Buybacks Are Scary, And Cause All Mortgage Applicants Pain.

October 31st, 2011

TRANSCRIPT (this was taken from a cartoon video I did, featuring monsters):

This is an explanation of how scary Fannie Mae and Freddie Mac (now government owned it is important to note) have become, and how it affects the consumer. Anyone who has gotten a loan in the last 3 years knows how difficult it is. Guess why. Think its the banks? Nope. The underwriters? Nope. It’s the Halloween style nightmare Fannie Mae & Freddie Mac cause with something called buybacks.

After a loan settles, it gets audited by Fannie Mae and Freddie Mac, and if they find one tiny thing not perfect in the paperwork (which is open to their interpretation of the rules), they can force the lender to buyback the loan! So lenders, as a result, over-underwrite the loan and cover themselves by asking for everything plus the kitchen sink. Buybacks have the whole industry paranoid, and the consumer is paying for it. Below is the text of the entire video:

Monster1: My wife tore our house apart in anger and beat me up and stabbed me with a fork because I ruined our refinance. The place now looks like a Halloween haunted house. I shopped at too many banks and picked an online lender who had no relationship with us, no local knowledge and no incentive to make us happy. We could not get our calls returned. Our appraisal came in low. The appraiser was not local and did not know our neighborhood and he smelled bad. I should have chosen a local lender who is accountable, was referred and has local knowledge. What happened to you?

Monster2: I am a loan officer.

Monster1: So what happened to you?

Monster2: I am a loan officer.

Monster 1: Okay, so, what happened to you, you, you, you?

Monster2: Don’t you get it? I work in what is fast becoming one of the world’s most hated industries ever. People shoot the messenger when it comes to bad news. Look at me. The last client who had his mortgage application turned down stabbed me with a rusty nail. I hate my job.

Monster1: The banks are idiots. You are an idiot. Underwriters are idiots. Quit your job and join our march on Wall Street to demand that banks hand out easy money like before.

Monster2: It is not my fault, the banks’ fault or the underwriters’ fault. It is the fault of the government who runs Fannie Mae and Freddie Mac and something they pushed down our throats called buybacks.

Monster1: Go on idiot. I am listening.

Monster2: Fannie Mae and Freddie Mac will make a bank buy a loan back for the smallest reason. They really don’t even want these loans. So now the banks are running scared of buybacks, so they underwrite the daylights out of the loan to levels of minutia we have never seen. March on Fannie Mae, Freddie Mac and the White House, you buffoon.

Monster1: As I look at you here in front of me, with nails popping out of your neck, I can honestly say I like your style. I am going to call all my friends and we are going to march on Washington instead. Go get yourself patched up and join us.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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