And in related news, blacks pay more for cars, boats, and any other sale that involves a commision. Why? Perhaps there are underlying problems in education? Are blacks incapable of shopping around for better rates the same as non-blacks? If a loan officer is charging you too much, find another. This has less to do with discrimination and more to do with underlying problems in their culture. Blacks do themselves no service by continueing to allow themselves to be portrayed as the helpless victim. Change can only come from within. Looking as your supposed "suppressors" to lift you up is naive.

Oh and to the race police- save it. People are tired of tip-toeing around the obvious in the name of political correctness.

elweedz, the mortgage process is so complicated -- and people do it so infrequently -- that even those trying to shop around can end up with a less-than-ideal deal, don't you think? That's not even counting the situations where people (of all races) found the terms changed significantly once they arrived at the settlement table. (Settlement-table shock is why the good-faith estimate rules were changed starting this year.)

Jamie-

I will concede that the mortgage process should be simpler but, I still beleive the onus falls on the consumer, making the biggest financial decision of their lives. IF you cant use a financial calculator, you have no business borrowing 100's of thousands of dollars. When customers call banks and ask "what's your rate?", like its a can of corn on the supermarket shelf, they obviously have done zero research on how mortgages are awarded.

Part of the problem with doing good faith estimates in the begining is that you dont have all of the information verified that the customer gives you. Often, half truths are uncovered from the initial application such as someone makeing 70k instead of the 75k that they told you. Mortgage companies have traditionaly had an unfair playing field when it comes to their business model. In what other business can you task a company with working for you for over a month, and then 3 days after they deliver the product, say "nevermind" and not pay them a dime.

elweedz is right.

Ignorance is not an excuse, it is a choice.

elweedz sounds like a loan officer. Except not enough typos and misspellings. Talks about the "product." Like there's any actual work involved in pulling someone's credit scores and reading down a chart to see which interest rates your outfit charges on which loans, and how much commission you'll get on each one.

So exhausting. Why should he not be paid for that regardless of whether the mark--er, "customer"--accepts the terms of the contract?

Then says "half truths" uncovered about the borrower's income could wreck the deal! As if that ever happened during the past decade, ever.

Not illiterate, but chutzpah of a loan officer. What could he/she be?

EE- I was a loan officer for 12 years starting in 1996. I have posted that before so, its not like I am hiding from it. I did not do the type of lending that brought this country to its needs, to the contrary, i railed against it. Want proof? Go to google and do a search for MDMORGAGEGUY on thehousingbubbleblog.com <-thats me. Most of my posts and brethren on the blog were disgusted by the excesses of the mortgage industry and the crooked shenanigans that were going on. That said, I also sympathize with the problems that mortgage companies face when dealing with the public and the gov't.
My comments, were critical of two things, the AA community playing the victim and consumers in general acting recklessly when making huge financial decisions.

As for you blow about misspellings(god i love it when people that have no real ammo go after spelling and grammar), i would liken it to your analogy of reading a credit score chart. Its soooo hard for even the worst speller to run spellcheck to make them look like the best. I have better things to do. I think my degree from MD in mechanical engineering speaks to my education. Too bad they dont make a spell checker for calculus equations, you know, something that really requires analytical thinking. Now get on with your bad self and impress everyone with your i before e rote memory skills.
I bet your really good at a game of flash cards too.

ooops, silly me. There goes my crazy speeling again. Meant to say search for MDMORTGAGEGUY with a T

LO's abuse asymmetric information through the continued use of disclosures that are complex to the point of opaqueness, and the prior rampant use of bait and switch. The problem with blaming the borrower for getting ripped off is two fold:

1. While the initial quote on a Good Faith Estimate (GFE) is now binding, it was entirely unbinding until the start of this year. Loan officers could quote whatever they wanted to rope someone in, and by the time the real charges were known at settlement, time was of the essence, and the borrower was under duress to close.
2. Even if the initial quote is binding, figuring out the total charges of your loan requires a fair degree of sophistication. Loan applications average 30+ pages, the half dozen or so pages of importance are highly complex accounting ledgers.

It is the market failure of grossly asymmetric information combined with agency dilemma. It is fraud. Efficient markets depend on good information. Current disclosure requirements are akin to the "bury them with everything and the kitchen sink" method of responding to a subpoena.

Regarding the pay, loan officers are like real estate agents. They spend most of their time unproductively prospecting for deals that make them supernormal profits due to anti competitive protective barriers provided by the government. Super Freakonomics devoted an entire chapter to this and even compared them to the KKK (real estate agents that is, after demonstrating that there exists zero empirical evidence that you can sell your house for enough extra to justify their fee).

A. People with bad credit pay higher interest rates - if bad credit happens to be more common among a certain race oh well. Try paying your cell phone bill occasionally.

B. Also if you're not educated enough to shop around for loans it's your fault not the lenders. Stop cashing your paycheck at the liquor store and open a bank account.

double B, the Justice Department compared the rates charged to black borrowers with what was charged to "similarly-situated white borrowers," if you take another look at the details above.

As for FHA, the idea of those loans is that you qualify or not. If you qualify, the rate you get is supposed to be roughly the same as the rate offered to anyone. It's not like prime vs. subprime.

Josh- your comments are on point but, let me add....
Loan officers dont create nor desire to have the mountains of disclosures and paperwork that comes with a loan. Those are compliments of your gov't and an over letigous society. As for the bait and switch thing that consumers seem to think is SOP, that is not true either. Largely what happens is you have/had uneducated, unliscensed bartenders by day, loan officers by night that were quoting rates from rate sheets that are quite complex. Typical underwriting guidlines are akin to a rule book in major league baseball. They are a series of if-then arguments that would require the loan officer to have a full day interview with every borrower just to quote a rate ( which would only be valid for that day since rates change every day). Consumers dont have the patience for loan officers to ask a billion questions. They just want to stomp their feet and get an ambiguous number to identify as their rate. By the time the application is actually taken and everything regarding, credit, income, savings, collateral is evaluated, 30 or more days have transpired. Often, a rate that was initally quoted, the borrower doesnt actually qualify to obtain. I have worked with hundreds of LO's and have NEVER heard one of them talk or imply that they intentionally decieved a customer about their rate. Largely, its a mad scramble at the end of the loan process to get the customer to closing with the rate and fees quoted. Occasionally, you have to migrate to the next best option if the customer doesnt qualify for something that you initially thought. Everyone thinks LO's were complicit in some bait and switch fiasco and its just not true. I am sure their are some anecdotal stories out there but by and large its a myth.
The crumbling real estate market was a product of greed on a lot of fronts and there is plenty of blame to go around but, at the end of the day i still lay the bulk of the blame at teh foot of the consumer. Fresh off the dot com bubble people were still ripe to be "had" again, failing to learn their lessons. No one held a gun to anyones head and said sign here. IN twelve years, i never had a customer that didnt understand the rate or type of loan that they were getting. This "victim" thing is very tiresome.

Jamie, you are incorrect. If you look at any lender's ratesheet, you will see there are adjustments for credit scores for FHA and conventional loans.

In fact, during the period of '06 to '08 there was manual FHA underwriting. These types of loans replaced subprime. Although the loans were fully documented for income and assets, credit score was ignored. This was done for borrowers who were given a "REFER/ELIGIBLE on Fannie Mae DU and Freddie Mac LP. Because these borrowers were considered higher risk of default, rates and fees were higher for these types of loans.

Even today, if you have a 620 credit score, your fees will be higher due to increased credit risk. Just because you are "approved" for an FHA loan does not mean you get the same rate and fees as someone with over a 680 credit score. Look at a ratesheet if you don't believe me. You can also Google FHA Manual Underwriting and you will see how those loans turned out. They are not offered today for a reason. Ever heard of USA Home Loans?

Yes, I should have included that the mountain of over-disclosure is created by well intentioned law makers.

Based on my observations, the rate rarely changes, because that is too easy to spot, understand, and offer push back against. It is the fees that increase.

Chad Traycee, a branch manager (at least he was back in 2002) with Savings 1st Mortgage out of Owings Mills with well over 100 employees back in the day used to "break them even" all the time. Meaning he would take any excess cash due to the borrower that was created by overestimating the mortgage payoff, and move it into loan origination.

Loan officers at NFM Lending down in Linthicum used to (at least until 2004) white out the section of the Good Faith Estimate that totaled up the charges so they could look borrowers in the eye and tell them that fees appearing multiple times on the GFE actually cancelled each other out.

CPA Mortgage (various moving offices as of 2005) used to routinely quote blank GFE's. The rate would be accurate, but lines 801 and 802 on the GFE would be blank, but the HUD had would have several points of charges on those lines.

Novastar had an ABA with a title company that charged almost $2000 for the same title work most places charge $800 for as of 2003.

It was shooting blind fish in a barrel for most of the 2000's. There was a huge disparity of sophistication between the lender and borrower that was exploited from as high as the design and institutional investor sale of these programs, right own down to the front line loan originator. Trying to principally blame the borrower reminds me of what we were repeatedly told USMC stands for whenever we complained: U Signed the M________ Contract.

elweedz- there were plenty of bait and switches. Most of those practices were to steal loans from competitors. Ever heard of trigger leads? These scrupulous LO's would promise anything it would take to get a loan. Also, those Internet leads like Lending Tree were known for it, too. The bait and switch was a pretty common practice up until a year or two ago. The scumbag LO's that did this are long gone.

IT'S PEOPLE LIKE ELWEEDZ WHO CAUSE SO MUCH DISSENSION AMONGST THE RACES, I PERSONALLY BELIEVE THAT WHITES ARE AT AN ADVANTAGE IN THIS COUNTRY. MOST OF US AFRICAN AMERICANS HAVE FIRST OR SECOND GENERATION WEALTH AND EDUCATION WHEREAS WHITES HAVE BEEN A PART OF THIS SYSTEM SINCE IT'S INCEPTION. I'M NOT WHINING I AM JUST STATING MY OPINION. I DON'T UNDERSTAND HOW ON ANY LEVEL IT IS OK TO GIVE SOMEONE A DIFFERENT INTEREST RATE THAN SOMEONE BASED ON RACE AND IGNORANCE. THAT TO ME IS EXPLOITATION AND THOSE WHO KNOWINGLY DID THAT DESERVE WHATEVER COMES TO THEM. IF YOU HAVE NEVER DONE SOMETHING IT IS LIKELY YOU WILL BE TAKEN ADVANTAGE OF. I WISH THAT PEOPLE WERE MORE FORTHRIGHT AND HONEST BUT THAT IS TOO MUCH TO EXPECT.WE ACT LIKE EVERYTHING THAT HAPPENS TO BLACKS IN THIS COUNTRY IS THEIR FAULT. I DISAGREE. WHILE MUCH OF IT IS CONTINUED IGNORANCE BY BLACKS, THERE IS STILL SYSTEMIC RACISM AS WELL. MANY WILL LEARN FROM THIS ERA AND TEACH THERE KIDS DIFFERENTLY AND THEY WILL BE FURTHER ALONG IN THEIR TIME. IT IS THE WAY THAT IT GOES. I KNOW THAT DISCRIMINATION EXISTS BUT I WON'T ALLOW IT TO STOP ME FROM ACCOMPLISHING MY GOALS.

"Nutty Bar," I know there are adjustments for credit score on conventional loans -- that's a key part of that process for sure. But I'd been told that wasn't the case with FHA -- that you either qualified or you didn't, and if you did, your credit score didn't affect your interest rate. (I don't have an FHA mortgage, so I haven't seen one of the rate sheets.) Have I been misinformed?

Here's an example of "everyone gets the same rate" reported elsewhere: http://homeguides.sfgate.com/difference-between-fha-loan-regular-home-loan-9469.html

There were always credit score adjustments on FHA loans. The only time there may not have been was when you did an FHA Streamline. But times have changed. They do hit you for that now, too.

Even VA loans have a mandatory +.25 bps in price regardless of credit score. Most lenders even have hits for the state you live in. The only thing you don't get hit for is loan to value and subordinate financing. Of course, if you go conventional you get hit on those as well.

FHA was the new subprime for a good two to three years after New Century and Fremont imploded.

Josh - we are essentially saying the same thing, i just think I am a little more biased AGAINST the consumer. While I have taken loan applications from all sophistication levels, I felt that my borrowers all understood their rate and fees. I also did the vast majority of my loans over the phone, working for FDIC banks. Perhaps my view is skewed since i was so upfront about the terms of the loan.

Nutty- i know about the trigger leads, they drove me crazy. Scumbags would call me customer and represent themselves as working with my firm to try and steal away the loan.

I know that fraud existed and i know of some of the dirty tricks that were played. My point to both of you is that I think it gets way more hype than it should. The vast majority of loan failures was a the result of an customer biting off more than they can chew. Even if the customer got hosed at closing by paying more in fees than they thought, how does that stop them from making their monthy payments once they are in the loan. If their finances are so precarious that marginally higher payment than promised wrecks their whole budget then, they clearly should not have been buying that home.

CANIGETASCREENNAME-
I have seen your posts in other forums and your slant about typing in all caps because you are too lazy to hit the shift key periodically- and how you dont care who you annoy with it.
Liife isnt fair. Get over it or be forever entrapped by your victim status. Do you think that whites have huge love for other races? Why do asians, middle easterns and indians own so many small businesses in this country?
Heck- just 10 years ago, every redneck wanted to shoot anyone that looked or sounded islamic (probably still do). Last i checked, doesnt stop them from coming to the US to get a better oppurtunity.

CANIGETASCREENNAME-
One more point for you to consider. What do you think the data looks like where both the loan officer and the borrower are black? I would be willing to bet that the data would still show blacks paying/accepting higer loan terms than other races. How do you reconcile your racist arguements in this sceario?

I DON'T KNOW THE ANSWER TO THAT ELWEEDZ. BUT I DO KNOW THAT EXPLOITATION ON ANY LEVEL IS IMMORAL. PEOPLE TAKE AWFUL ADVANTAGE OF ONE ANOTHER EVERYDAY. MY ONLY POINT TO YOU IS THAT IN THE FINANCIAL WORLD THIS HAPPENS TO AA'S MORE OFTEN BECAUSE THEY USUALLY HAVE LESS EXPERIENCE WITH IT. YOU LIVE AND YOU LEARN. I AM FORTUNATE ENOUGH TO HAVE THE RESOURCES TO OVERCOME SOME OF THE MISTAKES THAT I HAVE MADE. NOT EVERYONE IS AS FORTUNATE. IF OUR ECONOMIC SYSTEM WAS NOT SO HEAVILY BASED ON DECEPTION OUR COUNTRY PROBABLY WOULDN'T BE IN THE POSITION IT IS NOW. I HAPPEN TO THINK THAT THE MORE KNOWLEDGE A POPULATION HAS, THE BETTER SERVED IT WILL BE. THOSE SAME UNEDUCATED PEOPLE WHO GET DUPED INTO BAD SITUATIONS BECOME YOUR NEIGHBORS, CO-WORKERS AND SO FORTH. WHAT DO YOU THINK HAPPENS WHEN A LARGE PORTION OF THE POPULATION IS INTENTIONALLY UNEDUCATED ABOUT THINGS?