With the housing market in disarray and the economy in a slump as a result, lots of blame seems to be thrown towards the mortgage companies selling their sub-prime mortgages to anyone who could pass the mirror test. Personally I don’t think all the problem rests with the greed of the mortgage companies and their loan officers. It is a three party dance with most of the blame resting on the shoulders of the over exuberant borrower and greedy Wall Street. Thus the title of this post. Too much of a good thing is not always a good thing.
Perhaps we have too short a memory from the glory days of the dot coms when everyone thought that the tech stocks couldn’t go south. In the mortgage arena, borrowers thought that their incomes would always go up, their property values would always go up, their credit scores would go up, their ability to manage their finances would go up and thus everything would be fine. Wall Street obviously felt the same way or they were in it for the quick & big buck hoping that it would work out that way or that Uncle Sam would come and bail them out. Wall Street sent the message to the lender that they had an appetite for higher interest bearing notes (subprime loans & adjustable rate mortgages) and had easy money to loan. The lenders became the messenger boy and the borrower took the bait and now ends up flopping around on the shore without water. Let’s not kill the messenger, but slot them in a significant role to help throw the fish back into the water. (FHA comes to the rescue with higher lending limits)
Everyone who shares in the blame should bear some of the burden. Wall Street should adjust their notes where there would be some loss to the investors which ultimately include a lot of people who own some of these notes in their 401(k)’s, through insurance company portfolios, or pension plans. The mortgage companies should bear some of the loss by lowering interest rates on the loans allowing people to stay in their homes and not putting an overabundance of supply of homes on the market forcing prices down. A lot of borrowers have already shouldered some of the burden by having some of their appreciation evaporate. Also, Wall Street is experiencing some of the blood bath that is now being experienced by the people who were the ultimate lenders (investors in mortgages) in the first place. Peace is sometimes negotiated but in this case the market has placed its demands on those who are now getting slaughtered by too much of a good thing.
Mortgage lenders have always been transparent to mortgage brokers or bankers with their rate sheets. Mortgage bankers/brokers have used the information supplied by the various mortgage lenders (ie: Countrywide, Washington Mutual, Citi, etc.) to price a loan to the ultimate mortgage borrower. Rate sheets are often confusing and difficult to read especially for a borrower and sometimes even for a mortgage broker/banker without a lot of experience. The transparency in the mortgage industry has not been at the lender level but to the borrower.
Even with the transparency from the lenders to the brokers/bankers there still remains an uneven playing field. Broker/bankers with little volume do not get the pricing breaks that large volume lenders receive thus NOT all bankers/brokers are created equal. Walmart is a classic example of volume discounts and it is not different in mortgage pricing to high volume brokers and bankers. Walmart buys in such huge quantities that the producers of the product are willing to work on a smaller margin of profit. Comparing Walmart to a local store trying to sell the same product would end up being more expensive at the small local store because their initial cost is higher. So it is with mortgages. Lenders make larger margins on small volume mortgage producers and lower margins on higher volume mortgage producers (called mortgage originators).
With all of the above being said there are essentially two layers of transparency, one from the lender to the brokers and bankers (not always equal in pricing) and then from the brokers and bankers to the borrower. The layer that has suffered in the past is the transparency from the brokers and bankers to the borrowers.
We built RateWindow for the consumer. So they can now shop the rates from with full rate disclosure.
This post is for the developers that are interested in accessing the RateWindow™ API. There will not be an open developer platform for this widget due to mortgage industry regulations and standards, but we will still give access to core programming functions to extend not only the RateWindow™ widget, but any plugin that accesses RateWindow™.
First of all, RateWindow™ will run on any website, but we think that RateWindow™ will be put mostly on Wordpress blogs as a plugin. RateWindow™ does not create any database tables in a Wordpress blog, and we will not allow access to the raw mortgage rate information that is pulled due to the possibility of exploitation, but we will allow additional marketing plugins to access RateWindow™ widget.
The process to develop for RateWindow™.
- Contact us, and let us know about your plugin.
- We will then give you access to RateWindow™ hooks and details how to connect
- Once complete, contact us again and we will make sure your plugin is working properly.
- We will then distribute your plugin along with the RateWindow™ widget.
Possible plugin ideas
- blog posts, news sources, twitter posts
- real estate related information such as foreclosure listings
- the real estate agent listings (we already have this, but if you make a better one, we will include)
- credit information
- mapping, images, videos
Most plugins will only need to access the newsletter that is built into the RateWindow™ application. The owners of the blogs in which RateWindow™ is located (installed) will always want to distribute more and more information, and with the co-branding aspects of RateWindow™, it is a good start to interconnecting Wordpress widgets
Mark Warner, CEO of Realespace was invited to discuss the current state of the mortgage industry and introduce RateWindow to the public
http://www.realestateradiousa.com
The window is open (RateWindow™) to the world of wholesale mortgage rates where the public can’t be manipulated on the cost of their mortgage loan. Mortgage bankers and brokers and real estate agents with vision will join in on this first to market rate pricing engine so they can wear the white hat.
RateWindow™ is quickly moving from concept to reality. Over the next couple days we will be putting the finishing touches on our flagship product and release it as the first transparent mortgage tool.
For and example of the product, make sure you check out the demo.
