by Joe Bayer, Jr.
The government’s impact on our industry is staggering. Largely hidden from view of the average American, their actions will none the less effect us all. Currently, the government has placed numerous g-fees (guaranteed fees) on conventional loans; fees that have nothing to do with the mortgage industry, but instead fund several unrelated projects. These fees falsely effect mortgage rates. Though rates are low at this time, hovering in the low to mid 3’s, the rates could actually be in the low to mid 2s if the additional fees were not attached. Such rates would greatly impact your ability to pay your mortgage! Instead they are being used to fund ventures outside of the mortgage industry. Does this make any sense?
Furthermore, during the economic crunch, the government bailed out Fannie Mae and Freddie Mac at a tune of about 2 billion dollars. Fannie Mae and Freddie Mac still owe approximately 130 billion dollars of that bail out money. The government is quick to point out the poor business practices of these entities, however, would they not be able to pay off that debt all the quicker if g-fees were being used to pay off this industry related debt?
On top of everything, mortgage companies are being heavily scrutinized for denying a loan. At First Integrity, it takes 3 people to deny a loan, but only one person to approve it. We do not deny loans easily, we work very hard on behalf of our clients to get their loans approved. That said, at times, it simply does not make sense and loans must be denied. This is good business, it is how we stay in business and how we continue to serve all our clients. And yet, if we were to approve a loan and it ends up going “bad,” we could be sued by that very consumer and/or the Federal government for allowing the loan in the first place. Talk about a rock and hard place!
The penalties and fees that such an action would incur are exorbitant. It very much reminds one of what has happened in the Healthcare industry. Doctors are forced to carry expensive malpractice insurance. As a result they subject their patients to unnecessary tests in order to protect themselves and cover all possible areas of concern. Health insurance does not always cover all the tests, leaving the patient to cover the rest. Perhaps the patient would be better off without all the tests, but the doctor and his/her malpractice insurance costs are forced to think otherwise.
Is this the way the mortgage industry is headed? Will we soon have to charge extra fees just so you can get a loan and the government can continue to charge g-fees?
At First Integrity we will continue to work on behalf of you, our client, and do everything we can in our power to protect your investment in the American Dream; your home. At the same time, we feel it is our responsibility to make you aware of the challenges that have been put before our industry; challenges that will be felt by all who are looking to secure a mortgage loan. We refuse to leave our clients in the dark and will continue to bring these senseless government practices to light.
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