Dear Mr. President (and Senate Banking Committee),
As a fourth generation mortgage banker. I love the fact that I have been responsible for over 10,000 homeowners. I feel so deeply about the real estate industry that I want to make you an offer. I would like to travel to Washington DC (by train of course, GO GREEN). I would like to spend 15 minutes or more with you, Mr. Dodd, Mr. Frank, and someone from Fannie Mae, Freddie Mac and the FHA. I feel as though the Fannie Mae and Freddie Mac representatives should make themselves available simple because they now work for me. I mean my tax dollars are paying their salary. They owe me their time. I will buy lunch for the entire group. Before we set a time and place let me tell you my agenda. I want to make sure we discuss everything in the short time we have. I know you are all very busy.
- The new GFE
- Licensing
- Short Sales
- Sales from Fannie Mae and Freddie Mac
First, the “New GFE”. Who decided that not breaking down the borrowers closing costs was more “transparent” than the old GFE? Who thought that the mortgage person should be accountable for everyone’s fees? I absolutely agree that changes were needed (see the article in the Philadelphia Inquirer). But seriously no one involved in either real estate or financing will agree that the “new GFE” is transparent. I am convinced that the same person who thought I needed to wear a helmet on my bicycle but not on my motorcycle came up with some of the new rules. Because we have limited time so I can only bring up a few items. The mortgage company needs to guarantee the title companies charges. The mortgage company is responsible to determine the amount of the transfer tax that the borrower is paying. Please Mr. President what would happen if we made every member of congress responsible for every cost overrun on the budget. WOW! No one would ever run for congress. It’s a start.
Licensing is an interesting topic. Again I agree that we should all be licensed (see article in Philadelphia Inquirer). But all should include even those who work for the very bank I also own. Yes, again my tax dollars are being used to prop up the very institutions that not only caused the crisis but also refuse to lend our way out of the crisis. I have spent thousands of dollars, had numerous background tests, several hand scans, 15 sets of fingerprints (5 different sets for New York alone), 20 hours of education for the federal test, 8 hours for Florida, 3 for Pennsylvania, and 4 for New Jersey (38 minutes on line). The federal test only had 13 of 100 questions on “ethics”. Meanwhile, if I chose to work for a bank I need to do nothing. I have been able to use this as a marketing tool however. When asked what is the difference between the banker down the street and me I answer that I passed my test, while I can only assume the banker did not.
Short sales. Now there’s an oxymoron. There is nothing short about them at all. The idea seems so good. The homeowner is just a bit under water so he can make a deal with my bank to sell for a little less than is owed. In all fairness the house should be worth more with the owner in it than if they abandon it. What however is the advantage to the homeowner? He possibly will owe the shortfall and the time it takes the bank to say yes takes so long that what should be a shortfall becomes an avalanche. Again, we are entrusting the same banker that made the first bad decision to attempt to redeem himself. What is the banks incentive for the short sale? While they are marketing the home it is still a non performing asset on their books. If they foreclose it immediately comes off the balance sheet. Hence the oxymoron.
Fannie Mae and Freddie Mac selling a home are simply so rules laden that you must be joking. I recently represented a borrower whose real estate agent overlooked putting her husband on the agreement of sale. I ordered title for the borrower and added the husband to the title (I thought that they should have a choice to own their home together). Silly me. The Fannie Mae representative told me that they would not allow an additional owner. Just a curious question for one of my new employees (once again my tax dollars are paying for Fannie Mae to remain solvent) WHY DO YOU CARE? 48 hours prior to settlement the same representative expressed that as a condition of settlement I needed to provide a copy of the HUD 1. He needed to see the borrower’s costs. Once again WHY DO YOU CARE?
Well I am sure my time is up and you are wondering why I asked for someone from FHA to be here but had no FHA questions. The simple answer is I wanted the FHA here to say THANK YOU for trying to help the real estate community lead us out of the credit crisis. You have been the only customer friendly lending program alive for the past few years. We could probably sell more houses if the banks that buy these loans had less overlays beyond the FHA’s rules.
Mr. President, I am sure you care but please prove it. The economy needs people to own homes.
I just happen to stumble across your website and that has got to be one of the most honest and funniest articles I have read in a long time! I work at a small community bank and we have had nothing but trouble from the new GFE. However, I wish you would have added some comments regarding HVCC. I bet they would have been dead on and hilarious!
Thanks for writing such an fascinating post. I seem to read the same and it gets a bit old. Many thanks.