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sowak
Dud?


Joined: 09 Mar 2007
Posts: 16

Some realism to add to the pessimism
PostPosted: Mon Mar 12, 2007 10:34 am Reply with quoteBack to top

Some realism to add to the pessimism:

I keep hearing about how evil loan officers/underwriters/lenders are because they did everything they could (including lying and cheating) to get people in sub-prime loans they could not afford.

If 10% of sub-prime loans have defaulted or are in danger of defaulting, that leaves 90% that would be considered good loans because the borrowers are busy paying their loan off.

The person that I know that is a loan officer for Accredited has followed the guidelines that were given to him/her. He/she did not lie or cheat. He/she genuinely tried to help people get their finances and credit in order by consolidating debt.

These sub-prime loans offered people who had really messed up their finances or suffered some kind of life changing setback a chance to get their house in order.

Are there scammer loan officer/lenders? YES, of course. Are all loan officers/lenders scammers? NO, not even close.

This person did his/her best to follow high ethics and morals in an industry that is not know for that. What is my point? All loan officers/lenders are NOT scammers who are out to rip people off. There is a lot of blame to go around, but it is wrong to massively generalize everyone in the industry under one heading of evil/criminal.

The bottom line is that many, many people were given sub-prime loans and would have had a shot to get their house in order. If they didn't, that is on them. Many, many of the 90% that are paying their loan are getting their financial house in order and that is a good thing.

I had to vent. Thanks for reading.
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zippyzack
Dud?


Joined: 10 Mar 2007
Posts: 12

Re: Some realism to add to the pessimism
PostPosted: Mon Mar 12, 2007 12:39 pm Reply with quoteBack to top

I agree. As an employee...we were only doing what we were told, i.e., write loans per investor guidelines. While I personally wouldn't necessarily lend my own money on some of these loans, we were lead to believe that the secondary marketplace had an appetitite for them, and that they had provisions in place that would protect them. By that, I mean they knew going into certain loan types that there were inherent risks and that's why these loans had rigid guidelines as well as pricing levels to protect them from the risks. Needless to say, it appears that all players tended to "forget" their own guidelines and made far too many exceptions to these safety nets in an effort to gain market share or meet production "quotas". The net result today is the delinquencies we are all paying the price for. Most borrowers do not want to default. Very few are actual beats. It's now up to the industry to adapt to the credit risk pendulum that has swung HARD to the side of conservatism. Let's see if cooler heads prevail, and hope that this issue will work itself out so we can all go about our jobs. Afterall, people always need to borrow money, whether it is to purchase a home, buy-out their spouse through divorce proceedings, do major home improvements, consolidate debts, etc..
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bdc63
Schumpeter Reincarnate


Joined: 16 Feb 2007
Posts: 4392
Location: Maryland

Re: Some realism to add to the pessimism
PostPosted: Mon Mar 12, 2007 12:45 pm Reply with quoteBack to top

sowak wrote:
Some realism to add to the pessimism:

All loan officers/lenders are NOT scammers who are out to rip people off. There is a lot of blame to go around, but it is wrong to massively generalize everyone in the industry under one heading of evil/criminal.



I haven't heard anyone on this site imply that ALL LO/Lenders were scammers, evil, and/or criminal.

Greed, to me, seems to be the common thread.

The buyers were greedy to want to live beyond their means, and they signed documents they didn't read and took loans they didn't understand.

The Pension Funds and Hedge Funds were greedy for return, and they under priced risk, crossed their fingers, and bought up junk mortgages.

The people in the middle were the enablers. Yes there was greed there too, as the industry began to focus on "churn", or quantity vs. quality, and created products to maximize churn.

The only victims here are the people who are counting on a pension from the company whose plan is going broke because they over invested in MBS.

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sowak
Dud?


Joined: 09 Mar 2007
Posts: 16

..............
PostPosted: Mon Mar 12, 2007 1:20 pm Reply with quoteBack to top

Good points above. My post was a general response to several message boards I have been reading, not this one specifically. Greed is definitely an issue all around. Greed is NOT good, as some would have you believe. The desire to succeed, do well, provide for your well-being, provide for your family, etc. is good when coupled with morals/ethics that are based on the common good.
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qwopzxnm
Flash in the pan


Joined: 09 Feb 2007
Posts: 95
Location: Irvine, CA

Re: Some realism to add to the pessimism
PostPosted: Mon Mar 12, 2007 3:27 pm Reply with quoteBack to top

I agree bdc63. I think many people forget to look at the fact that all these subprime companies and brokers working subprime all made money hand over fist during the last few years earning margins WAY higher than any alt-a or prime shop. Their business models were to invest in high risk loans with really high yields so instead of staying in business and taking 10 years to earn $100 million, it took them 3 or 4 years. But because they're a one-trick-pony, when that sector of the market goes away so does their business.



bdc63 wrote:

Greed, to me, seems to be the common thread.

The buyers were greedy to want to live beyond their means, and they signed documents they didn't read and took loans they didn't understand.

The Pension Funds and Hedge Funds were greedy for return, and they under priced risk, crossed their fingers, and bought up junk mortgages.

The people in the middle were the enablers. Yes there was greed there too, as the industry began to focus on "churn", or quantity vs. quality, and created products to maximize churn.

The only victims here are the people who are counting on a pension from the company whose plan is going broke because they over invested in MBS.
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UghMortgageBiz
Spontaneously Combusted


Joined: 12 Mar 2007
Posts: 2099

Re: Some realism to add to the pessimism
PostPosted: Tue Mar 13, 2007 11:52 pm Reply with quoteBack to top

There have been some how have said things that make it sound like they blame everyone.

I agree, the blame has a place, and it's not with the people who made respectable salaries...it's with the people who made RIDCULOUS salaries.
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