If you don’t have thick skin and don’t want to know the truth, you will not want to read this.
As a relocation specialist I get asked questions about the housing slump daily. In fact I have been interviewed 10 times the past 2 months. It irritates me how facts can be manipulated. Again, if you don’t have thick skin and don’t want to know the truth, you will not want to read this. My research is based on countless hours of pouring through real estate sales, foreclosures and interviewing many professionals related to the real estate industry. Although most professionals will not state the obvious and prefer to give some long winded explanation that doesn’t make sense, I’m going to give you the good, bad and ugly. I’m annoyed at all of the ridiculous reasons why the country is facing a housing slump and I’m going to tell the truth. Although there are some minor reasons causing the housing slump, one of the major reasons for the housing slump is abusive lenders. I will explain abusive lender have a huge part in the down turn in the real estate market.
To start, back in the 80’s a mortgage professional most likely worked for a bank had an extensive educational back ground and had many years of mortgage experience. The laws didn’t require experience and an education; the banks required their employees to have experience and an education. When the real estate market turned around in the early 90’s, a mortgage company opened up on every other street corner. In some cases, they opened up in garages and basements. Not all of the mortgage companies were bad and in fact some offered good mortgage products with good service. The abusive lenders hired employees with no mortgage financing experience. Most of these employees were lured into the easy money of the mortgage industry from their low paying sales job. A perfect employee for an abusive lender was a salesman who could sell ice to an Eskimo. The average mortgage professional went from having 15 years of experience in the 80’s to 1.5 years in early 2001. With the number of loan programs offered going from 20 to thousands and the number of wholesale lenders going from less than 50 to hundreds in the same time period, most mortgage professionals lacked the education to offer consumers the correct loan programs or the best advice. It was nothing for a higher risk borrower to be charged 6 points (1 point is equal to 1%) on a loan. In fact one lender bragged that they jammed a borrower at closing and charged 20 points on the loan. They said that they knew they would close because they were in a pinch. Borrowers looking for the best rate would settle for the lender who quoted the lowest rate not knowing that that lender would make up the rate somewhere else in the loan or change the rate at closing.