Why mentioning mortgage brokers in the MERS mess is so annoying!
I am casually following the mess that the US still finds itself shackled to in 2011 and have just read a New York Times article entitled:
MERS? It May Have Swallowed Your Loan
By MICHAEL POWELL and GRETCHEN MORGENSON
You can read the full article here
Whilst I recommend the article as it contains a lot of useful information, there is a annoying reference to mortgage brokers at the beginning of the article that riles me in quotes.
Mortgage brokers hip deep in profits handed out no-doc mortgages to people with fictional incomes.
Wall Street shopped bundles of those loans to investors, no matter how unappetizing the details. And federal regulators gave sleepy nods.
That world largely collapsed under the weight of its improbabilities in 2008.
But a piece of that world survives on Library Street in Reston, Va., where an obscure business, the MERS Corporation, claims to hold title to roughly half of all the home mortgages in the nation — an astonishing 60 million loans.
Why I believe that Mortgage Brokers aren't to blame?
Well hip deep in profits is a stretch of the imagination. The banks got the money,not the mortgage brokers. Most mortgage brokers are now "broke"
Why do I find this objectionable? After all Mortgage Brokers were part of this scam.
right? I say wrong, dead wrong.
Firstly you'll see that mortgage brokers have been given primacy in the article, that is they are the first characters to be mentioned in the plot, and portrayed as the people would got the "profit." What a load of rubbish!
Who benefitted most from selling bad mortgage loans?
The Banks that created the loans, as well as Real estate agents and developers, new home builders, and home homers who sold on the highs of the market.
Mortgage Brokers come in a sorry last, but get to be mentioned first, because they seem to be at the front of the line.
Most of these sectors are not given a mention. They got the money and are seen as blameless. But we seem to forget that Real Estate agents made bigger commisions and drove the values of properties up to unrealistic highs. Heights that could only sustained with loans that were given to the buyers that they forwarded to home sellers. Buyers that could not afford to repay those loans.
We are all are finding out that what goes up [too high to make sense] must come down when the truth is outed. Whilst all works of fiction have a starting plot, this is not where the action starts in the mortgage business. It starts with the creation of the mortgage funds, for the purpose of making profit. That would be. let me think... be the banks?
So why weren't these real culprits not mentioned up front where they belong?
Maybe its because the big banks and insurance companies spend a lot of money with the New York Times, and nobody wants to bite the hand that feeds them?
And did Mortgage Brokers have to be mentioned at all? Mortgage Brokers are just comission sales people. I believe that Mortgage Brokers are less at fault in this than the Drug mules that they catch every day in airports around the world, are the cause of the drug problem that developed Nations such as Australia and the US are plagued with.
Because the drug mule is desperate and knows what he or she is doing is illegal and harmful, whereas mortgage brokers thought that they were in a legit business based on trust.
To further the drug analogy, the drug mules are just a small part of the distribution system that is the massive secret narcotic trade.
There had first to be growers and manufacturers of the narcotics and a ready end retailing distribution system of territories of the drugs dealers involved.
Doesn't this sound like the story that the New York Times just painted about what went wrong with the mortgage business in the US that started to unravel from 2006, not 2008 as mentioned in the article by the way.
Except that they are saying that the in their scenario the custom officers were not diligent.
The article made a reference no doc mortgages. If that was the case, then no mortgage broker would have to create fraulent documents to support the loan application, because none wold have been required.
Why do I say that Mortgage Brokers were not guilty?
Mortgage brokers were basically sales people that had little training in finance. They were paid essentially commissions on sales. Yes they were well off when these "low hanging fruit" sales were being made.
But most did not grasp the big picture nor made the huge profits that the banks made.
There was a saying in the industry that if you did not have a college eduction, then you could still make over $100,000pa as a mortgage broker.
Many of these mortgage brokers are now flat stoney broke!
So leave the mortgage broker out of the picture and focus on the real creators of this disaster. Make the heads of the corporations that actually got the profit for creating the mortgage mess in the first place, pay for their behaviour.
Article by Mr Mortgage
