Once again Mortgage Brokers are the culprit

Andrew Cuomo, the New York State Attorney General is probing the appraisers to find if they are the root cause of the subprime disaster. Two big Manhattan based appraisers signed statements saying they were improperly pressured by mortgage lenders and brokers. The pressure was based on them not getting any more business from that lender if they were didn't inflate the value of the property.

Why would anyone want to work with someone who wants them to act unethically? Now appraisers want to point the finger at other parties. In effect cutting a deal with the AG's office. Also in the Bloomberg article, Y. David Scharf, the attorney for Mitchell, Maxwell and Jackson (my favorite appraiser) dropped the word "lender" from his statement to focus entirely on the little guy - mortgage brokers. He emailed this statement for the Bloomberg article, "It is clear to me that the targets of the investigation are mortgage brokers along with anyone else who exerts any form of economic pressure on appraisers." He wouldn't want to upset big bad, powerful lenders would he?

I guess the next step is for mortgage brokers to point the finger at the real estate professionals, who will point the finger at their buyers, who will point the finger at the developers, who will point the finger at investors, who will point the finger at....blah, blah, blah.

Of course there a mortgage brokers AND lender loan officers AND appraisers AND real estate brokers AND the consumers themselves who have a vested interest in the rising values of real estate the past few years. To keep these people out of the real estate industry is a must. Those who engage in unethical behavior should be warned, those who commit crimes should be punished. There's no question about that.

What gets me about the statements that these two appraisers is their implied complicity while covering their asses while pointing the finger elsewhere. That's what needs to stop.

Our Name on Toast

Recently I've been working on forming my own mortgage brokerage and real estate brokerage with my business partner. It's called The Metropolitan Group.

Check out our name on toast.

Get your name on toast at Your Name on Toast

Keep Your Life In Balance, Ethics Will Follow

A 2007 Deloitte and Touche USA LLP Ethics and Workplace survey shows a strong relationship between having an excellent life/work balance and positive ethical behavior. Additionally it showed that management and supervisors who offer positive reinforcement for ethical behavior have a major impact on their employees as well.

If you are dependent on your job for all of your psychological needs you may be leading yourself to a dangerous place regarding your self worth, and where you fit in the world at large. This can become especially dangerous and lead to unethical behavior with there is an ethical dilemma that has a major impact at work. Those whose entire lives are tied up into what the position on their business card reads, may not make the most ethical decision or take the most ethical action, if they think it will result in a negative at work.

There is also an interesting note on job dissatisfaction. The survey found that 60% of those surveyed believe that job dissatisfaction is a leading reason why people make unethical decisions at work.

Disclose, Disclose and Re-disclose

Federal Reserve Chairman Ben Bernanke recently addressed a Federal Reserve Bank of Chicago Conference focusing his comments primarily on the sub-prime mortgage market. Chairman Bernanke said "in my judgment, effective disclosures should be the first line of defense against improper lending. If consumers are well informed, they are in a much better position to make decisions in their own best interest." The Chairman also noted that he does not expect significant spillovers from the sub-prime market to affect the rest of the economy or the financial system. To view Chairman Bernanke's speech, click here http://www.federalreserve.gov/boarddocs/speeches/2007/20070517/default.htm

Those Troubling State Income Mortgages

In a recent statement, Comptroller of the Currency John C. Dugan said he is increasingly troubled by the growing use of unverified "stated income" in sub-prime lending. Dugan argued that stated income (1) presents too great a temptation for misrepresentation and, in its most extreme form, outright fraud; (2) undermines transparency; and (3) is not a safe and sound underwriting practice. Dugan also said that he believes the federal agencies should address this practice in their pending guidance. To view the OCC press release, here http://www.occ.treas.gov/ftp/release/2007-48.htm or to view Dugan's remarks, click here http://www.occ.treas.gov/ftp/release/2007-48a.pdf

Reverse Mortgages for Purchases

Generally thought of as a refinance only transaction, reverse mortgages are also available to qualified borrowers for a purchase transaction. This can be very handy for those who are age appropriate and want to downsize or relocate. No mortgage payments on a new house isn't a bad thing.

AmTrust Mortgage Eyeballing Coop Loans

AmTrust Mortgage (formerly Ohio Savings Bank) is looking to make a play for the New York City cooperative mortgage market. They have been FNMA approved to lend against coops for a long time, but only recently decided to try to wrap their heads around getting into this line of lending.

They've hired a top dog who formed Citibank's coop lending and asked Jonathon Miller to push out some numbers on the size of the market (about 5 Billion USD), so perhaps they are getting comfortable with this property type.

Interesting for those of us who have been doing coop mortgages for years to see a lender making baby steps into this robust market.