This year thousands of homes will fall out of escrow, thanks to Uncle Sam Obama.

Nonsense,

You can't lay this at the feet of President Obama. You need to back up a few years and then start down that road.

There are a lot of reasons that we are in this fix, the most of which is not forcing loan originators from sharing the the risk of the loan.

Wow, how great is it to make sub-prime loans (at best) and/or conspire to commit outright fraud (at worst) and have to worry about. As long as lending institutions could bundle junk loans and sell them like cotton candy at the fair...anyone with half a brain could see this train wreck coming.

True,

But yes, there are some people out there that do need protection from themselves.

You know how complicated a home purchase can be, when you couple that with the fact the vast majority of people never will experience a home purchase or buy only one home.

A very small percent will have more than 2 purchases in a lifetime.

I'm not saying that one is not responsible for their actions, but when you have the deck stacked against the buyer, can anything good come of it.

Some people were sheep lead to slaughter by the wolves.

I agree Raymond, real estate is very key, but I don't see how that market can lead the recovery, for a couple of reasons.

1. People used their homes as a ATM, failed to save and are drowning in debt.

2. Wages, Wages, Wages, worker's stagnant while CEO's rob us blind.

3. NAFTA, globalization and loss of manufacturing jobs.

4. Destruction of the middle class.

5. Health care cost.

...who has a job, credit and savings to buy a house?

And that's President Obama's fault?

So the few that do have the job, credit and savings are now bogged down with more disclosures and more waiting. How does that help?

By increase the hurdles you are prolonging this economic issue.

Glad to be out of real estate and mortgage 20 yrs. was long enough for me.

If I may ask SoCalGal, did you see this collapse coming?

I ask everyone in Real Estate that question, the reason why is if all the insiders say yes, and most do, how did we get here?

How could people like yourself (no disrespect intended), the 20 year people - the people that make the "trains on on time" let this happen?

A lot of fingers are being pointed at the buyers, but nobody asks for a bad loan.

If I attributed comments to you that you did not make, I'm indeed sorry.

You kinda lost me with your statistic, are you saying that only 4% of owners are this big of a drag on the economy.

I'm in Mich. I see it first hand everyday. What I've seen is the rich get richer and the poor get thrown out, out of a job, out of the house and out of luck.

If more red tape slows things down, I for one, don't think that is a bad thing.

Something had to change, it may have been a small part of the mortgage market, but if the effect is this devastating to the economy, then put on the brakes.

I can only say this, only the guys that caused this mess have enough money to fit it, the rest of us are broke.

I would be happy to answer your questions Rodney.

When I started back in the industry Bush 41 was president. Things were different. There was no such thing as underwriting guided by automated underwriting systems. There was no credit score. All decisions were based on a human underwriters decision based on guidelines given to them. Someone was responsible. Those in the industry were professional and held themselves as such.

As time progressed, Clinton came into office and automation entered the picture we were given the credit score. A computer program decided if your credit was worthy. Next came political pressure to help every American obtain the American dream of homeownership. Which lighten the lending requirements and gave Wall Street a reason to look at the sub-prime market. Then the automated underwriting systems were introduced. This allowed Fannie and Freddie a way to control the amount of loans approved. They increase the amount of loans they were funding. Like when Wall Street became automated, you got to a state of hyperactivity.

Most importantly all this automation along with the invention of the internet allowed a loan officer to be in one state and service a client in another state. Allowing the loan officer to make three fold what he was able to make before all these "Advancements". While when the word got out how much money could be made it flood the industry with unsavory characters. People who saw the money they could make a quick buck, and not the mortgage industry as a profession.

Many unsavory characters along with Wall Streets desire to buy sub-prime loans lead to the constant hyper-activity. Basically greed by all parties from the borrower to the CDS trader in London, Everyone wanted a bigger piece of the pie.

Yes, I did see the collapse coming. It does not take a rocket scientist to see that the party was not gonna last forever. Since I was taught the old school way of looking at the whole picture I was watching the 10-y treasury and 2-y treasury in 2005 when they inverted it was at that point I got out. It was the last signal I need to know the party was over.

We the old school people who cared about the industry did not let this happen, we were told this is the way it is going to be. Clinton and automation along with the power brokers on Wall Street made this happen. Also bare in mind that the share holders are responsible they are always seeking higher and higher returns. Greed unchecked is what blew up the housing industry. Just look at AIG and the CDS fiasco.

Thank you Rodney. I hope the industry finds balance again.

I wish you the best of luck. I know what it feels like to hold a transaction together. Chin up!

Thank you, that was very, very eye opening...do you mind if I copy it and send it to a friend?

My view is that the changes you state are not the cause, but facilitated corruption on an industrial scale, the cause was simple greed!

PS - not pointing fingers, just wondering if so many could see the train wreck coming how did we get here.

Sure, you may copy it and send it to anyone you would like. I do ask that you remember this is my opinion so I am sure there are counter points of view.

Well we have had many train wrecks in our financial history. The dot com bust, the 70's inflation, the great depression and the depression of the 1890's (which i read was as bad as the great depression). It was started by the panic of 1893. Along with many others. Somehow some way we always pull through.

I know what you mean, I'm from a GM town, we've seen bad times but nothing like this.

There was a time when all you needed was a HS diploma and you had a good job and could raise a family (...and buy a house...lol) and live a comfortable life. Wouldn't get rich but couldn't complain.

Now...4 out of 5 plants closed, the suppliers are closing, supporting vendors gone and job moved overseas...how can we buy ANYTHING?

A lot of people here could not pay the property taxes on a free house!

It's bad...very, very bad. Doesn't matter what bank regulations are right now, unless they are giving homes away.

Ray, I was talking last night to a senior partner here in DC at Steptoe & Johnson. Guy's worth a ton and has no debt. He was buying an investment condo with an LTV of 60% and he said the lender was crawling up his butt like a fly on honey. He told them if they didn't crap or get off the pot he was walking on the deal. Lenders are now overreacting in the same manner the opposite way in which they threw loan underwriting standards out the window starting in about '94.

Raymond I understand your pain as a businessman trying to make a living, but if I'm the home buyer, I like most of the things listed in your link.

Does that prevent you from making money or does it just slow down the process.

I mean, correct me if I'm wrong, the industry was on the honors program once, right? That didn't work out too well.

I had a gung ho Marine Corps Colonel tell me once "it takes a thousand pats on the back to erase one screw up", by my count, they got 999 more to go.

Rodney,

Did you read the link? a mere .125 change in rates reguirea a new truth-in-lending declaration which adds at least 3 days to the process.

Ok, I understand crusader, but is that a deal breaker?

Right now, NOTHING is functioning like is used too.

So why should I worry about TIL, when I can't afford a house.

Don't get me wrong, I feel for all of those people that make their living in Real Est. but I'm looking at it from the bottom up...the top always seems to land on their feet.

If what raymond said is true, then 4% of to the population just tanked our economy, in my state, that 4% is not coming back, it's gone, along with the jobs.

So if the economy needs to get that 4% back on their feet, seems to me we start with a job not a house.

Just a thought...

Did you read the link? a mere .125 change in rates reguirea a new truth-in-lending declaration which adds at least 3 days to the process.

I don't know what lender you work with but I can get my lenders to kick out a truth-in-lending in 10 minutes? 3 days? what lender is really that busy?

Time for a reality check. I work in the mortgage industry and the new laws are going to have a horrific impact on the industry. Initially the biggest problem will be due to Realtors, buyers and loan originators being in a state of ignorance and denial. I was at a seminar last month where these rules were being explained and I mentioned to a Realtor sitting next to me that 45 days was going to be the new 30. She proceeded to tell me that her lender had already assured her this was BS and any good lender could still get a deal done in 30 days or less. Oh well!?! I can kick out a GFE in 10 minutes and provide them routinely to all consumers as part of the pre-approval process. But when a consumer movves from prospect to borrower it's a whole new ball game. Most large companies will not allow an originator to print and mail the initial disclosure package. A processor or other designated employee must initiate that functtion. One thing Wells Fargo doesn't mention is that its practice is to use the three days that RESPA allows for turn time from origination to release of documents as the point when the task is completed. So really WF should add an additional 3 days to their calendar. WF isn't alone in that practice. Rarely will documents go out the same day the borrrower applies for the loan.

Buyers want what they want when they want it. Many buyers delay complying with documentation requests or outright refuse to provide it because when they bought their last house the documentation requirements were minimal.

The hit to the rate if the credit score is under 740 is true. The only loan with no hit has a credit score of 740 plus, a 20% down payment, a loan amount between $350000 -$417000 and set to close in 30 days. The market ain't what it iuse to be.

I could go on for pages about the new requirements and how they will inteact with each other. I have been originating for almost 20 years. I don't know whether we will see these rules modified, especially the HVCC as that one is the result of a law suit settlement between the state of NY and Fannie Mae. Maybe it's not a bad thing. These laws will slow down the real estate industry to a level that is sustainable over time. A buying frenzy will never happen again. The price of homes will stay down and the cost of borrowering will go much higher. I also think interest rates on 30 year mortgages will return to the Reagan days of 9 - 10%.

What really makes me crazy is realizing that except for a few bad actors at the "Main Street" level, no one who really caused this crisis will be held accountable.

What really makes me crazy is realizing that except for a few bad actors at the "Main Street" level, no one who really caused this crisis will be held accountable.

I'm not a Real Est. guy, maybeblu, but I think you just summed up that last 8 years...in so many areas:

9-11

Iraq

Torture

Abu Ghraib

Katrina

Rita

Banking

Real Estate

Economy

...and so on and so on!

Good luck!

A highly contrived scenario. Someone agrees to purchase a home without contacting a lender? Can you even put the home in pending anymore for this scenario?

Thanks Raymond,

I learned something new...been very informative..

We're on the same side, we both want this country to shine again, I have faith...

God Bless