by David Lykken, Managing Partner, Mortgage Banking Solutions a leading consulting firm to the mortgage industry.
HUD’s press release below may seem like “old news” to some, but you may be surprised how many mortgage executives are not getting the message. For this reason, this press release needs to be republished weekly.
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HUD No.10-005 |
FOR RELEASE |
HUD INSPECTOR GENERAL PROBES MORTGAGE COMPANIES WITH SIGNIFICANT CLAIM RATES
WASHINGTON – U.S. Department of Housing and Urban Development (HUD) Inspector General Kenneth M. Donohue and Federal Housing Administration (FHA) Commissioner David H. Stevens announced today an initiative focusing on mortgage companies with significant claim rates against the Federal Housing Administration mortgage insurance program.
To read the full press release, click on the following link.
http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-005
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“Houston, we have a problem” is apropos to this discussion. Folks, HUD is signaling that there is a big problem out there in ‘mortgage-land’ and we need to recognize it. What I find astonishing is the number of mortgage company executives and business owners doing business with HUD that do not know what their company’s HUD compare ratio is. Even more surprising, some don’t even know what a HUD compare ratio is. Ignorance is not a defense. If you don’t know, go to https://entp.hud.gov/sfnw/public/EarlyWarnings.cfm and look up your own compare ratio. And while you are there, you may want to check out the compare ratio of the companies with whom you are doing business or considering doing business. You may be surprised.
Another alarming rational I hear as to why some mortgage executives want to get their company approved by Ginnie Mae is this… “So we can get around the stringent ‘restrictive’ credit overlays of bank correspondent lenders and ‘sell’ directly to Ginnie Mae”. As Mark Twain said, “To ‘succeed’ in life, you need two things: ignorance and confidence.” It would seem that there is some amount of both in our industry today. When Warren Buffett said, “When you combine ignorance and leverage, you get some pretty ‘interesting’ results,” I wonder if he was talking about some of the attitudes present in the mortgage industry today?
Being an optimist, I want to believe it isn’t too late. Yet each week more and more articles are focusing on the future of HUD with a question mark. It seems as if the questions are growing at a rate faster than the answers… not an encouraging trend. The thought of HUD not being there as we have known was unthinkable a short time ago. Yet today, we face the distinct reality that the “unthinkable” is possible, although I want to believe, avoidable. HUD Inspector General Donohue and FHA Commissioner Stevens are doing everything possible to shore up HUD’s foundations and preserve not only our industry but the foundation of our economy… housing!
We all need to get behind what is being done specifically by Commissioner Stevens by: (#1) educating the ignorant, (#2) by publicly supporting Commissioner Stevens initiatives to “raise the bar” on the loans being insured by HUD and (#3) refuse to do business with companies that are refusing to take the necessary steps to make the HUD programs strong again.
With that in mind, I launched a weekly radio program last year where we digest and discuss the hottest and most relevant topics facing our industry each and every week. For example, we discuss regularly the Tsunami of regulations flooding our industry as well as the latest initiatives by HUD to shore up and strengthen the Department.
Please join me each Monday, Noon Central, along with my regular guests, Alice Alvey of Mortgage-U and Joe Farr of MBS Quoteline, as well as other special guests by clicking on this link… http://www.blogtalkradio.com/search/lykken-on-lending/ I welcome your feedback and any “hot topic” suggestions you might have. If you are interested and your topic is relevant, I would welcome having you as a guest on the program. If interested, please e-mail at [email protected] or call (512) 977-9900 ext. 101.