Mortgage Crisis

Monica - Bowling Green, Kentucky
Entered on October 11, 2008
Age Group: 18 - 30

This I Believe

I believe that the greed of mortgage brokers has led to the sadness of many today. The finance industry is one that is complex and hard to understand. One portion of the large world of finance is mortgage lending. In the past couple of years there has been a “real estate crisis.” Many have attempted to point blame. Who caused this crisis to occur? Was it the government, uneducated borrowers, lenders? No, I believe the main source of this issue is mortgage brokers. A typical mortgage broker employed by a finance agency does not have the standard training of a loan officer. These companies do not fall under the radar of strict government regulation.

Mortgage brokers are looking to benefit themselves only and did not look at the consequences of what they were doing. A couple could come into a broker’s office requesting financing to purchase a house. The broker would then find a product that would “suit” that couple. In many of these cases the borrowers were placed in an ARM (Adjustable Rate Mortgage) loan; a loan that after a period of time would adjust from interest only payments to principal and interest payments. People thought this was wonderful because they could finally live the “American Dream” of owning a house. During the entire process the mortgage broker knew very well that once the payments adjusted to principal and interest that couple would not have the cash flow to pay their payments. All the mortgage broker was concerned about was the commission check they would receive once the documents were signed. I myself initially did not believe this could be possible. That people who were trusted to lend money would knowingly allow people to borrow outside of their means. But sadly it is true. I myself am not a mortgage broker; however, I did know one. He admitted to me that anything was done just to “close the deal and get a check.”

Had mortgage brokers not been looking out just for what was going into their pockets, they would have been looking at the full picture for those clients who may not have found their “American Dream” but would have found the dream that is now being lost in foreclosure.