I am from the government and I am here to help you. That punch line seems to be coming more and more true these days. Fannie Mae and Freddie Mac were taken over by the federal government in bankruptcy receivership in 2008. Fannie Mae and Freddie Mac, along with FHA and VA make up almost 100% of mortgage lending in our country. I would not say that the mortgage industry has been socialized, but it certainly is dominated by government. In the last four years the big government stamp on the mortgage process is undeniable and is the sole reason people scream bloody murder at their mortgage lenders during the process. Below are some exact reasons you can thank the Feds for your mortgage nightmares:
Buybacks: Fannie Mae and Freddie Mac, who are broke let’s not forget, have been making lenders buy back loans at an increasing rate. When you are losing money as a business, you want to do less business, or even close your doors. But thanks to we taxpayers, Fannie and Freddie stay open (and give out handsome bonuses apparently), but aim to be as strict as possible, to limit business, which in turn limits their losses. Fannie and Freddie are owned and run by the federal government. Thanks federal government.
When the Consumer Financial Protection Bureau announces tough new rules aimed at the mortgage industry, you’ll know another reason lenders have to get more and more strict on underwriting. So if you applaud the Consumer Financial Protection Bureau dropping the hammer on the mortgage industry, remember that when it comes time to apply for a mortgage, and the Consumer Financial Protection Bureau has mortgage lenders running for cover. Thanks federal government.
If you smile at the thought of banks paying fines and penalties over the alleged robo-signing foreclosure lawsuits brought by many revenue and attention seeking states attorneys and the administration, remember the impact that has on banks bottom line, their desire to even do mortgages, and their need to tighten guidelines more and more to avoid future problems. Thanks federal government.
The current administration has made lending harder by its relentless pursuit of banks through the Justice Department using disparate-impact lawsuits to force more loans under the Community Reinvestment Act. The safe play for banks is to withdraw from lending more and more, which many have done fully, and some partially. Thanks federal government.
The list of ways the Feds make it tough and expensive on banks to deliver mortgages is even more lengthy, but I am writing a blog, not a book. All actions have consequences. So please think about who the responsible party is when your lender says their underwriter has a laundry list of loan approval conditions for you to fulfill 3 days before settlement, most of which you think are totally unnecessary. Don’t curse your lender, nor the underwriter, thank your federal government.
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”.
Cry me a river! You should be thanking the government for bailing out the banks that sliced and diced bad mortgages, robo-signed mortgages, and that defrauded borrowers for years and years. You’re lucky to still be in business. Tell me you think robo-signing is all well and good. Regulations-oh help! Make sure banks follow rules! oh no!
Constance I appreciate your feedback, and thanks for reading. I do agree the banks have been bad actors in a lot of cases, I am hardly a fan of big banks, which you’ll see if you read some other blogs on my take on the big banks. We taxpayers saved a lot of their bacon for sure. But in this blog I am not defending banks, I am apportioning the blame for an overly complicated mortgage process to where it belongs, and that is to government. I think you’d be singing a different song if you went through the overly cumbersome, and mostly unnecessary analysis of a mortgage process these days. I don’t mind rules, but ridiculous rules that have no bearing on a client’s ability to repay their mortgage have no place in the process. There is not a single mortgage client I have that enjoys the mortgage process, not one. Most of them walk away angry and feeling violated. Asking 4,362 questions and requiring 43 pounds of paperwork from a client, based on government rules, does not make them any more likely to repay their mortgage than if we were required to use a more logical and streamlined approach. But we can’t use logic, because Fannie Mae and Freddie Mac (i.e. government) won’t let us. So the point of the blog is not to defend banks, but to let the public know who writes the cumbersome rules that all the banks, underwriters, loan officers and rest of the industry has to follow.