The mortgage industry has received much of the blame for the real estate bust over the past year-or three. There have been many re-writes of regulations to tighten the fraud and corruption as well as tightening of lending guidelines. This has created a huge shakedown in the industry and the exiting of many corrupt and criminal lenders out there.

 

With the ongoing and painful recession, the demise and decline of the mortgage industry has left many desperate people (loan officers) trying to maintain lifestyles beyond their current means. So, the fraud continues. Mortgage lenders are still known to inflate home values, borrowers’ incomes and document assets that are not there. The government and banking industry continue to create a system of checks and balances to reduce the fraudulent activity, which they are. Quite obviously, it is working, because it is now much harder to qualify for a mortgage, it takes much longer to get approved and there is additional (monumental) documentation required by the lenders. The downfall of this system is that many qualified and legitimate borrowers are denied mortgages and others are being charged additional fees by the lenders and FNMA to cover their own risk levels.

 

The next task is to raise the bar of the mortgage broker and banker by setting their standards of licensing qualifications higher. Each state has their own level of guidelines, education and testing mandated individually. There is no national system, but they have created a national registration system of all loan officers. Each state can opt in if they choose.  

 

The larger lenders are now reviewing all mortgage brokers for factors of legitimacy. A few of the things they are looking at now are:

 

·        Higher Education

·        Actual cash liquidity of the license holder

·        Minimum credit scores

·        No criminal charges

·        No past bankruptcy

·        Actual brick and mortar office (no home or virtual office)

 

The fact is that before lenders did not care who the broker was as long as they brought loans to the table. Now, they are requiring a legitimate business owned and operated by a financially responsible person. Again, this is good but will take time. The industry will continue to go through shakedowns until it becomes a business of ethics and morals- a far cry from the step above prostitution that it once was!

 

 

Dale Siegel