1. Hi there guest! Welcome to PoliticalJack.com. Register for free to join our community?
    Dismiss Notice

Devaluation Coming.....Yes, Virginia, it can happen here.

Discussion in 'Economics, Business, and Taxes' started by Sgt Staples, Oct 8, 2012.

  1. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    your ignorance of the profession does not constitute pretension on my part.

    The Loan Originator builds the loan. There's all these services available and all these creditors available and all these parts of the machinery and it is the Loan Originator that builds the loan and processes it ... everyone else just sells the paper.

    I am the mortgage banker; I was the guy you come to if you need a mortgage. That's what I did. I originated it. No one knows more about mortgage banking than the LOs... we were the ones that put the loans together. Everyone else is riding the gravy train, vying for our loans... it all starts with the LO.
     
  2. EatTheRich

    EatTheRich President

    Joined:
    Sep 18, 2012
    Messages:
    64,638
    Likes Received:
    3,380
    I never pretended to have some expertise here, but I don't have to know much about it to know that "two of the brokers I worked for were bankers ... what I did was very similar ... it made very little difference" means that you yourself were not a banker. But you keep saying you were. It is your use of the word "banker" and not your claims to have bern involved in the mortgage business--which no one is questioning--that leads to accusations that you are misrepresenting yourself.
     
  3. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    you just don't understand what it is and how it works. The Loan Originators had to be licensed to originate mortgages. But we did so on our Broker's license. What we were doing is mortgage banking... the Loan Originator is the primary source of the Loan, he builds it, he gets it processed; there is a loan process. The broker is just someone with enough money to broker loans. They do not need to be licensed to originate loans unless they are doing that. The primary requirement for a broker license is a clean public record, impeccable credit and enough cash reserve to be accountable to the state. But the broker does not perform the loan, the Loan Originator (LO) does that. All I was saying was if the Broker was closing loans correspondent with the Lender, technically, the Broker was tabling the money, so in those cases, the Broker is termed the Banker, because in those cases the broker is bringing the money to the table... but not really, the money always comes from the very large banks, there are Loan Originators that work for Wells Fargo and they are bonafide bringing Wells Fargo money to the table and Wells Fargo may even hold the loan... but the Wells Fargo Loan Originator doesn't know half what I knew because he is doing the exact same thing except he is doing everything in house, while I was brokering between hundreds of Lenders and thousands of products.

    The Loan Originator builds the loan. There's all these services available and all these creditors available and all these parts of the machinery and it is the Loan Originator that builds the loan and processes it ... everyone else just sells the paper.

    I am the mortgage banker; I was the guy you come to if you need a mortgage. That's what I did. I originated it. No one knows more about mortgage banking than the LOs... we were the ones that put the loans together. Everyone else is riding the gravy train, vying for our loans... it all starts with the LO.

    Who is it that you envision is the real mortgage banker? The LO builds the loan... we provide the mortgage that the banks want to buy. Banking just means funding... that's nothing more than having been a Loan Originator and able to evaluate loans put together by LOs whether you want to buy them. Underwriters are basically doing exactly that. Mortgage bankers all started out as Loan officers. We are the bedrock, we create the loans, everyone else buys and sells our work. These days, there are underwriters who graduate with degrees in finance and go straight to work for Lenders... and what happens? We have to teach them the profession while they screw up our loans. That's because mortgage banking begins with loan origination. Loan origination is what everything is built upon.
     
  4. EatTheRich

    EatTheRich President

    Joined:
    Sep 18, 2012
    Messages:
    64,638
    Likes Received:
    3,380
    I guess I just wonder how that qualifies you to assert that the banking crisis came from fictitious loans and not from real loans that were defaulted on en masse. I mean, I saw what you said about how there's still the property for the banks to foreclose on (if they can establish clear ownership--the WSJ says the prosecutions in New York are about banks foreclosing on the basis of fraudulent documents, not, as you seem to suggest, banks defrauding buyers of mortgages). But even so, if meanwhile the real estate market has plummeted, couldn't the banks still lose billions?

    Ok, maybe the mafia and corrupt bankers did swindle other bankers and ultimately taxpayers. But I don't understand how you could "know" that because you were someone borrowers went to to get mortgages.
     
  5. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    I can answer all that, but you might want to go to sleep, its going to take me awhile. But I'll add it to this post and keep editing it into this post as I go, okay?

    I guess I just wonder how that qualifies you to assert that the banking crisis came from fictitious loans and not from real loans that were defaulted on en masse. I mean, I saw what you said about how there's still the property for the banks to foreclose on (if they can establish clear ownership--the WSJ says the prosecutions in New York are about banks foreclosing on the basis of fraudulent documents, not, as you seem to suggest, banks defrauding buyers of mortgages). But even so, if meanwhile the real estate market has plummeted, couldn't the banks still lose billions?

    Ok, maybe the mafia and corrupt bankers did swindle other bankers and ultimately taxpayers. But I don't understand how you could "know" that because you were someone borrowers went to to get mortgages.



    okay, what I said was both are happening, but the outright fictious loans were doing the heavy hitting. If you have a $200,000 refi loan go belly up on a $250,000 property, how much does the bank lose? Nothing. If you have a fake identity operation with broker and title knocking out 100 jumbo loans in two months time; how much damage does that cause? (roughly $100 million)

    robo signing title documents during the foreclosure process was the only way the banks could handle the glut of foreclosures. That's a very big sin, legally, the foreclosure unit is supposed to check out those loans with duress during the foreclosure; but this was our first foreclosure epidemic and the process is supposed to be slow. That's title fraud; not that the titles were fraudulent, no one was really questioning that, it was that the process was not satisfied legally, but that whole affair was brought to court by AG's in multiple states over a year ago... some writer confused those cases with this latest case by the NY AG; which is purely about the securities being knowingly resold with bad mortgages... it was the part about the banks knowing they were peddling securities with bad mortgages that constituted fraud. the robo-signing is like a misdemeanor compared to the defrauding of the planet's financial institutions... the state is representing mankind. (or at least all of his money)

    Make no mistake, everyone lost money. The banks got pounded. However, it was only money... and money is the easiest thing to replace for Wall Street banks because they create our currency. So, during the financial crisis, the FED opened a special discount window for the very purpose of replacing all this lost money, and replace it they did, to the tune of 7.7 trillion in positions taken during the two years that window was open. So the Wall Street banks were made whole. Not so for the smaller banks they peddled this junk. The New York attorney general has filed a civil suit on behalf of all the investors, governments and banks that were harmed. It is probably the biggest civil suit ever filed by any state, ever.

    As for having been in the industry, I knew what was going down. I worked for a Broker/Banker in Wheaton, IL that caught onto a small time scam attempting to use our brokerage. what that was, a group of LOs posed as fall-out from a collapsed brokerage... they had licenses, they knew how to do loans, and they came to our brokerage looking for a new home. But they tossed about 50 fake loans at our processors, and the processors caught it. But most of what I learned about the big scams came from talking with Lenders. I had fellow LOs who moved up to Lenders, I was privy to conversations with owners of Title, I had worked with the industry for quite awhile and was well liked. I was approached to become a recruiter (recruit fellow LOs to work for a brokerage)... so I was thick in the industry. I was the kind of LO who could walk onto the floor at Countrywide's 3rd largest branch in the nation and say merry Christmas to everyone, or walk into the manager's office at any Lender... my best friend was the highest rated appraiser in the Chicago area; I ran down stamps for Title, all kinds of stuff. So yeah, I was privy to what was happening. But remember, I started in 2000, I had years in it before the sh*t hit the fan.

    Okay, what I've posted about this over and over and am getting tired of explaining it goes like this...

    initially, it was large scale of fraud, legit broker and title start-ups using identity theft and the new, insecure MERS to punch through multiple jumbo loans and do heavy damage to whoever opened the bundles... whoever bought the re-packaged product from Goldman Sachs and Bear Stearns. (JPMorgan bought Bear Stearns, that's who is being sued). this pounded the jumbo market. FNMA didn't do jumbos, so this is 100% Wall Street and they 100% shut it down. Which is why jumbos lost enormous market value; what happens to price when demand goes to zero? (remember... "demand" is actually how much credit is available) That was the meltdown. Then the market crashed... Fall of 2008. Now, when the market crashed, it resulted in millions of job losses. That was what created the foreclosure tsunami. Foreclosures were already at record levels from the housing bubble popping, all the bad loans could not get redone... 2006-2007-2008. But after the market crashed, good loans went into foreclosure, because jobs were lost. The foreclosure rate tripled. that was the tsunami.

    meanwhile, just about everything to be read in the news media distorted the real picture. why? Because none of those journalists were loan originators. Want to get the straight dope? Read it from LOs. The Mortgage lender Implode-O-Meter
     
  6. gabriel

    gabriel Governor

    Joined:
    Sep 29, 2011
    Messages:
    12,244
    Likes Received:
    32
    nope, just expressing my opinion that mortgage brokers are just middlemen. salesmen that find a buyer and put them together with a supplier and get a % for their work. i have friends and relatives that do it. not a terribly complicated job for the money they make. and expendable. banks can find their own customers if they decide to do so and in fact are going that way in many cases. again, a respectable career with some educational requirements but not overly tough to break into.
     
  7. jammer

    jammer Mayor

    Joined:
    Sep 19, 2011
    Messages:
    4,109
    Likes Received:
    69
    Sarge dips in from the darkside of the alternate reality universe of the far rightwinger nutjobs to tell us all that Rush says to buy gold and silver because the end is near and our money will be worthless. Only those with guns, gold, and faith in Rushbo are going to survive after 12/31/2112 according to the Sarge! I'm good on at least one.
     
  8. degsme

    degsme Council Member

    Joined:
    Sep 27, 2011
    Messages:
    19,820
    Likes Received:
    72
    No you are not. You are engaged in Mortgage SALES

    Um no. Foreclosure costs between 25% and 50% of the value of the property. So on a $250k property, it loses between $12k and $75k - and that assumes the property maintains its valuation.

    No it was not. as someone who took advantage of these products to start a business in 2001, I can tell you that legitimate banks with legitimate appraisers were the primary source. The issue was not identity theft (http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_full.pdf ) but rather the selling of products with 3-5 year balloons to people who could not afford the balloons (we could and we had a strategy for dealing with them from a business side).

    These were/are mortgage products used for the commercial/Investment side of the business - but deregulation allowed them to be sold to individuals. Between my ex and I, we had 3 Graduate degrees - on both the english and technical sides. And that allowed us to catch the bank changing the terms on us - in one case requiring a re-write of the closing docs THREE TIMES.... And we experienced this with Chase, CountryWide, IndyMac and Washington Mutual.

    The only bank we did not have this experience with was First Mutual of Washington - for a construction loan, since their policy was that they did not resell construction loans (one reason we opted for them).


    Now you do have some nuggets of fact scattered in there. Your point about the GSE's not doing Jumbos was true THROUGH MID 2005 when the GOP changed this. But that's not why the Jumbos lost enormous value.. the reason they lost such value is that appraisal of such high valuations was dubious to start out with. And since these initially were Non Conforming loans, the valuations were much much more dubious.

    BTW, the Market actually crashed over Thanksgiving Weekend 2007 but it had been in Freefall since May of 2005 when the "sub-prime" ARM market foreclosures spiked. And the reason they spiked is very simple calendar math. Most of these "exotic loans" had either 3 year or 5 year balloons. And even though 50% of them had been written by July of 2005, they didn't really begin to get written until mid/late 2001.

    Then just do the numbers... 3 year balloon on a mortgage that closes in say Sept of 2001 --- Balloon is due Sept 2004. Mortgage goes into default in October of 2004. Many states have 60 day waiting periods for Foreclosure filing. That puts us into Jan 2005 when the foreclosure gets filed, and May by the time it gets adjudicated.

    And the reason the "exotics" only came into play in late 2001 is because even though GLB passed in 1999, the Wallstreet backed loans didn't really appear until 2000. And it took them about 18 mos to suck up the "conventional" sub -prime market with ever more aggressive lending packages. By 2001 that had been suckedup but there still was a lot more cash in APAC looking for "fixed rate return securities"... and so the dereulated run up started.
     
  9. EatTheRich

    EatTheRich President

    Joined:
    Sep 18, 2012
    Messages:
    64,638
    Likes Received:
    3,380
    @days: thanks for spelling out your position & perspectives. Sorry if I was pushy about the unanswered questions I had. I still see your beef with gabriel as being legitimate disagreement & not harassment, but your position at least sounds like a conaidered one.
     
  10. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    No you are not. You are engaged in Mortgage SALES

    As much as I can appreciate your view point, I hope you can appreciate that what you are pushing is not only false, but also illegal (in the state of Illinois). From personal experience, as a prior salesman in various industries and as a LO, I can confidently tell you that it is also like a freak idea, because there's no way SALES, which I did plenty of in my life, works on a borrower. This is your fantasy viewpoint, borne of frustration with the mortgage industry and the crash it is blamed for. But it is not a reality based idea.

    Um no. Foreclosure costs between 25% and 50% of the value of the property. So on a $250k property, it loses between $12k and $75k - and that assumes the property maintains its valuation.

    More fantasy concepts. Ever met a foreclosure technician? Even aware that such a position exists? Foreclosure is not done on a percentage basis... it is fee based. That's why I chose the numbers that I did. Countrywide had the largest foreclosure unit in the nation. That's why Bank of America bought them and kept them together. (just as they were vanishing into nothing) Most banks would just sell the paper to Countrywide to do the foreclosure.

    I'm going to argue with the rest of your post also, because you have some more twisted ideas. But I'm going to do it in a separate post, that's a huge post by itself.
     
  11. degsme

    degsme Council Member

    Joined:
    Sep 27, 2011
    Messages:
    19,820
    Likes Received:
    72
    Sales works on Borrowers like any other product. A mortgage is a financial product. A Loan Officer simply sells that product just like the John Deere rep sells tractors. Neither one designs, maintains, nor actually needs to know a lot about the mechanics of each product. You pitch the value of the product, you close the sale and you do the paperwork.. THAT'S IT.


    As for foreclosure costs, my sister did a fair amount of "workout" business when she was a commercial banker in Palo Alto during the 1990s RE Crash in the Bay Area. No one says Foreclosure is done on a percentage basis. What I said was that a Foreclosure COSTS THE BANK between 25% and 50% of the valuation of the property in a combination of lost payments, legal fees, damage to the property, re-sale fees, legal enforcement fees and other COSTS

    So the notion that it does not cost a bank to do a foreclosure simply is not true. In fact its what pushed Washington Mutual under. They simply had too many construction loans that went into default and they could not get the valuation out of those mortgages because the foreclosure process lost them as much as 75% of the valuation of an uncompleted home.



    BTW, you STILL have not answered my question about what "value" is "stored" in money.
     
  12. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    I was out driving and before I could finish you've added this entrenchment to your fuzzy ideas. Remember, degs, I quit the business over three years ago. But your trying to equate a homeowner applying for a mortgage to the sale of a John Deere tractor... where do I begin? I had an experience with a newbie LO, who had just come from sales into the mortgage field; so there's a transition to becoming a banker while the prior concepts from sales rub away. This happened December, 2001. This guy had been a very successful salesman in the steel industry. I remember him talking the way you are thinking; having run a bunch of apps, which he spoke about like a salesman, saying he had closed all these deals. because "closed" in sales means they signed on the dotted line; but the young LO/old sales guy had not closed anything... he had merely begun the loan process; so I informed him that he still had a long way to go before any of those loans were "closed". During the loan process, you deal with every possible problem that could be lurking with the borrower or the property. And also with your loan. See, if you are some hot shot sales guy who goes out and writes a bunch of over priced loan apps, you will now watch all those loans disappear before closing. Family members come in, other loan originators come in, and any loan app that is taking advantage of the borrower should be weeded out.. they all are in a place like the Chicago 6 county area. Sales doesn't work on a borrower. Loans are not sales. and we have laws that make us prove we are doing right by the borrower, and that has to be satisfied as part of the loan process. Did you know that Dodd-Frank eliminated the YSP? There is no way to hide your charges, every one of them has to be spelled out. That's part of the disclosure process. Comparing a mortgage loan to a product for sale is like comparing an elephant to a gazelle.

    Yeah, so you lawyers speak with forked tongue, dontcha? Lets try it again; foreclosure costs are fee based, not percentage. That's by law. Somehow you managed to acknowledge I am right and still claim that you was right. You pulled a "Romney". What you said was percentage, and here you repeat it, but somehow you finish by claiming that your percentage is actually fee based. degs, what are you saying? what does this mean.... %? I always understood that to be a percentage sign... enlighten me.

    Who the heck said it does not cost a bank to do a foreclosure? Where did you get that notion? Not from my posts.

    I did answer that question on value, unless you actually explained what it is you are asking and I missed it... I'm not good at going back and reviewing posts.
     
  13. degsme

    degsme Council Member

    Joined:
    Sep 27, 2011
    Messages:
    19,820
    Likes Received:
    72
    So its a more complex sales process. I've been involved in sales processes between a multi-national and the GSA. Its similarly complicated. That doesn't change that its basically a sales process where you are filling out forms and followign processes handed to you. Its the difference between someone certifed to run a steam plant and the people who actually designed how it works.

    Loans are sales. Sales of a financial product. Nothign more, nothing less. the paperwork is simply reguatory due diligence but mostly legal CYA strucutred by the banks lawyers and underwriters to maximize profits and minimize risks.

    irrelevant to your CLAIM. Your CLAIM was that on a $250,000 house with a $200,000 mortgage, going into foreclosure would cost the bank LESS THAN the $50k equity in the property.

    That MIGHT be true WRT the fees to file the foreclosure motion and litigate it on average. But it does not include

    • Lost interest income on the property until the property re-sells - often over 1 year these days. And at 5% ARMs,, that by itself is $12k on your hypotehtical. And this is PROPORTIONAL TO THE VALUE OF THE LOAN and thus is best represented by A PERCENTAGE
    • repair costs associated with the moveout and lack of maintenance the property has undergone - this too is proportional to the property and thus REPRESENTED BY A PERCENTAGE
    • resale transaction costs - IE RE fees for the resale which definately are A PERCENTAGE (6% in this case that's an additional $15k so that's $27k JUST IN the lost interest and RE fees)
    • Depressed property valuation due to the expectation that a foreclosure is a property losing the bank money every month


    Your CLAIM was that banks had no incentive not to foreclose. And that's not the case. BANKS have an incentive to work it out. It is the Mortgage payment PROCESSORS that have an incentive to foreclose since they are graded ontheir collection performance. and once you stop paying, its better for them to get you off their collection books.
     
  14. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    Okay, lets go back a few paces. My "claim" was actually a discussion about how fraud was responsible for the bulk of the write-offs in 2006-2007-2008, not foreclosures. My "claim" was that a $200,000 mortgage on a $250,000 house that went into foreclosure would not write off anything.... versus a fraudulent $200,000 mortgage that was identity theft refi, or totally fabricated purchase... would write off the whole $200,000 and immediately. Then I followed the crash and the subsequent foreclosure tsunami that resulted from job losses. You are really detail oriented and are good at picking out trees and examining them, but not so good at seeing the forest. I've told you this before.

    AND ... Loans are not sales. I've already covered that... that ol' stone head notwithstanding. Loans are loans. Loan originators are mortgage bankers. I passed the Illinois BAR for Loan Originator and then passed the Illinois BAR for Real Estate Salesperson. Home sales are sales. Realtors are salespersons. But after they make the sale, the buyers usually need a loan to close the sale. The Realtor handles the sale. The mortgage banker provides the funding. If the buyer needs a loan, the buyer applies for a loan... that is not the sale. Loan Originators do not sell the buyers a loan, no one thinks that way, (no one in mortgage banking) we are more like an advocate who aids the borrower in the loan process... if the borrower understands all the facets of mortgage banking, and has the expertise and time... they don't even need a Loan Originator; they are free to do the whole process themselves directly with a Lender. You have an opinion that works for a moment as long as it isn't considered in lieu of the reality of the loan process and all the laws that it involves. Your idea that Loan Originators sell loans for a living is just warped, it doesn't at all match what they really do for a living. Loans are a lot of work. Loan Originators do that work for a living, they work hard. That's what they really do, they are not car salesmen. I sold cars too, it isn't remotely close to mortgage banking. Like I said, taking an app is the very beginning of the Loan process... the Loan app is four pages, by the time the Loan gets into closing the folder is over an inch thick with all kinds of hard work... that's the loan. You have a very low view of Loan Originators and not at all a fair view. I remember my taxi boss asking me which was harder; driving the cab or doing the mortgages (I held my license the first couple of years I drove the cab) and I told him; working the mortgages was much harder work. He was surprised too. People don't realize how tough that business is.
     
  15. gabriel

    gabriel Governor

    Joined:
    Sep 29, 2011
    Messages:
    12,244
    Likes Received:
    32
    selling a service. period
     
  16. justoffal

    justoffal Senator

    Joined:
    Sep 18, 2011
    Messages:
    21,006
    Likes Received:
    4,953
    If we Devalue the dollar you will create hunger and poverty.....What the hell are you talking about wooley.

    Devaluing the dollar to sell more manufactured goods is self defeating in today's Global marketplace. Where it worked in the thirties and forties it won't work today because manufacturing is no longer concentrated in the European and North American centers but is now everywhere...Asia, South America et cetera.......

    You don't drop the currency to the level of production Wooley....that's a formula for suicide....you bring production up to the level of the currency....this is econ 101.

    JO
     
  17. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    where's your license, pal?
     
  18. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    oh, really, tell us about your background in mortgage banking, Gabe?

    if you have any....
     
  19. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    I absolutely agree with you here, JO. All this talk about devaluing the dollar so we can sell more goods... the time to do that is not just after you shut down all your factories.
     
  20. Days

    Days Governor

    Joined:
    Sep 26, 2011
    Messages:
    17,039
    Likes Received:
    2,247
    gabriel is stalking, pure and simple. He was banned for doing that and he went right back to it. You notice, he calls me out and states that I am a Liar, that I am no mortgage banker... as if this guy personally knew me (he doesn't). I had to look up my old license at the state and post it to shut him up. that kind of personal attack is against the rules. Then, when he sees that I carried the license, then he turns and attacks the profession; obviously, he is just continuing his personal attack on me; first I am nobody, then when I expose his Lie, I'm still a nobody cuz Loan Originators are just cheap salesmen, not real bankers. Its a non-stop attack on my person, he doesn't have a single thing to say about the top post.

    I posted for ten years in moneybox. I understand the currency better than anyone here. I've got hundreds of posts on the subject. I have posted more about money than about the scriptures. I don't favor or disfavor anyone's person, if I agree with your point, I agree with it... if I disagree with your point, I'll disagree, I don't play politics.

    Wooley and justoffal understand the money. You've shown some insight on this subject. Arkady has a solid foundation. LeRoy teaches economics on the college level. I'd like to see what kind of discussion we could brew up. I'll give it some thought.
     

Share This Page