Salty

iTrader: (14)

Hopefull this makes sense... i've had a few beers and it's really late.

You know, back when I first started doing mortgages I had a very hard time grasping the economics. It was easy to understand why a family of four could afford a 3/2 house on a 30yr loan with a strong joint income.
But as the refi-mania got into full swing in the last years it became clear that programs became more lenient. Lenders became more and more complacent and seemed to never question the economics of lending 500k to two immigrant mexicans when all that was needed on the loan conditions (hardcopy info I needed to fund a loan) were two months worth of bank statements and a doctors note (slight exaggeration but you get the idea). This is what I could never grasp. I would always question how this could be the done. But my quests were always drowned-out by those that thought time in the industry meant a firm understanding of economics and business. People trusted their superiors far too much when they really had no clue or were too greedy.

Problem was that a couple ignorant, greedy mother****ers at the top had every pawn employee below them fooled as if they really knew what they were doing. Now I realize my confusion for this part of the industry in the past wasn’t confusion at all... Instead, I was on to something the entire time. It was that half these programs and their conditions had no face value to begin with. My confusion was in knowing these programs could never work in the long run even though they continued to process these loans on crossed fingers and the receipt of a few easily attainable documents. Heck, If you could prove you had 3 months worth of considerable savings in your accounts or say you earned a believable amount in a believable profession despite you never being successful because you had 800 scores (stated income), then you too could have a massive loan while disregarding inevitable payment shock.

Now huge lenders are closing their doors. Just heard a HUGE lender (not countrywide) is shutting their doors this week putting a lot of once high salaried people on the unemployed list. Sad to hear but I can’t say I feel sorry for their carelessness.

I will say one thing and I hope it doesn’t sound like a plug to reputable lenders like my mom. I don’t do mortgages anymore so i'm not trying to benefit myself. This dip is going to weed-out every SOB that decided to get their license as a pastime or hobby. This posed another huge part of the problem for lenders. People said, “hey, I should get my real estate license so I can make money on the side of my primary profession or career. I can even help family members get homes.” Bad move for many. When they tried to hook-up a relative they forgot that them not being able to qualify for a loan was really a favor on the beneficiaries part for them not being able to afford the financing. They should have saw it coming.

I think the DRE is a huge part of the problem. The State Bar is a right of passage. Sure, you can take the test without ever attending law school but good luck passing! Even law students fail the exam consistently. If you fail it the first time your odds of failing are considerably higher each time you take the test. It’s just how the test was designed. But once you pass the relatively easy sales/broker exams for real estate the only thing in your way is a “go” “no-go” stamp on whether or not you should get a license. And the yes or no is based on criminal record only. You don't need to know the first thing about mortgages or real estate. Instead, half of them purchased a test-prep course that was solely focused on memorizing test material keywords only. It’s crap.

I think the hurdles for acquiring real estate licensing needs to be more significant. You wouldn’t let a doctor perform on you if he was board certified but did not attend medical school, would you? Not saying this is possible but you get my point. And like a fraudulent doctor performing surgery on you, the wrong advice given to you by a licensed real estate professional can seriously alter the trajectory of your life. The whole real estate system is a time bomb.

FW Motorsports