Blog with MAE Capital

As a current Branch Manager and a former Mortgage Bank owner I have seen sweeping changes in the mortgage industry in the last 2 years. At times it seems too much to keep up with, but as with anything we must. It seems the dissemination of information has slowed even with the internet, I see this as a simple fact that we in the industry have no idea what the government regulators are asking of us. This becomes more and more problematic as the government implements it’s new Consumer Finance Protection Bureau (CFPB concieved by Chis Dodd and Barney Frank). This is a brand new government agency that is costing the taxpayers Billions to regulate the brokerage houses on Wall Street and the mortgage industry as a whole. The problems arise from the “newness” of the agency and with no precedence being established every mortgage company in the country does not want to be the first on their radar as far as an audit as they would have no idea what they are looking for other than the simple fact of, is the client or borrower being protected by the private mortgage company. With no real precedence to go by all the good mortgage bankers in the country are really going overboard on compliance to the point where it becomes difficult for a borrower to obtain a home loan in today’s lending environment. Again the very existence of this new agency designed to protect the consumer is in fact hurting the consumer as lenders are running scared of the big bad government agency who has already touted to get those bad apples in our industry, with no guidance on which companies are the bad apples. As this haunts small private mortgage firms the biggest offenders are excluded from the scrutiny of this agency, the BIG BANKS. Yes amazingly as the Big Banks are the ones who inevitably are purchasing these loans and servicing these loans are excluded from the very agency designed to protect the consumer. This is another billion dollar government blunder, as the agency’s that existed prior in the industry to look after the consumer , the Department of Housing and Urban Development( HUD) and the Treasury Department , still exist and still have their same budgets in place with less responsibilities.

How does this affect me you ask? Well in simple terms of obtaining a mortgage today it has turned to the absurd. As a consumer it has always been buyer beware whether you purchase a pencil, a car, or a house, you had to do your research to figure out what is best for your needs. You have obtained several opinions on what is good and what is bad where you should shop and where not to shop, but when you do go to purchase that pencil or car or house does the merchant tell you how much they made on the sale of those or any products? No, but when you get a home loan today from an independent mortgage banker they have to do just that, tell you what their profit is. Although, it is very confusing to get to that in the myriad of paperwork that the lender has to provide you, but if you ask your loan officer he or she will tell you, the exception is if you go to a Bank to get your loan as the banking lobby is so large they have made themselves exempt from this practice. Furthermore, the CFPB is making the industry so scared to do anything that might help a consumer actually obtain a loan that the average consumer is being asked to provide items that have never been asked for and the lenders are having to make sure every date, signature, disclosure, document is signed and delivered in the proper time frames and nothing was missed thus is taking at least an extra week to get these audits done. The poor consumer has no idea what is going on and often feel that there are actual problems with their loan when the lender is only protecting their own selves not really the consumer at all. This occurs on every loan in today’s environment due to this new CFPB, help or hindrance the answer should be obvious.

I remember reading George Orwell’s book 1984 in 1979 and at the time I thought to myself that we as a society we would never let our Government take over all aspects of our lives and prohibit the will of the people, I guess I was wrong.