Texas Mortgage Broker Chief: Progress Being Made
Rising foreclosures and the near-collapse of the Texas home loan market for those with bad credit triggered a flood of proposals from lawmakers during the past legislative session.
One bill that passed, HB 716, is designed to thwart mortgage fraud through the creation of reporting requirements and a task force to fight it, and making sure buyers get notices warning them against committing fraud.
Lawmakers focused on mortgage brokers instead of the banks because the state can’t regulate all banks since some are nationally chartered.
Houston Chronicle reporter Purva Patel recently spoke with Olga Kucerak, head of the Texas Association of Mortgage Brokers, about these recent actions and the state of the mortgage broker industry.
Q: Do you think the mortgage fraud bill that recently passed in the state is strong enough?
A: It’s a good start. I’m sure in the next legislative session, depending on how this bill is working, there will probably be some additions, some tweaking. … We also have new education requirements. So we’re trying to get better education for the licensed loan officer and broker groups.
However, that doesn’t go into the mortgage banker side. It’s just for the mortgage broker side.
Q: Legislation proposed this past session would have created a fiduciary duty between the broker and buyer. Do you think there should be such a duty?
A: The fiduciary duty we have, we have an obligation and contract by our wholesalers on what we have to do.
We also have a mortgage broker’s agreement that tells the client exactly what we do and that we are a retail shop. You can shop around.
The answer is no, but I’m trying to give you an explanation because we can’t really serve two masters.
We have a contractual obligation with the mortgage company that we sign up and we do have obligations to our buyer, but at any time they can shop around. They can go somewhere else. They don’t have to stay with us.
Q: What do you see as the mortgage broker industry’s greatest challenge?
A: How about a level playing field? How about a settlement statement?
The National Association of Mortgage Brokers has submitted one that would be similar to a HUD settlement statement that you get at closing. It would be very similar to that and would be for all originators.
Also, with respect to mortgage loan fraud, having a registry of all loan originators and having them all adhere to background checks. Because, if a licensed mortgage broker is unethical, they shouldn’t have the opportunity to go to a banker or vice versa.
Q: Is the era of bad credit home loans basically over?
A: I think that there will still be some subprime (bad credit home loans) issued. There were still a large majority of them that did not go into foreclosure. A lot of the lenders are working with their clients, because we don’t benefit from someone foreclosing. The lenders don’t want a foreclosure. Buyers don’t want to lose their homes.
And so a lot of the mortgage companies are actually working with them and trying to figure out a way to renegotiate their mortgage loan.
Q: Are there any kinds of loans that you think shouldn’t be made?
A: First off, the home loans: It depends on a person’s overall situation on what type of loan program may be best for them. There may be some people who shouldn’t have bought homes, who weren’t educated.
I think the underwriters are reviewing everything and the ones that are considered high risk, if you will, they’ve tightened it up. Certain credit scores, they won’t do those now.
SOURCE: Houston Chronicle