Why the Bank Will Not Modify Your Mortgage

We cannot understand the present unless we understand the past. To understand today's banking and real estate crisis you have to go back to the last banking crisis. The savings and loan crisis of the late 1980s resulted in a new banking paradigm. Under the old paradigm almost all banks were "full service banks." In other words all real estate lending functions were handled in-house. By the time the crisis was over with the typical bank had been transformed beyond recognition. Banks went from being full service institutions to limited service institutions that had farmed out to others many banking functions that had hitherto been regarded as being important core functions.



However,none of these dramatic changes were visible to the typical bank customer. It looked like the same old bank to them.



This transformation was part of a much broader transformation that was taking America by storm. This new business philosophy held that every business had a core competency and that the way to maximize your profits was to concentrate on your core, high profit skills and to farm out to other institutions your low profit, non-competency functions. It was taken for granted that the activities that were earning you the greatest profits were your core competencies and that anything that was low profit was a low competency skill that was bested farmed out to others.



The flaw in this system was that in times of crisis you no longer had the in-house skills to cope with the crisis because the skills had been farmed out to others.



It has to be admitted that in normal times the new paradigm delivered on its promise of lowering costs and increasing profits. This is why today when you make a call to complain about a product or service you end up talking to a speaker who lives in Calcutta, India.



The Old Bank Model



In-house staff real estate appraisers



In-house mortgage originators



In-house servicing of mortgage payments



In-house warehousing of mortgages



The New Bank Model



No in-house staff appraisers



Very limited amount of in-house mortgage originating



No in-house mortgage servicing



Almost no warehousing of mortgages
(mortgages were sold off rather than kept)



Under the old banking model when a mortgage got into trouble the bank had all the expertise needed to solve the problem in-house.



Under the new banking model not only was the bank clueless but it was enshrouded in total darkness as well.



Under the old system when a mortgage problem arose the bank knew exactly what to do. Under the new system it sits around and sucks its thumb. Under the old system the first thing the bank would do was send out one of its in-house staff appraisers to do a complete inspection of the home and a complete professional appraisal. Under the new system they call up a real estate broker and ask for a BPO, a broker's price opinion.



No doubt you are wondering why they don't hire an appraiser? The answer the bank will give you is that they are way too smart to pay the $275-$350 a complete appraisal would cost. This standard appraisal also includes a complete interior and exterior inspection of the property.



A BPO they craftily inform you will only cost them about $75. That's because the broker never leaves the office. He spends fifteen minutes scanning comparable sale listings on the MLS system. Eyeballs what seems to him to be an appropriate number and another fifteen minutes writing up the one or two page BPO.



As the bankers will proudly tell you they are way too smart to get the job done right. Guessing is so much cheaper.



I speak with an insiders knowledge on this point. You see I was one of the in-house appraisers that were thrown out on the streets like a dog.



Let's step back in time and continue our analysis. In the old days when a client asked for a mortgage The in-house appraiser and loan officer would carefully scrutinize the deal. Due diligence was taken seriously because the mortgage was going to be warehoused by the bank until maturity and not sold off.



If the mortgage blew up the bank took the loss. In this case the appraiser and the loan officer give the deal a thumbs down. The appraised value is below the sale price and there are problems with the buyer's earnings and credit. The bank turns the deal down.



A month later, an independent mortgage broker shows up at the bank with the same deal. Only this time as if by magic the appraised value hits the purchase price and the earnings and credit problems have disappeared from the mortgage application.



Now you know why the banks fired all their staff appraisers and most of their in-house loan officers. Prior to this time the banks originated about 90% of all mortgages. By the bull market peak independent mortgage brokers originated over 70% of all mortgages.



Of course, if the banker has a brain in his poor,stupid head he has suspicions. However his hot, little hands are now holding an appraisal done by a licensed appraiser and a mortgage application that has been done by a licensed mortgage broker.



The bank accepts the deal but there is no way he is going to warehouse this mortgage or the ever growing number of dubious mortgages that the bank is accepting from outside mortgage brokers. These mortgages are going to be pooled and securitized into various types of mortgage-backed securities ( MBS and CDO) as quickly as possible.



Let's now return to the present. The bank now realizes that the outside appraisal was dubious and the mortgage application was even more dubious.



It has probably sold off the mortgage servicing rights and kept the mortgage or it may have sold the mortgage and kept the mortgage servicing rights. Do not underestimate the importance of mortgage servicing rights. This is what gives you control of the mortgage. Others may own the mortgage but the mortgage servicers control the mortgage. There are about 8,500 banks in this country.



The vast majority of which do not service their own loans. The 27 largest mortgage servicers dominate the service industry.



You now know why the banks are responding so poorly to urgent requests to modify mortgages even when it is in their overwhelming interest to do so. It is the common assumption that the reason why banks will not help out their clients is because they are just being mean or greedy. The reality is that in today's brutal real estate market it is almost never in the bank's interest to foreclose.



Yet, the foreclosures continue because they are on automatic pilot. It is often the case today that the mortgage servicers start and often finish foreclosure proceedings without prior approval from the bank.



You see mortgage servicers are paid for foreclosing on the mortgages that they are servicing but until a recent change in federal regulations, they were never paid to modify a mortgage.



You now know why the banks and troubled mortgage payers are in such trouble.



The reason why banks appear to be wandering around in a stupor, is because they are in a stupor. To a shocking extent they have lost control of the ability to manage this crisis. They are in trouble because they are as blind and dumb as a fence post. The expertize that they once had is gone with the wind.

The Next Step - Getting a Home Mortgage Loan Quote

Once you've looked at your financial situation, the house that you want to purchase and the type of mortgage loan that you are interested to acquire, the next step is to get a home mortgage loan quote. This is for you to understand the repayment that you have to make with all the interests involved in it. A home mortgage loan quote essentially shows all this as these are the things that you really need to know.



In the past, if you wanted to get a quote, you would have to go to different lender offices.



This caused many people to only look for lenders in their immediate vicinity without even bothering to venture further out for better deals - it takes too much time and trouble. However, in today's age of the internet, you can get a home mortgage loan quote online without having to venture too far beyond your boundaries.



For example: have you considered a Japanese Mortgage? The Central Bank of Japan interest rate is 0%. For around 2,5% you have a Mortgage which is protected against Yen - Dollar fluctuations.



When looking for a quote online, there are a few details that you must have at hand so that the lender can provide you with a reasonably accurate quote. These include details of your income, debts and the home that you are trying to purchase. In addition to this, it would also be helpful to have your tax returns information, credit card bills and also your current mortgage if you have one. All of these will be accounted for when the lender works out the interest rate that they are willing to offer you.



These days, lenders usually put up forms on their websites for you to fill in. You should know that they have many types of forms for the various mortgage needs that people have. Therefore, to avoid wasting your time, you should be really careful that you fill in the one that is correct for you. For instance, when looking for a mortgage for a new home, you shouldn't fill in a form for a mortgage refinance loan.



When the form is submitted, the lender will receive all the related information and will be able to provide you with a quote.



However, you should know that a quote is still changeable and not fixed. Only when you've signed a contract is everything written in stone and unchangeable. Thus, it pays to look around for quotes so that you get the best deal possible.



Remember, even a slight difference in interest rate can mean huge savings for you.

The Future For Mortgage Brokers Part 5

Mortgage Brokers in the UK



The mortgage broker industry in the UK has been negatively affected by the credit crunch more than any other country in the world, apart from the USA. The boom of the late 1990s and early 2000s officially ended in late 2007 when the credit crunch became a reality. The following few months saw the closure of hundreds of estate agents and mortgage brokers up and down Britain as the property market came to a standstill.



Lenders pulled products from the market by the thousand. It seemed that all that remained was products for existing home owners with lots of equity in the homes. This left first-time-buyers and home owners with little equity in their properties with no options for remortgages or new mortgages when moving home. The property market ground to a halt and the boom was officially ended.



In the meantime the Financial Services Authority was uncovering widespread fraud within the mortgage advising industry.



Brokers were being suspended, fined, banned, and even jailed as sophisticated property scams were being unearthed. Through the investigations conducted by the FSA it was becoming evident that unscrupulous mortgage brokers were involved in activities designed to defraud lenders with loose lending criterion out of millions of pounds.



The combination of performing few checks on borrowers’ credit histories, earnings etc and the ease at which properties could be overvalued by surveyors led to a situation in which brokers who knew how to play the system could apply for mortgages greater than the actual value of the properties they were buying.



Those involved in the scams would purchase the properties with the majority of the proceeds of the mortgage and simply pocket the difference.



Needless to say the credit crunch and subsequent drop in the average value of property in the UK helped reveal such indiscretions. Individuals who had previously secured mortgages against properties over and above the true value of the underlying assets were now unable to remortgage their properties as surveyors were no longer overvaluing the same properties.



While it should be noted that it was not only mortgage brokers involved in these scams, some brokers were and have subsequently helped to give the profession a reputation it does not deserve.



After the initial fallout of the credit crunch the property market in the UK has begun to stabilise. Net lending of mortgages is no longer plummeting and more favourable products are returning to the market. Borrowers are starting to be given more choice with regards to the products they can choose from which means that lenders are beginning to see some light at the end of the tunnel.



For mortgage brokers, this means that there are more products to market to their clients than there were a year ago. This is welcome relief for the industry but is nowhere near the level it was during the heyday of the property boom. It could be said that a return to those days would not be a good things for the property market and the mortgage profession because the crash has helped to uncover and weed out inefficiencies in the industry.

Internet Mortgage Lead Generation

Are you looking for free internet mortgage leads? Are high advertising costs keeping you from effectively marketing your mortgage business? If you answered yes to either one of these questions, you can get free and almost unlimited internet mortgage leads by writing articles.

By writing and submitting your quality mortgage related articles to top internet article directories, you can market your products and services at no charge and create a reliable source of new customers.



Read on and I'll cover some key ways you can accomplish this powerful goal.

This is a newly discovered secret for many web savvy mortgage marketers: internet article directories really do work. Best of all, you can submit your material for free.

Look at it this way: the internet is a content hungry monster constantly "looking" for fresh material. Key search engines including Google, Yahoo and MSN frequently visit and "spider" web sites for fresh information.
For many website owners, creating fresh content themselves is nearly impossible.



Quite frankly, time and expertise will limit the ability of most website owners to continually update their web pages with new content.

This is where you come in.

As an expert in mortgage loans and real estate, you have the intellectual knowledge that others want. Trouble is, most people cannot afford or are unwilling to pay you for this information.

Instead, they go to the sources where free, informative articles are made available to them: the article directories. Chances are some of your competitors have already caught on and are already submitting their information to article directories.



Savvy authors, just like you, submit helpful, interesting and persuasive articles to these directories. Covering a wide variety of topics, the better articles are frequently picked up by website owners and placed on their sites.

So, what is in it for you? Well, if you play the game right you can include 2 or 3 different and useful back links in each article's resource box that will direct readers to your site.

If someone who manages a high performing site likes an article you wrote and decides to republish it on their site, the result can be hundreds - if not thousands - of free internet mortgage leads for you.



The beauty of article directories is they are free. You can submit your articles at no cost and website owners can take your articles and place them on their sites at no charge to them. The more you write, the more you can gain from this powerful web marketing tool.

To find article directories, simply visit your favorite search engine and search for "article directory" without the quotes. Here are a few article directories that have been around for awhile and attract quality webmasters:

EzineArticles.



com

ArticleDashboard.com

ArticleSphere.com

GoArticles.com

ArticleCity.com

Yes, you can gain mortgage leads without expending huge sums of money on advertising. By writing interesting, informative and persuasive articles your business will grow and prosper in no time. Again, at little or not cost to you!

By the way, if you would like to discover 10 proven strategies for generating more than 71 qualified mortgage leads per day, visit =>http://www.Mortgage-Leads-Generator.



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Please feel free to reprint this article as long as the resource box is left intact and all links are hyperlinked.

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