Haven't had a bunch to say lately; a week ago today at midnight, I fell down the stairs in my home - landed with such a THUD it woke up one of the neighbors! 911, paramedics, ambulance, ER and I got to spend 4 days in the hospital! Hope your Christmas was better than that.

Started a new consulting assignment as a Forensic Auditor reviewing case files on Robo signing, improper/illegal foreclosures by organizations who actually recorded ownership documents transferring their "Rights, title and interest in and to the Note and Deed of Trust" of this borrower or that one when they had No Standing to do so! I am so surprised, I mean so stunned by what I see I'm shit-shocked.

Forget about what you and I have seen in CBS, NBC and ABC's Evening news - it's worse!!

Start Your Own Mortgage Company

The real estate market is beginning to settle down; at this point in the cycle people begin to think about opening their own mortgage operation. One key step is the proper hiring of Loan Officers (LO). Mainly since the Fall of 1998 when the Russian Ruble collapsed and there was an industry collapse, in it's wake LO's were taken on board by most as 100% commissioned sales people. Please don't make that mistake!

When you do that sort of thing, you end up with people who come to your company with LOTS of baggage from their former employer(s). Ethical issues that can kill your fledgling operation. For the 8+ decades before that (like when I started in the business), we were paid salary and a modest bonus when me met certain broad ranging goals.It's best to hire LOs that have NO mortgage or real estate experience, that way they get infected with your firm's ethics and integrity instead of being high paid commissioned salespeople who tend to be greed driven.

The central theme (the #1 reason) on why any customer will do business with your company is it's credibility in the community. You think this guy's got that?

SEC FINALLY Charges Former GSE Execs with Securities Fraud

"Six former executives at Fannie Mae and Freddie Mac are now facing securities fraud charges (that means JAIL)  for making misleading statements about the companies' holdings of subprime loans between March 2007 and August 2008. The Securities and Exchange Commission (SEC) alleges they fed the markets false information about the amount of risk on each company's books. Both GSEs entered into non-prosecution agreements (means prosecutor's WEAK) with the SEC and have agreed to cooperate in the litigation against their former executives ... in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting any wrongdoing."

Ya know, it's stuff like this that makes my blood boil - years later they finally are about to be brought to justice, and the 'big-boys' always they get off. Now, don't get me wrong ... I'm not one of those 'occupado' 99%er people, but like you, I too am sick & tired of the major lack of aggressive enforcement of the laws we all see everyday.

I got a real kick reading the language they used in this article to try and sound not-guilty, some quoting of these exec statements: (no subprime, we only had...) “basically no subprime exposure,” subprime like” "expanded approval” "Alt-A loans" when actually Freddie Mac had $244Billion and almost 20% of Fannie Mae's portfolio was full of them! This isn't an inditment of the loan types, it's all about the FRAUD.

Rebuilding our Industry - Part 3

As we look forward to an uncertain new year, let me paraphrase the following from a news piece I saw this morning " ... in 1997 there was no Google. In 2002 there was no Facebook. There was no Twitter in 2004, and the iPad only made its debut in 2009. There is no indication that the pace of innovation will slow, so how can you plan for the future when the target is moving, and moving quickly?"You must get your head outta a sales/production mindset.

I think the word/concept for the year will be COMPLIANCE.

As a small/medium owner/operator of a mortgage brokerage or mortgage bank - few operators paid a whole lot of attention to this area, yet today there's 2+ dozen news laws and regulations that have been heaped on you just since this mess started a couple of years ago. Many of them still not fully written or even implemented yet ... and more to come!

Start paying close attention to industry news publications, read several of them on a regular basis so you can keep up with what's happening (among others - I have read the National Mortgage News - the dead-tree paper edition arrives at my home on Monday - weekly since 1982). 2012 and beyond to be owned by those that are picky on Compliance issues.

Rebuilding our Industry - Part 2

If you're a small/medium sized owner/operator, I'm sure yesterday's lesson about NOT running your company with hiring Big Commissioned 'salespeople' Promise Maker types, was a bit hard for you to swallow, especially if you used to be only an LO yourself and your employer was sales-production driven (therefore probably a terrible trainer). You've missed-out learning about the dozens of things your Promise Keeper department can do to make your firm excel. Once you think through thoroughly the concept of NOT paying a 6+ figure payroll to your LOs, but instead keep that money in house you'll like the idea.

You'll use that money to pay a first-rate salary to all your employees (the kind you would hope your wife, girlfriend,sister, Mom would get), plus modest bonuses now and then. And with the majority of that money, you'll spend a lot of it marketing and advertising your professionally & ethically operated mortgage company. With YOU directing how your company is seen my the public, you'll quickly discover that it is the company's credibility that attracts and keeps new applicants.

Better YOU show company ethics, morality and credibility than a Big Commissioned salesperson who is constantly challenging your understanding and enforcement of RESPA Section 8 as they bob-and-weave (shuck & jive) about how they compensate others for their referrals.

Given all the new laws and regulations that you need to pay close attention to, letting a salesperson (possibly) jeopardize your company future because you give them too much control, is just plain dumb.

A Step to Begin Rebuilding our Industry

As I sit here waiting for the private Mortgage Backed Security to get back in business and start securitizing pools of non-agency mortgage loans (not merely jumbos like today), along with (what I predict) the implosion of FHA (or at least a dramatic decline in its industry reach) along with the GSE’s start to drastically wind down their operations, we need to rebuild our industry from the ground up. Someone needs to provide all of us some guidance and rewrite how things need to be done differently moving forward … so I’ll start:

First off, the ‘commission for production’ model is seriously flawed. The consumer finance payroll method absolutely makes the most sense (something I’ve personally done, trained others to do, and provided instruction to my former students @ Secret! University).

This is an easy one, no more being a baby sitter for big commissioned salespeople who want to discuss their income regularly, etc. The employer simply sets a salary for each of the positions within the company. Occasionally this or that position is worthy of a nice bonus, so that is part of what personnel can expect from time to time (once they meet certain preset goals). Employer needs to incentivize Quality and NOT quantity.

This way, the Company focus is where it belongs – on the outcome of the loans, not mere production numbers. Good loan outcomes = Be Happy -- Lousy = Be Unemployed.

This Blog's Stats

Now that my blog is being run out of this ever-dreaded Google blogger - instead of my own company's server with WordPress; I have at last seen some of my previous readers have arrived, Thanks!

At November month's end we logged a 42% readership increase over the month before and for that I am appreciative.

Tell your friends about my blog; e-mail me any topic suggestion you would like me to address, it would be my pleasure to do so. Considering as hazy as the industry's future seems like right now, it can be challenging providing any guidance on how you should prepare yourself for after the fall-out - EXCEPT for a rather large handful of core ideas by former employees, consultant clients, and students and learned about directly from me. "Fall-out?" Yea, the coming dramatic landslide shrinking influence of Fannie/Freddie & FHA!

GSE's Gone Wild

"Fannie Mae and Freddie Mac spent roughly $640,000 this fall to send 100 of their employees to the annual convention of the Mortgage Bankers Association in Chicago, a decision their regulator defended amid criticism from GSE critic, Rep. Randy Neugebauer, R-Texas" ... in today's news ... looks like a perk to me, it's not about attracting more business!

Back in the day when my company was a Freddie Mac Seller/Servicer, I remember spending some fun time as a guest, with their President Phil Brinkerhoff (sp) in Chicago at the same MBA Annual convention. I vividly recall their spending money not unlike drunken sailors in their hospitality suite convention-long party - cuban cigars, etc. And at that time it's big sister was struggling with several quarters of losses with CEO Dave Maxwell (a guy I also knew then) @ Fannie trying to fix it, so baby brother Freddie had the better rates. But, don't get me wrong, I popped in on a party or 2 of Fannies also. This Congressman has hit the nail on the head, these execs tried last month to jam down gagging bonuses for themselves, they obviously feel entitled - what the hell it's not their money ... it's YOURS and MINE! Even their new regulators are already doing a crappy job of oversight so far.