Having spent nearly a decade in the mortgage industry, I know a lot of people in the business. Most (like myself) got tired of government interference into our daily lives and moved on to greener pastures. Some (God Bless them) stayed put and are still trying to help Americans achieve the dream of homeownership.
Whenever people say not enough government regulation led to the problems in the mortgage industry, I have to laugh. They don’t realize the audits we went through from government agencies and private lenders. They don’t realize the personal information we were required, by law, to send the government on all of our customers. They don’t know about the FBI background checks, the credit checks and the drug tests. They don’t know about the continuing education and licensing standards we had to maintain, the surety bonds we had to hold. They don’t understand the underwriting guidelines, propelled by the federal government, that pushed risky loans. They certainly don’t understand the compliance requirements we had to juggle with no less than half a dozen state and federal agencies.
Things got to the point where it was a full time job just keeping up with regulatory requirements and providing information to the government. That doesn’t count all the taxes you pay or other requirements that every other business has to fulfill. Unless you are a huge company turning tens of millions of dollars a month in volume, you just couldn’t make it. And most of us stopped trying.
Some didn’t quit and have tried to weather the storm. One gentleman I know who ran a small mortgage office tried sticking it out. As loans became more difficult after the credit collapse, he lost some staff and borrowed money to stay afloat. He always paid his bills on time and kept closing loans, but most months money was going out faster than it was coming in. As a non-depository lender, he didn’t have any deposits to hold, so there was no liquidity issues, but the government came in and closed his business anyway. Why? The new debt he borrowed caused his credit score to drop. Again, he hadn’t missed any payments, but the government said his credit score was now too low. With now cause or notification, they pulled his credit report, saw his score dropped, and terminated him and his office.
The business he built, the lease he had, the equipment he owned, the advertising in place, the sign on the door… all worthless. He had no complaints, the business had no problems. The state fired him because he accumulated too much debt trying to keep his business going. Overnight he was out of a job and had done nothing wrong.
Not one to complain he kept chugging along, trying to close out his accounts, pay his business debts, and find a new place to work. After working for himself for so long, some new government law said he had to work for someone else. And he found somewhere else to work. A friend he had known for years who had been in the business forever had a mortgage company a few counties away. So this gentleman, fired by the state for trying to stay afloat was now driving 1.5 hours to work each way.
That is until the state terminated him again.
It seems some legislation is floating in the house to require all loan officers to live less than 60 miles from their office. So once again, through no fault of his own, government regulation has put this hard working, honest American out of a job… citing a law that didn’t exist when he entered the business in the first place and the second time citing a law that hadn’t even been enacted yet.
How many people do you know that drive more than an hour to work everyday? I know plenty. One of my best friends works for a college and she drives much farther than that. After college I did it myself. But some government worker thinks that you shouldn’t work that far from home and now no loan officer (at least in North Carolina) can.
Think there is not enough regulation? Wait until the government knocks on your door and fires you because some bureaucrat with no knowledge about your industry decides how you should live your life. Wait until the government tells you where you can and can’t work, not because you’ve done anything wrong, but because they think they know best.
The mortgage industry wasn’t “nationalized” but it doesn’t matter. With enough government regulation and red tape they can control everything you do. Supposedly they aren’t going to “nationalize” the health care industry either. Do you think the semantics matter? What kind of ridiculous requirements will the government put on doctors, nurses and other health care workers? What kind of requirements will they put on employers or insurance companies? How are they going to run their lives?
Just wait. You haven’t seen anything yet.
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