How are the Mortgage Brokers escaping unscathed?

[sdrealtor]

While all the venom seems to be directed at realtors, I often wonder how the mortgage brokers are not getting scorched. Every time I get in my car I hear at least 3 or 4 ads touting 1.5% start rates, 100 to 120% financing, interest only loans….no credit, no money….NOOOOO PROBLEM! or how about those clowns at Ipayone. High prices got you down…we’ll rebate you 1% of the purchase price so you can get into a home you really can’t afford.

It seems to be the mortgage industry is more responsible for this mess than anyone.

[lendingbubblecontinues]

I concur. Much of the blame lies at the feet of the lending industry. Hence my name, which is “lendingbubblecontinues”.

However…some of the venom comes from things like the Century 21 ad which I posted a link to in another forum topic. Additionally, some of the venom comes from the constant pounding of the “no problem here” shills that the CAR and NAR continue to trot out as “experts”.

Finally, Cendant’s (Century 21’s parent) own Richard Smith, I believe, taunted us last summer in the USAToday with an article about how the frickin’ laws of supply and demand and how there was NO housing bubble.

I wouldn’t be so upset with the real estate business if it weren’t so inherently dishonest. Don’t take it personally….I feel the same way about the investment banks on Wall Street, the NASD (the fox in charge of the hen-house during the NASDAQ bubble), and other industries as well.

I have friends who are successful real estate agents, who have helped us buy and sell our houses. They don’t get a free pass from me, either. Like you have said before…question everything. Well, too often, your brethren in the business don’t question anything.

I truly wish you well. You and I are both in our thirties..who knows what we’ll be doing in 10 years? 20 years? Someday we will all get back to thinking of homes as a f’ing place to live and we’ll laugh about how meaningless time spent posting on a blog in 2006 really was after all.

[lendingbubblecontinues]

Here is what Richard Smith said last September:

“Laws of supply, demand still rule housing market

It is ridiculous for USA TODAY to suggest that, for the past several years, home prices have surged “in part because developers, real estate brokers and mortgage lenders have spread the myth that (home prices) have nowhere to go but up.” As any college freshman taking Economics 101 this fall would tell you, prices will rise when demand is strong and supply is tight (Dot-com bust echoes in nation’s housing boom, Our view, Real estate prices debate, Aug. 25).
Allow me to burst your bubble. We enjoy a free market economy in the USA, and the housing marketplace is highly efficient from a pricing perspective precisely because laws of supply and demand rule the day. The United States is in the midst of a 13-year housing boom with home prices rising each year because the fundamentals that support the business are strong, not because a group of industry insiders got together to dupe the home-buying public.

As a matter of fact, average home prices in the USA have risen every single year since 1950, even through eight recognized recessions. From 1978 to 1981, mortgage interest rates soared from 9% to more than 18%, and although the volume of homes sold during those years went down, home prices still continued to rise. The reality is that when the housing market cools, people don’t sell off their homes in a panic and move into a tent. They just don’t move.

It is irresponsible journalism to compare today’s housing boom with the dot-com bubble. Real estate ownership is a long-term investment secured by a fixed, tangible asset and not a new-economy fabrication being touted by stockbrokers, analysts and investment bankers.

Stick to reporting the news and stop trying to scare the U.S. public, nearly 70% of whom just happen to be homeowners.

Richard A. Smith

Chairman & CEO

Real Estate Services Division

Cendant Corp.

Parsippany, N.J.”

http://www.usatoday.com/news/opinion/2005-09-06-letter-housing_x.htm

[sdrealtor]

Not that it matters but I’m in my 40’s already, plan on being exactly where I am today in 20 years (albeit only 6 years from paying off my 30 yr fixed rate mortgage at 5.5%) never stopped thinking about my house as anything other than a place to live and already laugh about the time we spend on these blogs.

[lendingbubblecontinues]

I’m sorry, I could have sworn you said you were 30 in another forum topic here.

[sdrealtor]

I pretty much agree with most of what he said. Excess demand pushed prices up and excess supply will drag them back down. When the market cools most people will stay where they are (albeit some begrudgingly). I do see some parallels to the dot com bubble though.

[North County Jim]

I agree with you. Most likely it’s because realtors are so visible. With signage, car placards, etc., this is what the public sees. They only hear Barney Aldrich and his ilk.

While realtors may be guilty of cheerleading in the face of an impending downturn, this does not compare to the damage caused by mortgage brokers steering their own clients into toxic loans for an extra point on the back end.

We’ll see how it all shakes out. If this goes extremely sour, the public will want scalps.

[powayseller]

Our friend in Boston said he was in his 30’s.

[powayseller]

Smith left out inflation. Adjusted for inflation, home price has been cyclical, and more so in certain locales. Wages were rising fast in the 80s, as was inflation.

He also left out this: Exotic loans.

It really IS different this time.

[powayseller]

Excellent point. The housing bubble is caused by loose lending, which is just a byproduct of capitalism, and a lack of lending regulations to protect the public. The recent OCC regulations should have been put in place a long time ago.

Realtors market themselves by person, whereas lenders market themselves by company. That’s the difference, and that’s why someone gets mad at Eric Zoey the realtor vs. Ameriquest the company.

[LookoutBelow]

Just like a Bad Movie ! The actors take full responsibility for a movie that some hair brained director/producer has put together, but hey, the realtors have no skills, other than lies, talk and bad comps, although they like to refer to themselves as “Brain Surgeons” laughingly they are as necessarry as crotch crabs !

If you have something for sale that is priced fairly, you dont NEED to have anybody “sell” it for you, for the fair price, there are plenty of “buyers”.. only when your trying to gouge a “sucker” do you need some R.E. pimp to hype up your property. as a seller, you also can tell a chiseler to F…..Off if he trys to rip you off with his purchase offer, no silly realtors necessarry.

They all think they’re donald trump, what jerk he is, reality is cruel to those who over value their importance.

C230 MB’s, 2 cell phones, magnetic stickers on their cars, cheesy ads, over whitened teeth, they like to reference themselves as “professionals” Hah ! what ever happened to higher education (college) … Not necessarry for a realtor, hell, I know some that were landscapers before they got their psuedo license….yeah right ! Thats the requirements for a Realtor “professional” !

What a scam industry. Hahaaaa !

[Bugs]

There’s plenty of blame to go around. The realty agents, the mortgage brokers, the appraisers, the lending institutions and the government who is charged with regulating them have all succumbed to greed. Lest we forget, many of these buyers are not so pure, either.

“You can’t cheat an honest man”.

I have personally seen a lot of deals where almost every party involved in the transaction is being dishonest, and that includes the borrower. You can’t get an $800k CLTV mortgage on your $70k salary without doing something dishonest.

Ironically, I think the group that shares the least “blame” for our current trends are the realty agents. Their job is to be an advocate, which by definition means playing up the positive and playing down the negative. Their compensation is directly tied to the amount of the sale price, so it would not be inaccurate to say that the way the system is set up their loyalty is ultimately to the deal rather than to any of the principals. The only reasons they have for being at all concerned for their clients’ interests are because of legal liability and in order to garner more deals through repeat and referral business.

When times are good, neither of those two controls are of significance. There are lots of easy deals going around, and a rising market will cover all manner of sins that would make them vulnerable to legal liability. So except for any outright lies they may have told whilst advocating for their deals, they haven’t really done anything but facilitate the sellers’ greed.

The lies that it takes to do one of these outrageous deals generally get told by other people, starting with the buyer and including the mortgage originator and the appraiser and the loan underwriter. Inasmuch as the sole obligation of the appraiser and the underwriter is to observe and report the truth, and because they are the only ones whose compensation is not tied to the amount of the deal, it is their lies that do the most damage.

[sdrealtor]

That makes a little sense but what I hear is blanket condemnation of Realtors and very little of Lenders. I’m getting ready to sell a past clients house. I sold it to them 3 years ago and got them hooked up with a good lender that got them a decent loan despite some credit blemishes (5.5% 7/1 arm). He got laid off a few months ago and is moving to LA for a new job. When he got laid off he re’fied w/o callng me for a referral. He ended up with an option arm that has a 1.5% start rate but an 8% amortizing rate! That’s 2.5% higher than had and he has been in a neg am situation of $1,200/month on a 300K loan. He would have been better off taking a no cost HELOC from his local bank for 10K to get him through but that wouldnt have put a few grand in the lenders pocket. If I could get my hands on that lender I’d……….

BTW, I drive a 4 year old american made car that’s paid off, have never done any cheesy advertising, have 1 cell (not a Treo) that meets my communication needs, no stickers on my vehicle, a nice god given smile that’s never been whitened and I have considered my self a well educated professional in every job that I have held which included VP of Sales at publically traded company and Director Of Strategic Marketing at an organization w/ $400M of annual revenue.

There are plenty of Realtors that fit your description just like there are many (fill-in the blank with a race/religion/ethnic group) that fit stereotypes. If you choose to relie on stereotypes in judging ANYONE for ANY REASON you’ll get exactly what you deserve and not what you could have.

[Bugs]

The good thing about a market correction is that it invariably washes out the weakest links. You don’t judge how good someone is at what they do by the amount of money they made during the good times, you judge them for how well they do when times are tough. I daresay that anyone who has been in any of the real estate related occupations is untested until they make it all the way through an entire cycle. Thay can say what they want, but the truth is that they really don’t know and they really can’t prove.

[barnaby33]

Its the consumer stupid. Quit blaming realtors and mortgage brokers, they get paid to sell. They are deserving of a little venom, but not nearly so much as the people who use their servies. Quick lets shoot another messenger. Ultimately aren’t you responsible for understanding your financial situation?

Josh

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