Do you really think that loan officers in banks feel more pressure for the loan to perform after they get their commission check? Do they really have these kind of consequences on them? I have many friends in the retail channel and they have never once said they are paid on the performance of the loans they originate. Or that they are worried about having to buyback a loan.

Again, when the retail loan officer has to get surety bonds, audited financials, continuing ed, state audits, FBI checks and so forth I will believe that they may just have an idea oh how much responsibility we take on versus them.

Do retail loan officers have the same buyback clauses in their employment contracts that I have in my broker agreement?

Please stop saying we have no accountability. Its simply not true.

Banks are supposed to create proper loan products. They are supposed to underwrite them and put them through quality control. “IF” the loans brokers originate perform worse than the retail channel, its the greed of the banks to blame to not spending enough in these departments. After all it cost a lot less to originate a loan thru a third party than through a retail channel.

As far as Tom’s idea that only the big banks will make it. I think he fails to recoginze the benefits of small organizations. I like working for an organization that can change overnight. We can turn on a dime. I dont have 14 vice presidentsa ordering different reports. I also dont have marble lobbies to pay for. The idea of just big banks is simply not practical. Technology and skill will succeed not size.

Have you tried to get a second mortgage lately? They too have all but dried up. Subprime is dead unless you can prove income and can make lower ltv’s work. Alt “A” is just as bad.

Sensible loans that my clients actually benefited from are nowhere to be found. These people are sinking fast with no alternatives for them. These aren’t the 100% purchasers, who got in over their heads with no more risk than renting an apartment. These are established home owners who simply don’t fit the fannie/freddie cookie cutter matrices.

In a word, it’s terrible out there. The worst I have ever seen it and I have been doing this since 1991. It’s not getting better either, it’s getting worse everyday.

On a closing note, I’m with Mike. To blame the wholesale community for all of the mortgage meltdown woes is way off the mark. We didn’t design, underwrite, rate or securitize these mortgages. Is the inherent fraud associated with wholesale origination partly to blame? Undoubtedly but it is not the primary cause.

The real bad guys are the ratings agencies and risk management departments. It is their jobs to determine the risk factors of the securities the manufacture and sell. It is them who should have pulled the plug on stupid lending programs long before the crisis emerged. But no, in their greedy pursuit of profits and market share, they kept their heads in the sand until now.

In fact, there is a post dedicated to the misplaced blame on brokers on my blog. It’s called “Say Goodnight to the Bad Guy”. It kind of puts things in perspective.

I think that there will always be “room” for those who communicate well, put their personal profit behind the long term good of their customers and yes, work in an “environment” that encourages a connection between the LO and the client (read retail bank). Also, the market is going to become predominantly “powered” by banks who have the size to be able to service their own loans and sell directly rather than having to “broker” the loans to other places. I’ve worked at smaller banks and in this market, I’m glad I’m back in a big bank.

I agree with you Chris, a bailout isn’t going to work. Take the medicine and learn from it.

I don’t have exclusive blame on the Broker Channel. Not at all. But, when there’s no long term accountability for loan performance, when the industry (generally) lacks the Esprit de Corps…that you have…this is what happens.

There are conscientious brokers out there, no doubt. But let’s not be naive. The wholesale-retail channel specialized in selling exception loans for years.

The taxpayer bail out of the S&L’s is the reason we’re in the mess: congress demonstrated that it’s willing to bail out the housing market any time…So, when big banks made dumb moves, they did it with the assumption that they would have some of the cost underwritten by the US taxpayer.

That is what we’ve gotta not do, that’s what we have to stop and ensure doesn’t happen–let the banks fail. Enough will remain that we will figure out the road home.

And yes, the real greed is systemic, and it starts higher than the broker industry.

Chris – I like what you have to say. Keep it up.

Besides, assuming home values don’t bottom out for another 2-4 years, it would take at least a year for underwriting rules to require much bigger downpayments. And most buyers wouldn’t have that kind of scratch to put down. By the time they got their downpayments together, home values would have fallen so far that they may be at the bottom. Ironically, that would mean that 100% financing would again have minimal risk to lenders (assuming it’s full-doc, excellent credit).

I could see the possibility of having some type of state controlled regulatory appraisal panel which brokers can order their appraisals from in the future.

The one thing that is definate, regulators want a panel type of ordering system for all LO’s (retail & wholesale) or something stops originators picking the the appraiser and thus influencing the value.