Clinton Mortgage Reforms More Pandering Than Problem Solving
Mortgage Insider » Mortgage News » Clinton Mortgage Reforms More Pandering Than Problem Solving
Presidential candidate Hillary Clinton unveiled her “mortgage reforms” on the campaign trail yesterday. You won’t be surprised to hear they are more pandering than problem solving. Her rhetoric was emotionally charged placing the blame specifically and solely at the doorstep of the mortgage brokers. No mention was made of Wall Street mortgage investors, wholesale lenders, retail mortgage divisions of home builders, or big banks.
Mortgage Brokers Get the Blame
Mrs. Clinton said in a report on Financial Times website, FT.com:
“We need to put an end to fly-by-night mortgage brokers peddling loans to unqualified applicants based on inflated appraisals,” she said. “We need to help those facing the pain of foreclosure. We need to secure the market place and put reforms in place right now.”
Of course, the home builder banks peddled their share, Countrywide peddled their share, as did Washington Mutual and Bank of America. It is estimated now with effective bank marketing over the last few years, broker market penetration is down, falling from 75% 10 years ago to roughly 50% today.
So with only 50% of the retail market, why is Mrs. Clinton finger-pointing only at mortgage brokers?
PAC Money Talks
It’s no coincidence Wall Street, home builder banks, and retail depositor banks get left out of Mrs. Clinton’s diatribe. The 3 lobbies that protect and promote those interests are in the Top 5 PAC campaign contributors in the last 6 Federal election cycles. Millions of dollars spread around to both parties insures when you as a politician speak ill of the mortgage industry, “broker” is what’s said.
The mortgage broker lobby, National Association of Mortgage Brokers, on the other hand, contributes so little money making them inconsequential and impotent when it comes to defending it’s own.
Don’t Blame the Waiter!
This attack on the mortgage brokers is like blaming the waiter for a bad steak. The waiter only takes the order. He didn’t buy the beef or cook it. Sure in this analogy, the waiter could screw up the order, scribble down rare when the customer wanted well done, but here that doesn’t apply since mortgage customers wanted easy money cheap and they got it.
If a politician really wanted to reform the mortgage industry instead of just pander to voters a more courageous plan would need implementing and it would mean taking on the biggest PACs in the country. So don’t look for it anytime soon.
When a Reform is Not a Reform
Mrs. Clinton’s so-called reforms are:
1. New disclosures stating fees in plain language with a full disclosure of monthly tax and insurance
2. Banning prepayment penalties on all home mortgages
These are basically subprime mortgage reforms since A-paper conventional loans fully disclose taxes and insurance, and have no prepayment penalties. Subprime mortgages typically do have prepayment penalties and are virtually always sold as “no escrow” loans…so disclosure of escrow items (eg. taxes and insurance) are not required.
Of the 14 million homes sold in the last 3 years, 7 million home mortgage customers “ordered” adjustable rate, subprime loans which are the cause of the current crisis Mrs. Clinton wants to fix.
The customer wanted this particular “steak”. So Wall Street bought the beef, the wholesale lenders cooked it, and the mortgage brokers took the order.
But remember, it wouldn’t have even been on the menu, if consumers didn’t want (or need) it.
Groucho Said It Best
The perfect quote to describe Mrs. Clinton’s mortgage reforms…
“Politics is the art of looking for trouble, finding it,
misdiagnosing it and then misapplying the wrong remedies.”
- Groucho Marx
You said it, Groucho!
Author: The Mortgage Insider
Date: August 8, 2007
Tags by Post Foreclosure Issues, Hillary Clinton, Mortgage News, Mortgage Reforms, Mortgage Tips, Subprime Mortgages
Technorati Foreclosure Issues, Hillary Clinton, Mortgage News, Mortgage Reforms, Mortgage Tips, Subprime Mortgages
Our Free Quote Service
Get 4 quotes (and only 4) from the nations best mortgage providers using our free, secure, quote service.
Unlike other online services, ours has a built-in "security measure" via an independent verification service that contacts you by phone to insure it was, in fact, you wanting the quotes. (So you must include a phone number for verification) Once confirmed, your request is passed on to the providers who will send you their offers by email (so you must include a valid email too!).
You then pick the best offer!
All Posts In Category
$15000 Housing Tax Credit: Senate Adds Billions To Obama's Economic Recovery Bill
$700 Billion Bank Bailout: Emergency Economic Stabilization Act of 2008
Ambac Financial Group Inc Posts Deceiving Earnings Increase
Bad Loan Originators Are Coaching Borrowers and Agents to Commit Loan Fraud Everyday
Bailout Mentality Folly Highlighted By Fred Thompson Video
Bearish Outlook for Home Builder Stocks
Bush Caught Lying About Rate Freeze
Bush Speech: Creating A Phantom Crisis To Dupe Congress - Again!
Chrysler Financial - Mortgage Crisis Caused Credit Crunch Spreads To Autos
Clinton Mortgage Reforms More Pandering Than Problem Solving
Countrywide Home Loans Going Bankrupt-Possible, But Not Likely
Countrywide, Friends of Mozilo, and Obama
Deceptive Mortgage Advertisers Warned By FTC: Too Little Too Late
Discover Card - Mortgage Mess Spills Over
Don't let E-agent Get as Big as LendingTree!
Economic and Housing Recovery Starts Mid 2009
Hello Mortgage Shoppers...you've come to the right place!
Home Mortgage Advertisers Lie...Especially About Closing Costs
Housing Assistance Bill Passes Senate
Housing Crisis and Unemployment Make Recession Inevitable
Housing Economic Recovery Act of 2008 No Help For Consumers
Housing Starts, Building Permits, and Consumer Prices Down (Video)
Hybrid Adjustable Rate Mortgage Recasting Will Cripple The Housing Market
IndyMac Bancorp Bankruptcy Filed - Thanks Senator Schumer!
Joe Grano Calls For 50 Year Mortgage Solution
Larry Kudlow Is Dead Wrong
LEH Stock Falls On Mortgage Risk (Video)
Lehman Brothers Bankruptcy Likely After Buyers Shunned By Feds
McCain Houses - Obama Calls Opponent Out of Touch
Merrill Lynch Mulit-Billion Dollar Subprime Mortgage Write-off Biggest Hit Yet
Monthly NC Unemployment Statistics Are Misleading
Most Advice On Picking An Agent Misses the Mark
National Debt Raised In Housing Bill $800 Billion
New Home Builder Mortgage Companies Scam Home Buyers Daily
New Mortgage Bill Will Turn FHA Into Subprime Dumping Ground
Predatory Lending Uncovered By Consumer Groups
Senate Bailout Bill Passes - Goes To House Monday (Video)
Senate Banking Committee Balks At Bailout
Subprime and Bad Credit Mortgage Lenders: Are They Responsible for the Subprime Meltdown?
Subprime Mortgage Losses Hammer The Stock Market
Subprime Mortgage Meltdown Explained From The Hedge Fund Perspective
Subprime Mortgage Meltdown Goes Global- Dow Plummets
The Mortgage Insider Interviewed For Article Critical of No Cost Mortgage Advertisers
The Mortgage Insider Joining Denver Blogging Panel
The Mortgage Meltdown Has Only Just Begun
The Word "Mortgage" in the Media Always Means Something Negative
Unemployment Rate Threatens Mortgage And Housing Markets
US GDP and Jobless Data Bad News For Homeowners
Washington Mutual Appraisal Scandal
Wholesale Lender Email Reveals The Yield Spread Premium Lie!
Reader Comments
How To Use Our Comment Section:
1. To comment on the article or post: Simply cursor down to the bottom and add your comment in the box, hit "Save". After moderation, your comment will appear next chronologically.
2. To comment on a comment (not on the post) or what is called a "nested" comment: Hit the "Reply" link at the bottom of the comment you'd like to reply to. A new comment box appears, you can add your comment to the box, hit save. After moderation, your comment will appear "nested" under the selected comment.
3. Do Not Use ALL CAPS. Use "Real" Names, No Keywords. Do Not Put Contact Info (ie. phone numbers, email addresses, etc.) In Comment Text.
Rob
I agree with Mike’s comments to a certain degree – we as loan originators and mortgage brokers have to be the financial gatekeepers and do the right thing. By the same token, for the short time I have been in this business some people on the street believe they are smart and just as savvy in trying to get over and do the wrong thing as far as the mortgage process as well because I have ran into some these folks already. It’starts with the loan originator and/or the mortgage broker on the front end but like you and Terri have said if the guys on the back end such as Wall Street did not create these bad loan products we wouldn’t have this problem at this degree. Also like you and Terri have said about the public’s request for these type of loan products being made available to them. So who do you really blame? I say blame everyone who had their hands in the cookie jar and got caught. If the big banks gets rid of the little mortgage broker the problem will only get worst for the masses of people. The reason why I came into this business is to help clean up some of this mess and I am already being criticize for trying to do the right thing.
Rob, some people don’t care if they get screwed over because they are trying to find a way to over on someone themselves. I had this one couple who openly admitted they did not mind paying 12% interest rate with a 3 year prepayment penalty. I politely told them I could not help them because they wanted to do some other shady stuff. So some people out there think they know what they are doing and messing themselves up in the process and some folks just don’t give a ****.
Rob,
Sorry but I don’t share your view that the mortgage broker is like a waiter who only takes the order.
A major function of what the MB is supposed to do as part of their compensation is to educate the consumer on what their options are and help them select the best loan program for their situation. This is hardly akin to just taking an order.
I also think it is high time to stop passing the blame onto the consumer and accept the fact, it is the loan originators and the companies they work with and for that are mainly responsible for the mess this industry is in.
The average guy on the street hasn’t got a clue how this business works and gets slaughtered financially for it. Strong reform is needed along with severe penalties for those that have abused the system for their own personal gains. Most are against this, because most are part of the problem and would like to keep the status quo. Mortgage broker or mortgage banker, it makes no difference.
Hey Rob and Terri
You guys hit nail on it’s head. Senator Clinton comes out and bash the little mortgage brokers for wrongdoing and BusinessWeek comes right back and say the same thing you have talked about on previous podcast shows about these corrupt homebuilders and their one stop shops for homebuyers. I’m glad I found you guys – believe it or not – through Lenox Financial which is headquartered right here in Atlanta. I hate that stupid commercial they have. I can’t wait to start my own business. Thanks guys. Keep up the great work for us little people in the mortgage business.