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Reviewed a proposal to "Save Wholesale"...
Involves setting up a third part processing system which offers a "zero fraud" guarantee on all loans processed.
Wall Street has bought-off on it.
Two major lenders are willing to return to wholesale if it can be implemented - And my guess would be others would soon follow.
Many small brokers/bankers are using outside contract processors anyway - But are brokers willing to trust an outside company with their files?
What do you think?
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I'm sure they probably want a lot more concessions than just a zero fraud guarantee. Wall Street is still as gullible as ever....
It will increase a brokers overhead.
EL - They do - But I can't disclose the particulars. I can tell you part of it involves only dealing with HR departments for all income and company sponsored 401k documentation. Effectively eliminating the broker or client from submitting "less-than-factual" information...
AA - Only by a few hundred dollars on the processing side... Actually since someone else is accepting the fraud risk - Pricing should improve...
hahaha "guranteed zero fraud"
Another way of wording we are going to check into needless things and it will take 90 days to process your loan.
Couldn't be any worse than getting a written VOE anymore....wonder who would be the first company would be to start charging for that gem of a service?
What needless things are you referring to? The plan also includes a "10 day or it's free" offer on the processing fee - Apx $450....
I will be that companies will start charging for VOE's. How can you guarentee turn time when 3rd party has to deliver?
My thoughts were even more cynical -
"What keeps the borrower/broker from telling HR to stall...?"
In theory price should improve if defaults drop but they have to make up ground for the current enviornment. I would bet they pocket it for awhile.
10 days for what? To have it submitted to the wholesale lender or to have it approved by the lender?
"Needless things" nothing specific but sometimes these processing companies take things a little to far on an individual loan, makes it hard to offer a good customer service when you really don't have control of the file.
Prepare for the big swing to 45 day pricing....
Who will police the policemen? What qualifications will these 3rd party processors have? I have hired contract processors and some are dumber than a box of rocks! I posted in another thread my frustrations with one that came straight out of subprime school and thought every loan was "stated".
It's a ridiculous idea and will do nothing to stop fraud. If the lenders want to stop fraud, they should stop promoting it! Llast ime I checked it was not the brolkers that created NINA, NINJA, and all the other CACA.
Brokers just created documents so your borrowers could use those products. Ridiculous!
"Created documents" ?
First of all I have never done one of these in my life ... EVER. I have never even done a single stated loan. That being said ... what documents are you referring to the creation of? As I understood it, a NINA program required no documentation, nor did a stated program. How can you document what you don't have or what is not required? My point stands ... Countrywide decided to lend money to people who did not have jobs. Countrywide decided to give people with low credit scores 2% start rates. Start at the top and work down. You want fraud to stop, go get your CEO and audit his books.
Good grief Greggy. You complain and whine but offer zero solutions to actually solve the cash crunch problem.
There are people working to improve the situations which directly effect our business and our clients. You obviously don't get it.
And you've NEVER done a stated income loan. Does that mean you've never helped a waiter, bartender, or waitress buy their first home? You've shunned away self-employed borrowers?
Must be fun to judge people by their abilty to verify their income and throw away good clients...
First of all, you are confused, I was niether complaing nor whining. My business is fine and whatever regulations are enacted will not affect that. Secondly, self employed people can surely prove their income, the only people that cannot prove income are people who do not pay taxes on it.
Last time I checked, waiters and waitresses pay taxes on tip income "that they report." If they do not report it, it is not income and it is not me that has the problem. If you want an easy doc loan I'll get a 4506T and I will verify it before submission. I don't look good in orange!
Giving people houses that they cannot pay for by the use of creative financing is not a solution to the "credit crunch", the fact that you think it is, is what is laughable.
I never offered "giving people house they cannot pay for" as a solution - In fact it was the exact opposite. If you reread the post it mentioned contacting HR departments directly for verifications. To which you cried "Who will police the police?"
So by your reasoning - There is absolutely no possible scenario where anyone should ever get a mortgage if they can't fully document their income. Is that actually what you think...?
The issue at hand is gaining the confidence of wall street, lenders, and brokers - Using a third party responsible for processing all documentation. The third party is self-policed by virtue of the buy back provisions if fraud is found in the file down the road.
The problem has never been soley the offering of "easy free" money. The issue has always been not pricing in the risk.
My fault for asking for thoughts before clarifying - Allow me to correct myself....
If you are a rational person with realistic views - What do you think...?
You didn't answer my question about the 10 day guarantee...I would really like to know what they mean by 10 days.
"So by your reasoning - There is absolutely no possible scenario where anyone should ever get a mortgage if they can't fully document their income. Is that actually what you think...?"
That is exactly what I believe because a tax return serves as proof of what you earn. If you do not pay taxes on your income like everyone else has to do, you cannot then find a creative way around it and use that income for qualification on a home loan. As far as I'm concerned, if you don't pay taxes on it, it does not exist.
I'd love for you to give me a scenario where one makes a legitimate income that should qualify them for a home loan, but is unable to document it in some manner.
We have a file pending for a client who made $31k in 2006, $85k in 2007, and just received a sign on bonus and contract for $900K/$2.1M a year.
They are in escrow on a $1.6M home with 35% down.
In this scenario - Documenting their income (with corresponding exceptions) results in worse pricing than going stated. Is it in the clients best interest to charge them a higher rate and verify their income - Or go stated at the lower terms?
You actually think there isn't a low enough LTV or high enough reserves - To price in a rate adjustment to offset the lenders risk for not verifying a borrowers income.
Stated income programs are not evil. The brokers/lenders who made bad loans are. Almost as evil as closed minded thinking...
And Rob it's not finalized - But seems to of course reflect their own performance outside of other parties. Much in the same way COE purchase guarantees require other parties to act in a timely manner. What it is designed for is to guarantee the system will not be bottle necked due to a lack of resources...
So it will add some time to the process, puts us at a disadvantage to a correspondent or a bank. But I would try it, if they had products/lenders that I could not obtain through normal means.
"We have a file pending for a client who made $31k in 2006, $85k in 2007, and just received a sign on bonus and contract for $900K/$2.1M a year."
... and will be in Chapter 13 by 2010.
"The problem has never been soley the offering of "easy free" money. The issue has always been not pricing in the risk."
I thought you were explaining how risk was not factored in. Isn't the higher rate in your scenario because of the increased risk? Isn't going "stated" circumventing what is in fact already a risk based system?
See, this is where we differ, you believe your client is qualified to be in a 1.6 mil home, I do not and I would not do the loan just because I could.
You nailed. Offering premium pricing on a few products - And additonal products not currently available to test the waters - Then slowly expanding the product lines over time.
The two lenders mentioned are not currently in wholesale at all - And have specific broker/banker criteria for sign up.
As I said before - Very interesting...
How about instead they just verify credit reports, veryify appraisals, verify assets , and verify income using tax records.
This 'third party processing' doesnt do anything that a good underwriting/ compliance team cant do working for the lender.
It is great that you have a client with 35% down and that is really the exception. I'm not against SISA loans for those it was intended for, but you must agree, we ahve about 2mil of those loan types coming back into the barn. The program was abused byt the masses and will basically disappear for a while until we can tell and be comfortable that those who verify income can afford their homes. Only time will tell and it simply will take time. Any rollout of any plabn would be "welcomed" by Brokers as they will take anything to move what they call loans. With prices as much as 50% below prices of 2 years ago (at least here in FL) I would think REFI's would not do well, but maybe some select purchase, but again, I think this is a drop.. a good drop but a drop. We'll see and keep rockin'.
... and will be in Chapter 13 by 2010. HAHAhahahahah. Your typical delusional answer. You asked for a scenario and I provided one. I then asked you which rate should be delivered for this client. No intelligent response - Just a snide remark with your pompus stance you would turn your back on the client. Don't ever change Greggy - Your competition loves you...
Any rollout of any plan would be "welcomed" by Brokers as they will take anything to move what they call loans. I'm the first one to agree there have been abuses - And at the same time these stated programs have offered solutions for many clients who can afford their homes and are making their payments.
Underwriting standards have moved back 20 years - And they will find a middle ground eventually. There are people working hard to try and reduce that wait time.
Shortening this time line benefits clients who need mortgage solutions now - And the increased volume also helps to support the fringe businesses. (title/escrow/appraisal/inspection/realtors/etc)
The data included with the proposal shows another $500M in annual production - And thats just LA, OC, and San Diego counties. (Current AVM LTVs under 90% - Converting from Arms to 30yr fixed)
Tom - The main issue is that Wall Street simply does not trust the current system. Although you are correct - A third party seems to solve the credibility issue.
You seem to want an argument more than a rational answer or a conversation. You say I am pompous? I'm sorry, I don't remember insulting you or acting in any pompous manner. On the other hand, calling someone who's name is Gregorio "greggy" is arrogant and shows what a fool you are. Maybe I intimidate you and that's why you resort to such idiocy, I don't know, but it shows your character, or lack therof. Do whatever makes you happy with whatever clients you choose. Pontificate all day long about things that will probably never affect you because I doubt you do enough volume to even warrant such a concern. You are the type that thinks you are much smarter than you really are, and you post on boards like this to continue convincing yourself of that. Continue this silly debate over nothing with yourself, I suspect you are used to that.
Have a great day and you keep chasing that dream.
I hope you get your way in the product loosening lending with adult supervision, but we should really look at a couple of simple things as to why we are even having to discuss it:
1) The company we keep
2) The company we kept
Mortgage Lending has/had been "Risky Business" and guidelinese were rolled out to the masses like Mom-n-Dad left the home to Joel and that crystal egg.. We all know what happened while they were away. Same thing happened in mortgage lending and RE speculation. Prositution, Pimps, Money Laundering, people getting caught and seen with their pants down. Anyway, the movie and the mortgage business will turn out OK, but normalcy to a Broker's eyes and normalcy to what may be are very different. I have read requests for a lot of the loans that do not have a place in the market and as much as I want business to be brisk, it will not be. Not everyone can ride or afford a cycle like yours and it is not WALL ST or the country's responsibility to make that happen. Every person does not need to be a homeowner either. It is proven from recent activity that shoving everyone into a home creates unstable and unsustained demand and greed sets in on builders/worker..inflation... demand lessens,, price collapses... etc. I just got my latest wrench to tighten things down again, so I am simply unaware of where WD 40 Mortgage is on the horizon. Keep rockin'.
Rock on GV. You will not be in the business long.
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