Confessions of a subprime mortgage broker

[Elliott]

Bob Brinkers Money Talk had a former subprime MB.
3-4% loan fees. If you don't get value you just
find another appraiser. He thought realtors were as
bad as MB. It was all about closing the deal.
Regulation? There was none. Rating companies
blew it too.

 

[Mike Boyd]

3-4% fees? That would be from nice MBs only. I know one MB who would not bother with a deal if he could not make a minimum of $10,000.

Well, I guess 4% would be $10,000 on a $250,000 loan.

 

[moh malekpour]

The confession is 3 years late. The whistle should be blown 3 years ago when we were blowing whistles here in this forum but no body was listening to us. A whistleblowing from an insider 3 years ago could be more effective but no body wanted to rock the boat at that time. Now everyone is whistleblower but the horses are out and the barns are empty.
I believe some realtors were worse than MBs because they were who initiated this mess and lured the buyers and manipulated the market.

 

[Kevin Mc]

Day late, dollar short. I only hope he lost everything.

 

[Mike Phillips]

The confession is 3 years late. The whistle should be blown 3 years ago when we were blowing whistles here in this forum but no body was listening to us. A whistleblowing from an insider 3 years ago could be more effective but no body wanted to rock the boat at that time. Now everyone is whistleblower but the horses are out and the barns are empty.
I believe some realtors were worse than MBs because they were who initiated this mess and lured the buyers and manipulated the market.

Yeah but...let's remember the realtors are, by law, required to act in the best interests of the seller, not the borrower/buyer OR the lender. That means getting the hightest price for the property possible - the highest cash proceeds possible in the pocket of the seller at closing - LEGALLY. Furthermore, realtors do it openly and notoriously - it is no secret to any party to the transacion that the realtor works for the seller. That is what I want from a realtor and I expect them to act aggressively and legally in MY best interest.

There are supposed to be safeguards in the system that prevent realtors from selling homes at inflated prices - we both know what they are.

Comments have been made regarding us "seeing this coming." Sure we did. But did we explain in our neighborhood/market area comments, say about 10/05, that selling prices were being bid up to extermely high levels and a significant reversal was likely? I think we both know the answer to that question.

Did TAF see it coming? How about the AI? How about Fannie/Freddie? Do you recall hearing any guidance, words of caution, any suggestion that appraisers should be taking a hard look at their respective markets and assessing (and communicating) the potential for a significant reversal from any of those groups?

Nope. Real hard to get people's attention when they are counting their money. S*** happens. The safeguards broke down. Low barriers to entry and a lack of enforcement in the mortgage lending AND appraisal vocations created this mess.

 

[Bama Bayou]

Yeah but...let's remember the realtors are, by law, required to act in the best interests of the seller, not the borrower/buyer OR the lender. That means getting the hightest price for the property possible - the highest cash proceeds possible in the pocket of the seller at closing - LEGALLY. Furthermore, realtors do it openly and notoriously - it is no secret to any party to the transacion that the realtor works for the seller. That is what I want from a realtor and I expect them to act aggressively and legally in MY best interest.

There are supposed to be safeguards in the system that prevent realtors from selling homes at inflated prices - we both know what they are.

Comments have been made regarding us "seeing this coming." Sure we did. But did we explain in our neighborhood/market area comments, say about 10/05, that selling prices were being bid up to extermely high levels and a significant reversal was likely? I think we both know the answer to that question.

Did TAF see it coming? How about the AI? How about Fannie/Freddie? Do you recall hearing any guidance, words of caution, any suggestion that appraisers should be taking a hard look at their respective markets and assessing (and communicating) the potential for a significant reversal from any of those groups?

Nope. Real hard to get people's attention when they are counting their money. S*** happens. The safeguards broke down. Low barriers to entry and a lack of enforcement in the mortgage lending AND appraisal vocations created this mess.

By bold. This is not true in my state and I don't think any others, but I may be wrong. In AL you can represent the buyer or seller as an exlusive agent. I have represented several buyers where I was contractually obligated to act in their best interest. Many buyers are represented by exclusive buyer agents who do not take listings.

 

[Dirty Harry]

I'm sure Mike was referring to the seller's agent.

But any way you cut the cake, realtors were in the thick of it in all aspects of the market. Huge numbers of realtor owned flips went through the market and are still on the market. Even some of them got caught with their pants down and are paying the price.

The market will go where the market will go. The only thing we can help prevent is the actual fraud when we discover it. By reporting it when we see it happen and refusing to be a part of it in any way, shape or form.

Ethics can not be taught, it is part of the moral character of a person.

Remember if you don't stand for something, you'll fall for anything.

 

[moh malekpour]

I'm sure Mike was referring to the seller's agent.

Even seller’s agents have fiduciary duty to the buyer if that broker found the buyer and if another broker found the buyer, that broker also has a fiduciary responsibility to the buyer. It means that those brokers who are paid by the seller’s commission to find a willing and able buyer need to be 100% honest and truthful to the buyer even though if they are not charging the buyer any money and have no contractual agreement with the buyer. If the property is listed overpriced and the broker knows it and the buyer wants to buy it, the broker has a fiduciary duty to disclose it to the buyer and let the buyer to make the decision.

 

[Wayne Tomlinson]

When the buyer broker wave first began, I felt that sooner of later there would be a lot of brokers who looked fiirst to the larger sale/commission instead of the buyers well being.

I expect that before all the smoke settles, there will be a lot of suits against brokers and especially the buyer-brokers.

I can't remember a single case where I thought that the buyer broker advised a client to buy the cheaper home that fit his circumstances best.

Can you?

Wayne Tomlinson

 

[Richard Carlsen]

Yeah but...let's remember the Realtors are, by law, required to act in the best interests of the seller, not the borrower/buyer OR the lender. That means getting the highest price for the property possible - the highest cash proceeds possible in the pocket of the seller at closing - LEGALLY. Furthermore, Realtors do it openly and notoriously - it is no secret to any party to the transaction that the Realtor works for the seller. That is what I want from a Realtor and I expect them to act aggressively and legally in MY best interest.

There are supposed to be safeguards in the system that prevent Realtors from selling homes at inflated prices - we both know what they are.

Mike
You obviously have never seen a purchase agreement before. Let me explain what it is. It is a document in which both parties to a real estate transaction agree to the price and terms that will result in the real estate being conveyed from one party (herein called the Seller) to the other party (herein called the Buyer). These two parties, the Buyer and the Seller enter into this agreement of their own free will, act and deed. Nobody forces them to enter this agreement. Nobody signs the agreement for them without their knowledge and authorization. In short, they do it based on their own decision and volition. They alone are responsible for the sales price and terms to which they agree. If they do not like the asking price, they are under no obligation to enter into the agreement. In short, the Buyer is responsible for agreeing to pay the price that is agreed to.

I get damn sick and tired of people blaming brokers for high sales prices. Buyers and Sellers are big people; responsible for their own actions. The agreed price is their doing and is not the fault of the broker.

A broker cannot make a buyer pay any more than a buyer wants to pay and is willing to pay.

Let's knock off this ragging on brokers about being at fault for high real estate sale prices for a while shall we.