to learn ANYTHING. Please lets stop pointing fingers at brokers, lenders, appraisers, title companies, and secondary markets. Responsibility ultimately lies on the borrower.

The mortgage broker industry has an extremely powerful trade organization, the NAMB, that protects them. I can almost guarantee you that there will be no legislation limiting the broker industry. PERIOD. I personally feel there should be more selective requirements to enter broker industry, but there is not and will not be any time soon.

Here's what an "industry insider" has to say about this situation:

Jim Stasiowski, a mortgage consultant for Countrywide Home Loans in Leesburg, said his company, like many nationwide, is dealing with a major spike in foreclosures.

"The worst of it is still yet to come," he said. He said Countrywide, the largest mortgage provider in the nation, has always had stringent lending practices. But some of Countrywide's packages are sold through correspondent lenders, which Countrywide has less control over.

He said one of the problems is there are no licensing requirements for mortgage brokers.

"You can be a shoe salesman one day and the next say, "I'm a mortgage broker." Unscrupulous lenders, he said, will lend money without thoroughly disclosing the risks to the borrower, promoting the low initial payments.

"To an uneducated buyer, these things sound great. ... The thing is -- it was too easy," said Stasiowski.

[SHELLY]

Mortgage brokers are paid to bring the least expensive money to the table.

And too many failed to do that job.


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[Mango]

Here's what an "industry insider" has to say about this situation:

Jim Stasiowski, a mortgage consultant for Countrywide Home Loans in Leesburg, said his company, like many nationwide, is dealing with a major spike in foreclosures.

"The worst of it is still yet to come," he said. He said Countrywide, the largest mortgage provider in the nation, has always had stringent lending practices. But some of Countrywide's packages are sold through correspondent lenders, which Countrywide has less control over.

He said one of the problems is there are no licensing requirements for mortgage brokers.

"You can be a shoe salesman one day and the next say, "I'm a mortgage broker." Unscrupulous lenders, he said, will lend money without thoroughly disclosing the risks to the borrower, promoting the low initial payments.

"To an uneducated buyer, these things sound great. ... The thing is -- it was too easy," said Stasiowski.

Let's be clear here with terminology. One can not just go and open a mortgage broker by sticking a shingle outside. Each State has certain licensing requirements (trade experience, education and financial reqiuirements) to become a Broker/Lender. The term he should have used is Loan officer, an employee of a mortgage brokerage or Lender. Quite a few states do not have licensing requirements for loan officers, processors or underwriters. It's on the job training.

Secondly, a Mortgage Broker who corresponds with an entity for example like Countrywide, each loan is reviewed and given full approval by the Correspondent . The commitment Letters on printed on the Correspondent's Letterheads, not the Mortgage Broker.

Then you have Broker/Lenders or strictly Lenders. (Not to be confused with Correspondents, like Countrywide, Chase, HSBC.......)
These entities fund the loan on their warehouse line, then either 1) sell the loan on a flow basis, (one loan at a time with full approval from the Correspondent prior to closing) or on a bulk basis, which is a package of loans sold strictly if you have Lender status.

When they sell in a package (bulk) they are reporting to their warehouse lender and the Correspondent lender. if there is early default or early payoff, the Lender has to pay back the premium earned to the Correspondent and it also lowers their rating with their warehouse Lender. Further, the Correspondent can request additional loan docs and the Lender must provide it, or it will not fund the money into the warehouse line, so they do look at some of the loans in a bulk package since they have to do a Weighted Average (called selling on a WAC Basis) on the purchase.

You are quoting for your benefit a mortgage consultant? Not a Veep or higher level Executive? Sounds to me like someone who just became a shoe salesman and is now a mortgage consultant.
He sounds like a Countrywide puppet. You don't go spewing off this type of info without backing it with figures and proof. I would bet it's Countrywide's own retail loan officers who produced a fair amount of foreclosures themselves.

In response to the NAMB, I resent the comment from Aubbieone since it implies IMO that the NAMB is against any regulation. The NAMB is a powerful organization that yes, is obviously there to protect the interests of mortgage brokers like any trade organization, but if you have been in the business long enough, you would see that they also have large conferences nationwide with prominent Federal figures, State officials, Banking Department Compliance Heads etc. to continue education to Brokers by holding seminars, and keeping them apprised of the industry standards they wish to uphold and continue improving.

I am with certainty that the wholesale Lender Aubbieone works for is a member of the NAMB as this is what all Wholesale Lenders do is support this organization at trade shows, but if you step outside your booth, and attended some of the educational seminars, you would see it is quite a bit more than a self protecting entity as you have made it sound. And I have 20 years experience in this business, have served on my local Boards of my State and represented them at the NAMB functions nationwide, so there isn't anything you can tell me that I don't know already.

Yes, IMO, there should be more stringent regulations for becoming a loan officer, but note, a loan officer is ultimately the responsibility of the Mortgage Broker, and their actions can greatly impact a Brokerage negatively if they are not monitored by their employer.

I personally have never hired an LO who didn't have at least 3 years experience and in my State, we have to have a full FBI check before we can hire them and they are listed and registered with the Banking Dept. as they are not allowed to be employed by multiple employers as well.

[spinDrAtl]

Well said, Mango. I will add a few additional points:

Many states DO require individual loan officers to be either licensed or to pass a state specific educational requirement. Many states DO require a full background check, fingerprinting, and so on.

For the ones that don't, the broker, not LO, is still licensed and ultimately responsible for the actions of the LO's. In Georgia, to work as a loan officer, you must be an employee and work under the supervision of the licensed broker.

The brokers/LO's do not approve anything. The lender's underwriters do. I can have a clean, full doc, high credit score package and if the underwriter doesn't like something, poof, no approval. I can have a low credit score, high dti loan and if the lender decides the risk/reward is acceptable, they approve it.

"You can be a shoe salesman one day and the next say, "I'm a mortgage broker."

This statement is blatantly false in many states, except for the fact that you could say it in a bar and maybe try to impress someone but that is soooooo 2004-2005.