- Feb 7, 2006
- Professional Status
- Certified Residential Appraiser
It just points out the fundamental problem. You have untrained, unregulated brokers pushing commision-based products. Their paychecks varied depending on what they could get away with.
The borrowers either by design or by stupidity gave falsified income statements to qualify for these products. How many of these borrowers are now saying "we didn't know what Stated Income meant" or "we didn't understand the teaser rate" How disingenuous can they be.
Once the loan was closed, the broker sold it off in a hurry. He has no ties to the mess he's created. This junk was packaged into a bundle called a Collateralized Debt Obligation or Structured Investment Vehicle. Sounds solid enough....but there was no way to tell the exact percentage of solid loans to absolute junk. Rating Agencies seemed to just rubber stamp the things.
There's certainly enough blame to go around. I just hope that the appraiser doesn't take the brunt of it.
what's to train? A phone monkey and a computer form. They learn pretty fast. I mean an honest person wouldn't have ever thought of fabricating someone's income statement to include money they didn't make, or a host of other frauds they performed. "Training" has nothing to do with it. "Ethics" and severe "punishment" meted out to miscreants will improve the mortgage profession... As my daddy used to say, "You can teach an old dog to roll over and play dead if you hit him with big enough two by four."...of course, that is a permanent fix and exactly what we need.untrained, unregulated
The Fed, rightfully, is coming under fire for not requiring income verification before allowing these loans be made and Standard & Poor, et al are catching it, again rightfully, for giving these exotic derivitives and hedges "AAA" ratings when they are at best junk bonds.