Mortgage Expert Provides Tips on How to Fix Regional & National Mortgage Mess

by admin on October 23, 2012


Raleigh, NC (PRWEB) October 23, 2012

How to fix the financial crisis in 2012

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My wife and I sit down for coffee every Sunday just before church. Sara recounts the ways that technologies will flatten out the world and lower the need to have for people, and I assessment the most current NYTimes report on why the monetary crisis is a large money maker for the lucky few that get to determine the worlds financial fate. I then describe a couple straightforward fixes and we get the youngsters ready for church, and had been off.

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Best 5 Tips -&#13

Well after 5 years of watching error following error made with our countrys income I ultimately had adequate and am writing my leading five ways to boost our countrys economic crisis (by way of background, Ive worked at AIG, JPMorgan, Allstate, and owned my own companies, along with an MBA from Duke). The first fix begins with Accountability. We no longer reside in the idealistic capitalist nation that we tell our children about in background class. Our fore-fathers did develop that country, but we obviously live in a socialist nation now. We have socialized medicine, insurance coverage, autos, credit unions, government sponsored enterprises, church run businesses, and so forth. Obviously we, the tax payer, own the banks off-balance sheet dangers. While the publicly traded banks profess that they are owned by their shareholders that only operates for the profits. When there is a blow-up, the bank is thrown on the tax payer. We need to do what Britain did, rather than reward the CEO by telling that person they are the only one that knows the risks of the bank, we need to eliminate them from their corporate workplace. Accountability comes in many types, and its not to reward the management with greater cash incentives, a lot more stock options at lower strike rates, and more incestuous board of director unaccountability.

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Like Britain, we want to stop feeding the wealthy 1% and fire the board, fire the senior management, and absorb the bankrupt banks into healthful ones (as opposed to the Citi-flip where our government virtually gave Wachovia to Citibank.when Citibank was on taxpayer life support, and nevertheless is). America requirements accountability of its bankers. And moving to a Canadian style five-bank owned world is not the right way. Government backing of the leading five banks is undesirable for States and negative for our country. As the mortgage specialist I sift via thousands of pages of underwriting and legislative data to establish what the very best system is for you.

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The second factor America need to do is have a diverse group of businesses compete for mortgages and financial services. Possessing four sets of government operators (FHA, VA, USDA, GSEs) with basically 1 government regulator to monitor these four mega-trillion dollar liability firms is a recipe for disaster. Diversify the risks. Expand the number of firms that can offer mortgage items. Weve gone the other way, and eliminated competitors. Over 60% of independent brokers were thrown out of company. The government can back the mortgage sector, it need to not be the mortgage sector.

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With this diverse group of businesses, we have to level the playing field. Banks hire 1099 loan officers (brokers have w2 loan officers), banks can compete in all 50 states (brokers have to obtain costly licenses in all 50 states), banks can employ an 18 year old and have them push bank mortgages (brokers have to pass state and national tests, take continuing ed, be insured/bonded, etc.). Banks also call for their 1099 staff to come into operate. Brokers have to obtain land lines for loan officers that are clearly 1099 in nature, but since banks wrote the laws the brokers have to give office space and land lines (an exciting conundrum). Most importantly, banks and credit unions ignore State Mortgage laws (claiming the Feds laws are far better for them). Competitors means a level regulatory framework.

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The third repair for America is to raise capital backing the mortgage business. Capital is what tends to make an market. Return on capital is what drives the business. Right now the government is utilizing the U.S. Taxpayers balance sheet and leveraging the risk beyond any standard corporate levels. Typical danger to capital ratios for banks are ten:1, insurance firms 25:1, government sponsored enterprises (150:1) and FHA/VA/USDA/State run Housing agencies who knows? Id guess 1,500 to 1 (threat:capital). Theres truly no over-sight of the true risks related with these entities. They just operate like social security in a spend-as-you-go mentality. If money is short, they can just ramp up their volume to spend present losses and hopefully out-run their loss-curve. If they are incorrect, then the U.S. Taxpayer shows up once again. And if they are genuinely wrong, we just raise sales taxes and home taxes on the individuals that are paying (of program, those 25% of Americans that went BK or into foreclosure dont spend so significantly anymore). The federalization of the $ 2 trillion a year mortgage industry is making Washington DC the new Palace of Versailles in that all the profit from all the states gets sucked into Washington DC through federal government jobs paying millions (don’t forget just final year Fannie Mae gave their head of HR a $ three million money bonus for the year, in spite of becoming government run and operated).

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The forth repair is to quit feeding the banks by permitting massive write-offs. Numerous of our banks have assets on their balance sheets that are worthless. They are permitted to preserve them on their balance sheets at a greater value than reality. They also are allowed to count Tarp-funds as capital. We want to create these losses off the banks balance sheets and not throw them off onto the tax payer once again. Thats a backwards way of executive compensation for bad bank behavior and poor danger management. Rewarding the million-dollar a day CEOs by sticking it to the taxpayer. Of course we the taxpayer lost trillions in the TARP bailout, only to be told that no one particular lost income (the Fed opened the discount window and permitted banks to make hundreds of billions in profits borrowing at close to rates, in order to spend back the TARP funds). No one particular believes it, and it really is insulting to recommend that all TARP cash was paid back with interest.

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The 5th technique for securing a far better future for housing is to implement a better set of underwriting requirements. Lets call it the Preferred Economic Underwriting Method. With the PFUM we will see housing prices stabalize, housing will be a place for investment once again, and America will see GDP grow once much more. The PFUM would enable the current crazy appraisal sector to resume as a typical capital marketplace, rather than a reduce the home value and get paid anyway model. In addition to making a much better appraisal business (the current one absolutely everyone agrees is Andrew Cuomo broken) we would make the following underwriting alterations:&#13

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Eradicate the three% tax on mortgages for investor properties up to 80% LTV&#13

Eradicate the 1.75% tax on mortgages for investor properties up to 75% LTV&#13

Provide a .five% tax on 90% LTV investor properties (presently 80% in the max LTV)&#13

Enable Americans to move once again, by permitting rented properties to qualify as rentals. When an American moves to a greater job, they are saddled by their old house and are allowed to count rental revenue (unless they get an appraisal and prove 30% equity in the old house)&#13

Allow anybody that has made five years of mortgage payments on time to refinance with little paperwork. The government takes all the threat now. Why not allow them to do that with a safety that has borrowers that are minimizing their payments (rate term refinances only) and have a sturdy payment history.&#13

We need to have to fully revamp the appraisal industry. The last technique was thrown together in little time, and has caused devastating losses on American citizens. Our appraisal sector is fully broken and we need to have a fresh start. Residence prices are mathematically prevented from going up (but that is yet another story for an additional time). The mortgage expert will create once again

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