mortgage

Those wacky mortgage kids

Friday, March 12
Written 10 a.m. EST

FHA commissioner says he's a parent guiding the kids; beware foreclosure-prevention scams

Those wacky mortgage kids

WHERE HE'S COMING FROM: Mortgage trainer and part-time journalist Christopher Cruise e-mailed highlights from a speech last week delivered by David Stevens, the commissioner of the Federal Housing Administration. First, a little background: Stevens is that rare FHA chief with years of experience in the private-sector real estate industry. He began his career at World Savings Bank, the institution that pioneered pay-option ARMs. The Obama administration caught some flak for nominating him to the FHA post because his resume included stints with World Savings and other companies that bear some responsibility for the housing bubble.

That bubble burst, and the foreclosure crisis is the latest consequence. "We got here primarily because of a lack of responsibility on the part of the real estate, mortgage and banking industries," Stevens said at the annual federal conference of the American Land Title Association, the lobby group for title insurers. "There is one collective industry that Capitol Hill doesn't trust and that is the real estate finance industry."

The federal government had no choice but to intervene in the mortgage industry, from tighter RESPA regulations to the takeover of Fannie Mae and Freddie Mac: "There were no parents guiding the kids here," Stevens said. And then he rhetorically donned the hat of someone who is still in the mortgage banking industry instead of a watchdog: "We have to learn to collectively police ourselves," he said. "Until we do that, investment capital from the private industry will not come back."

Stevens said that the FHA insured the loans of half of first-time homebuyers last year. It now has about 30 percent of the entire mortgage market, including first-timers, subsequent buyers and refinancers. "It's scary, and a sign of sickness, that the FHA is so large today," he said. But "without FHA, we would not have a real estate business today."

He said that he believes we will return to a period of "trust, confidence, integrity, discipline and risk management." On the other hand, he added, he recently met with a group of mortgage brokers who asked if they could offer a "responsible stated-income product." He said he wondered what planet they were on.

BEWARE OF SCAMMERS: I got an e-mail from a reader who asked about the legitimacy of a company that promises to ... well, I'm not sure exactly what this company promises to do. Something about taking over the servicing of your mortgage, then buying the loan from the investor at a discount, then charging you principal and interest on the reduced balance of the loan. It doesn't make any sense, but the company's Web site slings around a lot of fancy words that might bamboozle anyone who doesn't sit in front of a computer thinking about mortgages all day.

I'm not going to share the company's name or URL with you, for two reasons. First, I'm implying that it's a scam, and there's a slight chance that I'm wrong -- in which case, identifying the company could invite a libel suit. Second, I don't want you to go to the site and get bamboozled.

Here are a couple of things to watch out for if you run across the Web site of a company that promises to help you with your mortgage mess:

  • Is the URL the name of the company, or is it the name of the company's foreclosure-fighting product? If it's the latter, it's kind of fishy.
  • Does the Web site have the company's office address? If there's no address, or it's just a P.O. Box number, be suspicious. If you're feeling sleuthy, try a Whois search, which is a way of finding the contact name and address behind a Web site URL.

Start your Whois search by going to this InterNIC page. Type in the URL. Just for grins, let's see what you would get if you plugged in "Bankrate.com." You would get this, which tells you that the URL's registrar is GoDaddy.com, and the Whois server is whois.godaddy.com.

So we go there and type in "Bankrate" again, and it gives the company's address and contact information.

And if you feel especially sleuthy, you can look up the address in Google Maps and choose an aerial view to see if the company's address is a house or an office building.

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