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ucodegen.
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August 4, 2009 at 9:41 PM #441345August 4, 2009 at 10:57 PM #441384
CA renter
Participant[quote=patientrenter]”One of the better suggested reforms I’ve heard would require loan originators (who often act as servicers, as well) keep some skin in the game on the mortgage for a period of x-years after the loan is made. If the underwriters had to hold the loan longer, they’d underwrite more conservatively.”
If it would cause home loans to be underwritten more conservatively, then it won’t happen.[/quote]
——————-Unless they were required to have their own, personal money involved, it won’t make a difference.
Clawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
Even if they withhold some portion of the commission, as long as they make **any** money on the front end, they will push through as many loans as possible.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
Yes, this will probably mean fewer loans and higher rates, which is exactly what we need in order to avoid another “foreclosure crisis.”
August 4, 2009 at 10:57 PM #441052Participant[quote=patientrenter]”One of the better suggested reforms I’ve heard would require loan originators (who often act as servicers, as well) keep some skin in the game on the mortgage for a period of x-years after the loan is made. If the underwriters had to hold the loan longer, they’d underwrite more conservatively.”
If it would cause home loans to be underwritten more conservatively, then it won’t happen.[/quote]
——————-Unless they were required to have their own, personal money involved, it won’t make a difference.
Clawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
Even if they withhold some portion of the commission, as long as they make **any** money on the front end, they will push through as many loans as possible.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
Yes, this will probably mean fewer loans and higher rates, which is exactly what we need in order to avoid another “foreclosure crisis.”
August 4, 2009 at 10:57 PM #441455Participant[quote=patientrenter]”One of the better suggested reforms I’ve heard would require loan originators (who often act as servicers, as well) keep some skin in the game on the mortgage for a period of x-years after the loan is made. If the underwriters had to hold the loan longer, they’d underwrite more conservatively.”
If it would cause home loans to be underwritten more conservatively, then it won’t happen.[/quote]
——————-Unless they were required to have their own, personal money involved, it won’t make a difference.
Clawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
Even if they withhold some portion of the commission, as long as they make **any** money on the front end, they will push through as many loans as possible.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
Yes, this will probably mean fewer loans and higher rates, which is exactly what we need in order to avoid another “foreclosure crisis.”
August 4, 2009 at 10:57 PM #441626Participant[quote=patientrenter]”One of the better suggested reforms I’ve heard would require loan originators (who often act as servicers, as well) keep some skin in the game on the mortgage for a period of x-years after the loan is made. If the underwriters had to hold the loan longer, they’d underwrite more conservatively.”
If it would cause home loans to be underwritten more conservatively, then it won’t happen.[/quote]
——————-Unless they were required to have their own, personal money involved, it won’t make a difference.
Clawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
Even if they withhold some portion of the commission, as long as they make **any** money on the front end, they will push through as many loans as possible.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
Yes, this will probably mean fewer loans and higher rates, which is exactly what we need in order to avoid another “foreclosure crisis.”
August 4, 2009 at 10:57 PM #440853Participant[quote=patientrenter]”One of the better suggested reforms I’ve heard would require loan originators (who often act as servicers, as well) keep some skin in the game on the mortgage for a period of x-years after the loan is made. If the underwriters had to hold the loan longer, they’d underwrite more conservatively.”
If it would cause home loans to be underwritten more conservatively, then it won’t happen.[/quote]
——————-Unless they were required to have their own, personal money involved, it won’t make a difference.
Clawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
Even if they withhold some portion of the commission, as long as they make **any** money on the front end, they will push through as many loans as possible.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
Yes, this will probably mean fewer loans and higher rates, which is exactly what we need in order to avoid another “foreclosure crisis.”
August 4, 2009 at 11:54 PM #441067ucodegen
ParticipantClawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
I think you misunderstand what is meant by “keeping skin in the game”. What it really means is that the originators will not be able to completely sell of the structured debt/CDO. The originators would have to retain a percentage for a specific number of years (probably past child death period – about 3 years). It would be possible to structure it such that any gain they would have from origination etc would be offset by the losses in the retained portion should a specified percentage of loans go bad. Going out of business would not give them a way around the losses. If I originate $100mil on loans and the origination fees are $5mil and I have to retain 20% of loans I originate ($20mil).. if 25% of the loans go bad, I am out my profit that I made from originations because my retained portion lost 25% or $5mil.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
This would mean that banks would rule almost all of the originations.. and they were part of the problem. In several cases, the banks collateralized loans that they felt were questionable and sold them off as investments while retaining the best loans.
I do know that the originators would really get upset about having to ‘retain’ a percentage of loans that they originate. They just want to originate, turn and burn. For the next cycle of originations, they would need to find additional $20mil to cover the amount that would have been recovered on the sale of all of the CDO.
August 4, 2009 at 11:54 PM #441399ParticipantClawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
I think you misunderstand what is meant by “keeping skin in the game”. What it really means is that the originators will not be able to completely sell of the structured debt/CDO. The originators would have to retain a percentage for a specific number of years (probably past child death period – about 3 years). It would be possible to structure it such that any gain they would have from origination etc would be offset by the losses in the retained portion should a specified percentage of loans go bad. Going out of business would not give them a way around the losses. If I originate $100mil on loans and the origination fees are $5mil and I have to retain 20% of loans I originate ($20mil).. if 25% of the loans go bad, I am out my profit that I made from originations because my retained portion lost 25% or $5mil.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
This would mean that banks would rule almost all of the originations.. and they were part of the problem. In several cases, the banks collateralized loans that they felt were questionable and sold them off as investments while retaining the best loans.
I do know that the originators would really get upset about having to ‘retain’ a percentage of loans that they originate. They just want to originate, turn and burn. For the next cycle of originations, they would need to find additional $20mil to cover the amount that would have been recovered on the sale of all of the CDO.
August 4, 2009 at 11:54 PM #440868ParticipantClawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
I think you misunderstand what is meant by “keeping skin in the game”. What it really means is that the originators will not be able to completely sell of the structured debt/CDO. The originators would have to retain a percentage for a specific number of years (probably past child death period – about 3 years). It would be possible to structure it such that any gain they would have from origination etc would be offset by the losses in the retained portion should a specified percentage of loans go bad. Going out of business would not give them a way around the losses. If I originate $100mil on loans and the origination fees are $5mil and I have to retain 20% of loans I originate ($20mil).. if 25% of the loans go bad, I am out my profit that I made from originations because my retained portion lost 25% or $5mil.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
This would mean that banks would rule almost all of the originations.. and they were part of the problem. In several cases, the banks collateralized loans that they felt were questionable and sold them off as investments while retaining the best loans.
I do know that the originators would really get upset about having to ‘retain’ a percentage of loans that they originate. They just want to originate, turn and burn. For the next cycle of originations, they would need to find additional $20mil to cover the amount that would have been recovered on the sale of all of the CDO.
August 4, 2009 at 11:54 PM #441470ParticipantClawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
I think you misunderstand what is meant by “keeping skin in the game”. What it really means is that the originators will not be able to completely sell of the structured debt/CDO. The originators would have to retain a percentage for a specific number of years (probably past child death period – about 3 years). It would be possible to structure it such that any gain they would have from origination etc would be offset by the losses in the retained portion should a specified percentage of loans go bad. Going out of business would not give them a way around the losses. If I originate $100mil on loans and the origination fees are $5mil and I have to retain 20% of loans I originate ($20mil).. if 25% of the loans go bad, I am out my profit that I made from originations because my retained portion lost 25% or $5mil.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
This would mean that banks would rule almost all of the originations.. and they were part of the problem. In several cases, the banks collateralized loans that they felt were questionable and sold them off as investments while retaining the best loans.
I do know that the originators would really get upset about having to ‘retain’ a percentage of loans that they originate. They just want to originate, turn and burn. For the next cycle of originations, they would need to find additional $20mil to cover the amount that would have been recovered on the sale of all of the CDO.
August 4, 2009 at 11:54 PM #441641ParticipantClawbacks and other forms of “keeping skin in the game” won’t work, because by the time the loan defaults, the originators/servicers will have made their money and can simply file BK or go out of business.
I think you misunderstand what is meant by “keeping skin in the game”. What it really means is that the originators will not be able to completely sell of the structured debt/CDO. The originators would have to retain a percentage for a specific number of years (probably past child death period – about 3 years). It would be possible to structure it such that any gain they would have from origination etc would be offset by the losses in the retained portion should a specified percentage of loans go bad. Going out of business would not give them a way around the losses. If I originate $100mil on loans and the origination fees are $5mil and I have to retain 20% of loans I originate ($20mil).. if 25% of the loans go bad, I am out my profit that I made from originations because my retained portion lost 25% or $5mil.
Quite frankly, I don’t think we should have originators or servicers in the process at all, and there should be full transparency from the origination point to the final lender. We should have one internet site where (final) lenders list their rates and product types, and customers can choose from there.
This would mean that banks would rule almost all of the originations.. and they were part of the problem. In several cases, the banks collateralized loans that they felt were questionable and sold them off as investments while retaining the best loans.
I do know that the originators would really get upset about having to ‘retain’ a percentage of loans that they originate. They just want to originate, turn and burn. For the next cycle of originations, they would need to find additional $20mil to cover the amount that would have been recovered on the sale of all of the CDO.
August 5, 2009 at 12:16 AM #441082ParticipantYou are correct. If the originators were mandated to keep a certain portion on their books (the potential losses on that portion being higher than the origination fees), then that would seem to work, and that’s why I said it had to be their own money.
The question would be…how do we determine whether or not it’s the originator’s (executive’s and employees of the origination company) personal money, or money they got from “investors”? If the money loaned on the retained portion comes from investors, but the origination fees go to the originator (executives and employees — with little of that money going back to the actual investors), then they will again be gambling with other people’s money, and will have no incentive to process good loans.
Not sure if that makes sense…
August 5, 2009 at 12:16 AM #440883ParticipantYou are correct. If the originators were mandated to keep a certain portion on their books (the potential losses on that portion being higher than the origination fees), then that would seem to work, and that’s why I said it had to be their own money.
The question would be…how do we determine whether or not it’s the originator’s (executive’s and employees of the origination company) personal money, or money they got from “investors”? If the money loaned on the retained portion comes from investors, but the origination fees go to the originator (executives and employees — with little of that money going back to the actual investors), then they will again be gambling with other people’s money, and will have no incentive to process good loans.
Not sure if that makes sense…
August 5, 2009 at 12:16 AM #441414ParticipantYou are correct. If the originators were mandated to keep a certain portion on their books (the potential losses on that portion being higher than the origination fees), then that would seem to work, and that’s why I said it had to be their own money.
The question would be…how do we determine whether or not it’s the originator’s (executive’s and employees of the origination company) personal money, or money they got from “investors”? If the money loaned on the retained portion comes from investors, but the origination fees go to the originator (executives and employees — with little of that money going back to the actual investors), then they will again be gambling with other people’s money, and will have no incentive to process good loans.
Not sure if that makes sense…
August 5, 2009 at 12:16 AM #441657ParticipantYou are correct. If the originators were mandated to keep a certain portion on their books (the potential losses on that portion being higher than the origination fees), then that would seem to work, and that’s why I said it had to be their own money.
The question would be…how do we determine whether or not it’s the originator’s (executive’s and employees of the origination company) personal money, or money they got from “investors”? If the money loaned on the retained portion comes from investors, but the origination fees go to the originator (executives and employees — with little of that money going back to the actual investors), then they will again be gambling with other people’s money, and will have no incentive to process good loans.
Not sure if that makes sense…
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