Comments on: What the Space Shuttle Challenger Disaster Can Teach Us About the Current Mortgage Lending Crisis

By: Elisa Wu

Elisa Wu — Sun, 28 Feb 2010 09:32:28 +0000

I agree with Sam that there must have a change or some sort of regulation to the whole system; it seems for from Bank all the way to the LO, there are too many “opportunities” to damage consumers and satisfy all those greedy’s pockets; their goal is to get the more money out of consumers legally and do not care the consequeny and at the end, lead their own loss, look WAMU is the perfect example.

By: To The Students From the Nov 12, 2009 Comprehensive Class : National Association of Mortgage Fiduciaries

Thu, 19 Nov 2009 20:01:58 +0000

[...] There was a conversation going on at one of the tables regarding how the subprime meltdown is really “nobody’s fault.” I mentioned I wrote an article on this theme in 2007. Here it is: “What the Space Shuttle Challenger Disaster Can Teach us About the Current Mortgage Lending Cr… [...]

By: Ross Palmer

Ross Palmer — Fri, 31 Jul 2009 02:13:39 +0000

The HVCC has taken a lot of pressure from the appraisers, although this was a frustrating thing to deal with as a mortgage company, it has proven to be working. Real Estate agents are always going to try to be in the mortgage side of the transaction because they want the deal to close as bad as everyone involved. Since a year ago when this was written, I believe the industry as a whole has come a long way. The more irritating regulations the Feds come up with, the more people fall out of the business who cannot keep up. The companies who can keep up with the changes and follow the rules will be the ones who come up on top. As long as we stay educated, while keeping the cosumers educated, this will all turn around.

By: Melissa Morgan

Melissa Morgan — Sun, 21 Jun 2009 03:04:41 +0000

It is our job as mortgage professionals to know and to know how to explain the products available and best suited for our borrowers situation.

As the loan starts here and begins its journey with each step having an additional layer of risk added to it that continues to grow well through closing.

There are too many layers of risk and opportunities for fraud through out the process. Too many incomes relaying upon future services and fees of each transaction.

By: Joe Dahleen

Joe Dahleen — Thu, 14 May 2009 18:36:36 +0000

Will those in the trenches stay silent again?
I think that it is impossible at this point. With each and every funding being tracked all the way back the originator and the processor – those days should be gone forever.

Underwriting of loans today take on a completely different process.
All loans require and executed 4506-T. Even after it is processed and the underwriters still want the tax returns.
More Fraud reports are being done at the point of sale.
No more 100% Financing – Borrower need more skin in the game.
Even low down payment loans require upfront mortgage counseling.

Today there are more checks and balances than ever before so this should be a thing of the past.

By: Raylene Ramos

Raylene Ramos — Thu, 23 Apr 2009 21:58:09 +0000

In the case of the space shuttle in comparrison to the mortgage industry. The space shuttle should have never been launched due to something just not looking right. Same with qualifying for a loan. It starts with the loan originator…if something doesn’t seem right on a loan application, than it should be looked into to ensure a loan is properly qualified. If the bank or loan officer decides to go along with the red flags and proceed to lend the money, the consumer could be in real danger down the road and cause them financial devastaion.

By: Mary McGraw

Mary McGraw — Wed, 22 Apr 2009 00:14:02 +0000

Everthing needs to be explained as they are going along so the consumer can understand instead of just telling them to read everything and not help them to understand.

By: Mary McGraw

Mary McGraw — Wed, 22 Apr 2009 00:12:05 +0000

Just because i feel that in the past to many people were doing the wrong thing to people and thats what has made alot of the problems we are having today.

By: Mary McGraw

Mary McGraw — Tue, 21 Apr 2009 22:54:13 +0000

I feel that everyone from the beginning of the deal to the end should let the people know what they are getting into, explain what is in the paperwork and dont try to do what is wrong just to get ahead. Just do the right thing.

By: Terry Birkland

Terry Birkland — Sat, 04 Apr 2009 00:00:58 +0000

Working on a commission doesn’t mean you are easily corrupted. A salary would kill this business for me. It sounds to me that the LOs were simply the “first mile” in a process that was almost like a “Ponzi” scheme that was doomed to fail when real estate prices went south. This business is too vunerable to a downturn in the market. This is the issue that must be addressed. I know my home has dropped in value $200,000-300,000 in the past year or so. I also know that building a new home hasn’t changed very much. Homes will start appreciating in the next growth cycle but that won’t help in the short term. I think LOs do beat themselves up a lot for this mess.

By: William Platts

William Platts — Fri, 27 Feb 2009 18:07:26 +0000

Great analogy! Thank god we only ruin lives in our industry and don’t kill them. Washington Mutual while originating my last homeloan presured me to not only go with one of their flim-flam loan products but also harrassed me about buying less home than I qualified for. I had to raise my voice and be abrasive to get the point across that I would only originate a 30yr fixed rate mortgage. I also told them what fees I would and wouldn’t pay or I would go elsewhere. I wasn’t a LO at the time five years ago but was very knowledgeable about anything to do with money. Had I not been as knowledgeable as I was they would have totally screwed me up one side and down the other. Pathetic!!!!

So, even your local WAMU was stepping way out of bounds during this interesting time, and look where it landed them. Largest savings and loan in America gone!!!!!

Could we end up gone???? If our O-ring corrodes any further the answer I believe is yes. Not in a literal sense but rather in the sense of losing the ability to make a better than average income by working hard and being honest. I do not believe salaries are the answer, America’s strength was originally based in free enterprise. Its our ethics that are in question. As I said in my last response the answer is ethics with a bite. You work ethically and you don’t get bit by our SELF-governing body. So I believe this self-governing body with a bite is a must before we can stabilize and professionalize our work place.

By: Teresa Tait

Teresa Tait — Sun, 08 Feb 2009 05:03:44 +0000

Great comparison. I got into this industry right in the middle of the boom. At that time, I asked many times how in the world could we lend so much to people that had so little. I was told to not worry about it, just get the deal done.There were quotas to meet. I am thankful for the changes coming and hopeful for a profession that will truly benefit all of us. As an industry we have had to fall and learn some tough lessons but hopefully we will get up and become stronger because of it.

By: Vladislav Baydovskiy

Vladislav Baydovskiy — Mon, 02 Feb 2009 04:39:20 +0000

I defenetly see the analogy, but I think the whole system needs to be re-invented. The LO needs to be proffesional, and always act in the best intrest of the client. But there is a also a good point that a client needs to be resposible for their own actions also. I think there should right balance between LO being responsible, informative, and acting in the best intrest of a client, and consumer doing their own due deligence. For us to come out strong from this, we all need to be resposible, LO’s, Banks, the consumers.

By: Beth Damery

Beth Damery — Wed, 28 Jan 2009 22:44:55 +0000

I enjoyed the analogy and I can see the comparison to what happened in the mortgage industry. I am ready to move forward with solutions and stop revisiting over and over who caused the fall. Let’s focus on the future and be responsible professionals who will always act in the best interest of our clients.

By: Laurie Morgan

Laurie Morgan — Wed, 28 Jan 2009 22:33:07 +0000

What an interesting analogy, but right to the point.

I don’t believe paying originators like a processor will solve anything. The reason Brokers/Mortgage Banks are different from the brick and mortar banks is that we have the ability to hire the most efficient person for the job. Along with the best vendor’s to ensure the clients file is closed in a timely manner. Most of us are not paid unless the transaction closes, so why not surround your self with the best and give the best service possible?

Again it all comes down to personal ethics – do right by your customers and they will return to you and their referrals will come also.

By: Mila Usher

Mila Usher — Sat, 03 Jan 2009 17:11:29 +0000

It’s my opinion that the majority will stay silent again. It’s human nature to look out for number one, themselves. If they can find an easy way to line their pockets they will. This is unfortunate but true.

By: Rand Wood

Rand Wood — Sat, 03 Jan 2009 04:06:41 +0000

Great analogy.I have often thought of each of these pressures that every one in the mortgage process experiences at one time or another.It gets back to the final question in the article “Will those in the trenches please speak up?” We had it can we get it back?

By: Mike Vandenbos

Mike Vandenbos — Wed, 31 Dec 2008 05:48:51 +0000

I believe Underwriting guidelines are the gatekeepers of our industry, like the Bill of Rights is to the Constitution. Guidelines hold us accountable to originate sound loans. Guidelines are the “O” ring. I remember when it was a joke for account reps to come in and a loan officer would ask if they had any stated, non-owner products…the joke became a realty.

FHA has the four C’s of loan approval: Character (Credit), Collateral(Appraisal), Capital(Reserves) and Capability (Income); Consider that the lion share of loan defaults come from the Subprime sector where a loan could close even if it only had one of the four C’s, Credit. That’s craziness!

I like Denise S. comment regarding UW: “If it is a guideline it needs to be tempered with documenation, and critical analysis and objectivity.”

I also appreciate Susan L. comments about proper incentives and more emphasis on salary based originators with bonus potential for service and perhaps loans that have no late mortgage payments in a 3-5 year period…a delayed bonus structure.

I’m not sure whistle blowing should be what saves our industry? I would defer to Jillayns earlier comment about Kant regarding the univeral imperative, “is it good for all involved”? Sound underwriting guidelines with an emphasis on character is sustainable.

By: Bartholomew Henning

Bartholomew Henning — Wed, 31 Dec 2008 00:16:45 +0000

This article kind of reiterates what I had mentioned about mortgage fraud. You have a duty to say something when you see something wrong going on. If you don’t, you aren’t at fault, but you are doing yourself and your industry an injustice. If you say something and you are stifled, at least you can sleep at night!

By: Kent Kiser

Kent Kiser — Tue, 30 Dec 2008 22:17:41 +0000

As I stated in an earlier blog, it comes down to one person in charge of the whole process. As originators we have to see the road ahead in a very clear manner. At the end of the day it is not what went wrong but who was guiding the ship.
Recent improvements in licensing and in the education format are clearly steps in the right direction.
As far as the YSP thing goes, I’m all for it if everyone has to disclose.

By: Cheryl J Barr, 510-LO-38949

Cheryl J Barr, 510-LO-38949 — Tue, 30 Dec 2008 19:44:08 +0000

It is true that our industry needs on overhaul but we do not need to create a new system. Career and professional people continue to look for new ways to improve their business, service, value. The licensing and education requirement are not a burden to those of us who take our fiduciary responsiblity serious. It only helps to eliminate those people who do not understand the industry or care about the public at large. I believe this to be true in all aspects of our industry whether it be apprasiers, title officiers, LPO’s; there is intergrity in all arena’s, if you look for it. No one wants to be known as a whisle blower but on there other hand, integrity that can not be compromised is always admired and sought after. The choice is really yours. I hope Roger Boisjoly did everything in his power to communicate something as simply as an O-ring. If he did not, I would not want to live in his dreams. I did enjoy reading Brad’s comments about YSP. I am not sure I agree with him but do appreicate the other side of the coin.

By: Benjamin Bergsma

Benjamin Bergsma — Tue, 30 Dec 2008 19:30:03 +0000

I think deep down inside we all knew that the “O ring: would fail and the indstry would go bust. Every thing was out of constrol. Greed and egos were the driving force behind this disaster.

By: Mark Johnson

Mark Johnson — Sat, 27 Dec 2008 22:20:46 +0000

Everybody should be held accountable and concerned with the mortgage process. If everyone would do their job in a professional manner, loans would developed, processed, underwritten, funded and sold as intended years ago. This should include realtors, appraisers, closing and title companies as well as bankers and loan officers.

510-LO-44600

By: Yoshiho Takamoto

Yoshiho Takamoto — Thu, 25 Dec 2008 18:33:06 +0000

Like the Challenger, in the mortgage industry, we thus have multiple people involve to complete the loan. However, up to to now, with minimal regulations, every player including the LOs were getting away with unrealistic loan programs for their clients. But now I believe we have taken the first step to change this mortgage crisis. Each player learn to listen and try to comprehend each others job and respect each other. Though we have multiple people involved in each loan transaction, I believe it will take longer for this industry to come to order.

By: Navie

Navie — Tue, 23 Dec 2008 22:45:32 +0000

This is a very complex issue because there are so many entities involved. I have a question. If a Realtor is allowed to charge 3% on each side of the purchase price and the client can not make an offer on a property through a different Realtor once it was showed by another Realtor they previously were working with. Why not implement the same law for us. Many times I had clients who were working with multiple lenders or LOs without anyone’s knowlege until the last week of closing. In this case if the loan of closed in the same loan program that was previously discussed with the other LO the client should hold account for their actions. So far, there isn’t a law to protect the LOs and more importley, we have been working for free more offen than not if you are Ethical like myself.