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Originally Posted by wiphan
You sound like a well educated, responsible fellow mortgage lender. All of your points are spot on. Fortunately I work for a responsible lender that chose not to offer option ARMs (probably the only responsible large lender in the industry). What amazes me is that recently I have heard of other lenders still offering mortgages that they should not be doing especially in times like today. Unfortunately there needs to be a ton of regulation especially against mortgage brokers and irresponsible institutions. I am never a fan of more regulation, but it needs to happen unfortunately. About 2 yrs ago we were joking asking when some one was going to offer a stated FICO loan.
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I work for a small bank and one of my duties (when we actually had money!) was risk assesment for a tiny set of portfolio products that we had along with cherry picking a select group of notes that we wanted to keep. let me tell you that when its your signature signing off on the risk, that pen gets a ton heavier. Needless to say, our portfolio products had guidelines that most lenders would just laugh at because they were so strict. Although even the clean loans weigh on banks during this liquidity crisis, at least they aren't actual losses.
Regulation needs to be tighter on the broker/lender level but at the same time they need not go overboard. I think the market is really doing the Fed's work in terms of regulation in the mortgage industry. How easy is it to cheat now? You want to use a lease? Fine...show us the cancelled rent check and demonstrate equity. You want to inflate an appraisal? Fine...we are going to run a corelogic and then perhaps a review before we buy your note. The market is dictating all of this. The feds havent done anything yet. But you probably have a point in terms of weeding out the bad apples.
I dont think Option Arms are necessarily a bad product but again, there is only a tiny segment of the population that it could work well for. Option Arms were indeed the crack cocaine in recent years because they were profitable to every rung of the ladder. Now? You should see the execution on Option Arms. No one wants them. The government doesnt need to ban them because the market already has. That, along with low documentation and high LTV's. The market doesnt want them thus you cant sell them.
My God...you republicans out there are probably having a heart attack. Maybe this liberal, democrat wench might have a few conservative ideas yet.
The stated Fico thing is hilarious. By saying that you didnt offer any neg am, it is easy to figure who you work for. The only risks you took were on seconds and community housing iniatives that the govt forced your hand on.