Archive for April, 2010

Heartbreak Hill: Appraisers, HUD Counselors, etal.

Posted on April 6, 2010. Filed under: 1 | Tags: HECM, HUD counseling, loan officer, mortgage meltdown, non recourse loan, pros and cons of reverse mortgages, Reverse Mortgage, reverse mortgage specialist, senior mortgage |

Nobody likes a complainer. It gets annoying, except when the complaints are warranted, albeit necessary. For the past eight years I have been a loan officer. Things were pleasant and fun. I helped borrower’s get a mortgage for a home, refinance, and then ventured into Reverse Mortgages.

Then, came the meltdown. The mortgage meltdown, the sub-prime meltdown. We are told it was caused by us loan officers. We were greedy! And many were. But is that entirely true? Check out Dave Zwierecki’s blog: “The mortgage meltdown as many are calling it basically boils down to, in a nutshell, lenders making money too easily available to too many consumers. Lending guidelines and lending criteria became way too loose and relaxed for the better part of the past decade, housing values continued to rise extremely quickly because of the easy money and the low interest rates, and too many consumers bought way more home than they could truly comfortably afford because lenders would approve them for too much. Combine all of the above factors up together at the same time and doom was bound and determined to find its way into the real estate economy. This is how we ended up in this mortgage meltdown.” http://themortgageu.wordpress.com/about/

Look for “cause and effect” of the mortgage meltdown on his blog. I’m sure if you do a search online, you’ll find more about the meltdown, but this blog contained a simple answer that most of us can understand.

After the mortgage meltdown our government decided they need MORE regulation. And regulations we’ve got! The problem is this, however: Many good and honest appraisers are being driven out of the business. Many good and honest HUD counselors who do Reverse Mortgage counseling have been driven out of the business. The list gets shorter and shorter and shorter every day of industry professionals who knew their stuff and are gone. Many who just can’t contain the stringent rulings have all but given up to choose a totally different career, one where they can support their families.

Why is this happening? For sure, the real estate market is down. Mortgages have slowed down. And regulations are UP. It seems the glow that was on this industry has become so fettered by documents, paperwork, and laws that it becomes rather difficult instead of joyful. Sure, we love our senior borrowers. We love what we do! But our industry, due to the mortgage meltdown and fear of some sort of reverse mortgage sub-prime crisis, is now in overkill mode. One HUD counselor told me she was “shaking” in her boots about taking the new HUD counselor test so she can remain on the HUD counseling “roster”. What would make an experienced HUD counselor fearful of taking a test?

Many borrowers have no idea about these things. You don’t see it on the evening news. We are here to serve you, we care about YOU. And we believe if borrowers had any idea that appraisers are being paid half what they are worth, they would be shocked. All appraisals now go through a management company, we have ZERO contact with our appraisers. Management companies now make a pretty penny though they don’t even do the appraisal, go to the home, write up the appraisal or anything!! If you ask any lender, any loan officer, any broker, if they agree with all the regulations and changes, 95% would say “absolutely not”. Now, lenders can get fined more easily for mistakes, though they be unintentional, and loan officers can get STUCK for fees that they, as human beings, never intended to make on a Good Faith Estimate. We are not gods, we are human. Even HUD people, the people who make all these rules, make errors, yet they are forgiven.

Example: Suppose you make an error. You forgot to include “endorsements”, part of title fees. Let’s say you forget a fee of $100, for example. You get stuck with it; the loan officer has to pay it, even IF it is a legitimate closing cost to the borrower. It could cost you hundreds if not thousands if you slip up. Why? Because loan officers are permitted to create only one Good Faith Estimate. That’s it. There is no recourse, no mercy, no “cure” as they call it in the mortgage industry. Yet, our OWN government can make mistakes, and they just write another bill.

Here is information I placed on a blog recently that says it all:

“The situation is sad if not dangerous to this industry. With the AMC’s, no appraiser has assurance that he will be called upon. All this, despite the appraisers’ years of work establishing relationships with brokers, bankers, lenders. Sad.

I talked with an appraiser who said the management company threw him a whopping $200 for all his hard work. He has not drawn a paycheck since January!

I got a letter from an appraiser that says it all. Naturally, the name is withheld:

“Hi Kathie, It’s a sad day. I can no longer speak to people I have worked with for years. You were the last bank client I had that wasn’t an appraisal management company. I have lost all of my HONEST mortgage brokers. Years of work. Now its gone. So sad. They will use the cheapest appraiser available regardless of the quality of their work, their appearance, or personality. They will not be there representing you or your company or your borrower. I wish you the best of luck. Keep in touch. Thanks.”

All the years it took to build up their appraisal business — gone in one day. Essentially, many will be put out of business by “big brother”. Same thing happened with the HUD counselors. I talked to counselors who could not pass the test; too hard. Others are terrified of taking the test. Just looking at the new HECM Roster for HUD approved counselors, gosh, it’s a LOT smaller. So many are gone.

And the loan officers, well, I have heard of Reverse loan officers just jumping ship and quitting the business. They can’t take it anymore. I hope we can let our voices be heard, and that one day things will revert to the pleasant business I loved. Over six years trying to help seniors do Reverse Mortgages, and I don’t see how much of this is to their benefit.”

I keep repeating myself because I believe his blog is worthy of reading, but be sure to check out http://www.DennisHaber.com – he’s honest and straightforward. And so am I.

Many of my clients are business people. They don’t need to be shielded from our displeasure with this insane process, a process that is there for their benefit. Ask anyone in the mortgage business how they like the new Good Faith Estimate or even a borrower. You get mostly negatives, though we agree disclosure to consumers is good. While we can grasp that the winds of change were necessary and blowing our way, we didn’t need a tornado.

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