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CFPB says lack of mortgage regulation failed consumers

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Mortgage Professional America | 16 Sep 2013, 06:35 AM Agree 0
CFPB director Richard Cordray has claimed that the pre-crisis lack of oversight in areas of the mortgage market let consumers down, and has defended the role of the CFPB
  • John C Durham | | 16 Sep 2013, 09:20 AM Agree 0
    He, Elliot Spitzer & Kamala Harris are the winners in getting the most from banks in court. Actually, he is the overall winner by several hundreds of millions. Appreciate you concentrating on the people who are actually on OUR side of this long, long fight which will continue until we have all of the main jackals in the TBTF banks in jail.
  • Dan Harp | | 16 Sep 2013, 09:20 AM Agree 0
    It was the lack of a functional educational system in this country that failed consumers, not the previous mortgage regulation!
  • Elaine R | | 16 Sep 2013, 09:35 AM Agree 0
    That's absolute bull-crap!! It was Franklin Raines, when he was head of FNMA that saw a golden opportunity (courtesy of George Bush) to make buckets of money by giving his seal of approval to the sub-prime mortgages that took off like a shot. If FNMA had not drafted the regs, or purchased them, we wouldn't have this mess. Let's get real, and pinpoint the actual source of this mess.
    There is NO need to "protect" the consumer with anymore ridiculous regulation.
  • Paulsmoney | | 16 Sep 2013, 09:40 AM Agree 0
    Competition in lending is a good thing. Regulations in place, not the lack of regulations, were ignored.

    Advocates of a home and a home mortgage for everyone regardless of their resources or credit history is what failed across the board, but mostly it failed consumers.

    I think the era of 'entitlement thinking' brought about buyers unqualified for home ownership by previous standards long in place.

    It was the damn Barney Frank freaks that messed up real estate and real estate finance.
  • Cosmicflyer | | 16 Sep 2013, 09:42 AM Agree 0
    If it is going to be a level playing field, why then aren't mortgage officers at the 2 Big To Fail banks required to take the 21 hours of school work, take state & federal tests, fingerprints, criminal background checks, 11 hours of continuing education every year and pay all the fees for each along the way? Can you say Double Standard Mr. Cordray??
  • Cosmicflyer | | 16 Sep 2013, 09:47 AM Agree 0
    Level playing field?? Why then aren't mortgage originators at the 2 Big To Fail Banks made to take 21 hours of classwork, state & federal tests, criminal background checks, fingerprints and 11 hours of continuing education each year?? And pay all the fees along the way? Double Standard Mr. Cordray??
  • Robert Payton | | 16 Sep 2013, 09:49 AM Agree 0
    It has evolved into a "compliance validation process" rather than ensuring consumers receive a mortgage that is right, and effective, for them. In virtually every case (appraisals, closing costs, MI fees) the consumer now pays more than when "oversight was lacking".
  • Bill in Florida | | 16 Sep 2013, 10:19 AM Agree 0
    What a crock. Blaming "unchartered" players for the biggest part of the mess again. What he means first of all is "BROKERS" the lowest rung on the totem pole and easiest to play the blame game with, right? They didn't package the MBS or derivitive scams, nor set the guidelines or underwrite the lenders products offered by the "LENDERS". He and the CFPB were so fair they received well over 100,000 comments and complaints during the comment period from various mortgage association memebers and licensees and they were simply ignored or factual details miscontrued or twisted to favor the arguments of the CFPB strong arm goons on the review board. Regulation is required but this has become a political club to beat any bank competition out of existence. Can you say lobbyist contributions? The big lie continues to get crammed down the throat of a consumer base who neither understands what is being put in place nor cares enough to do anything about it if they have a clue.
  • Ginger McCleod | | 16 Sep 2013, 10:20 AM Agree 0
    The unfortunate fact is that Cordray has and still is unable to help consumers now who were mistreated by the big banks during the crisis. He fails to see the big picture. The monies he has recovered are inconsequential.
  • Drue Jordan | | 16 Sep 2013, 10:43 AM Agree 0
    Once again, the bureaucrats are justifying the treatment of the symptom instead of the disease which originated in Congress in 1996.
  • Cosmicflyer | | 16 Sep 2013, 11:26 AM Agree 0
    This all started in the 70's under Jimmy Carter when he created the Community Re-Investment Act. Clinton tweaked it, Bush questioned it, then we had the melt down. All the Democrats doing so the people that vote for them can get a house. Plain and simple.
  • Did he say this with a straight face? | | 16 Sep 2013, 12:26 PM Agree 0
    "But in the nonbank sphere, they’re often not used to being regulated at all…”, “That model really failed us in the mortgage market and in the lead-up to the crisis. And it was a lot of the unsupervised areas where some of the most irresponsible practices occurred.” Nonsense! Never provides any specifics of 'irresponsible practices' or data on the extent of these which would indicate the need for legislation. No research or testing a ‘solution’ before making legislation. Business is being made the enemy from which the CFPB will protect the ‘victims’ as an argument for its existence.

    Your homework question; What happened when it was ‘decided’ that the artificially low rates from 2001-2005 were to be raised as predictably as an escalator, and who made that decision? Hint; where is the CFPB housed and where does it get it's funding?
  • Bill P | | 16 Sep 2013, 01:29 PM Agree 0
    Let's just take one of hundreds of new regs:
    LO compensation.
    Loan Officers used to make 1/2 pt on a mortgage, sometime an 1/8 or 1/4 overage depending on the market. NOW with FED oversight LOs earn an average of 1.5% on a mortgage up to 2%.
    But they make the same on everyone; how has this helped the consumer? Maybe the Fed's should go back to overseeing the medical insurance - I hear they are doing a bang up job there!
  • John C Durham | | 16 Sep 2013, 03:06 PM Agree 0
    Pretty silly to have a criminal element that has received $26Trillion from the Fed since '07, the banks have used it to speculate and for our problems most here are blaming the people. There is $1.5Thousand Trillion in derivative paper from 12 Wall Street & European banks. At best 75% is backed by real securities. I'm sorry, but you best grab the TBTF banks first. After that, the lights will come back on. About 3,000 bankers will have be thrown in jail, the FDIC will have to move in with new management, the banks will have to go through a bank chapter 11 writing off the net left over hot derivative paper. While you keep the doors open and everyone else employed, you sell off the TBTF banks to community banks OR state and large city PUBLIC banks, ( perhaps, created similar to the Bank of North Dakota) and you never let Wall Street have banks again.
  • Brad | | 16 Sep 2013, 06:12 PM Agree 0
    It's all of the above buy it takes much longer
    To do a mortgage and we do less mortgages but we
    have large fines if it is not some correct.
    I think making 1.25% on a mortgage is well
    deserved. You are getting a much cleaner
    product. If they mess with our compensation
    there will be no one left to do a mortgage and the
    Big banks win and will rip you off while
    having JR do your mortgage in about two months.
  • M Scott | | 17 Sep 2013, 05:13 AM Agree 0
    This is all a huge mess. All I can say is that I owned and operated a small mortgage company for 13 yrs. I didnt get rich but I was able to have a flexible schedule to raise my daughter as a single mother and finish my 4 yr degree on a fair income... the American dream, right? That was taken from me. I tried to wait it out for 2 yrs, went through all my savings, and still had to go to work for the big bank to now struggle and make pennies for 10 fold the hard work. There went my American dream.
    They were successful in putting a lot of the honest small business owners out of work.
  • Sherry L | | 17 Sep 2013, 09:10 AM Agree 0
    From New York Times 1999: "In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on mortgages that it will purchase from banks and other lenders.

    The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional mortgages. Fannie Mae officials say they hope to make it a nationwide program by next spring.

    Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage mortgages among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

    In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more mortgages to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional mortgages, can only get mortgages from finance companies that charge much higher interest rates — anywhere from three to four percentage points higher than conventional mortgages.
  • Wm Matz | | 17 Sep 2013, 04:31 PM Agree 0
    The comments reflect lots of good points and lots of myths. As Dan Harp notes, the lack of consumer financial literacy leaves consumers vulnerable to scams or misunderstanding complex products. Sadly, literacy about the mortgage system is poor even among other financial professionals, who often know just enough to be dangerous. [I was originally qualified as an expert witness in real estate finance in an atty malpractice trial; sadly, the attys incurred 6-figure liability simply out of ignorance.] The problem is exacerbated by the lack of education and training requirements for mortgage originators.

    So when Wall St designed deliberately complex products, it knew that borrowers would have few folks to advise them. And then Wall sSt made sure the garbagfe would sell by offering [illegal] 4-5 point rebates on the most profitable [e.g. Option ARMs] products. Yes there was fault all around, but Wall St was the puppet master.

    As to Fannie Freddie and the CRA, impact is overstated. Read Morgenson/Rosner, "Reckless Endagerment" for a great history.
  • Tim | | 24 Sep 2013, 09:58 AM Agree 0
    "It recognizes that only supervising chartered institutions is not a very workable model because in the actual marketplace for several of these products", WHAT???

    Im my State, the brokers were audited as often as the Banks. Brokers never created the programs, nor underwrote the files. CFPB can keep creating its own view of the world, but its not reality.
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