Wednesday, April 1, 2009

Industry leaders apologize to housing consumers, back strong federal legislation

Don't be fooled!
Real estate industry officials from both the home sales and lending sectors capitulate, apologize to consumers and lobby Congress for stiff federal reform on lending and real estate sales practices. Huh?

by Broderick Perkins
© 2008 DeadlineNews.Com
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Washington D.C. April 1, 2009 - A group of senior executives, representing major segments of mortgage financing and real estate services sector, today renounced business practices that brought the economy to its knees and cost millions of homeownership their single most valuable asset.

The group apologized to the millions of American homeowners injured by subprime mortgages or misguided mortgage practices, while promising to support stiff federal reforms to prevent future abuses.

Industry leaders also pledged to voluntarily end practices that have ruined both homeowners and stockholders.

Novel Ponzi, President of the American Association of Allied Mortgage Lenders (AAAML), said a March 27 White House meeting with President Obama convinced them that change is paramount.

"The President basically told us that the reason the public thinks we're all a bunch of morons and buffoons is that we have, in fact, made really dumb decisions and have been incredibly arrogant about it. We all looked at each other and realized that he was absolutely right," said Ponzi.

Ponzi admitted that the mortgage lending sector's abandonment of sound underwriting practices was a primary cause of the nation's economic meltdown.

"When we found that we could sell risky mortgages to unsuspecting investors, we told our underwriters to forget all they had ever learned about sound underwriting practices. If a home buyer can't qualify for a mortgage at the current interest rates we'll create a teaser rate that's low enough for them to qualify, and then pretend they'll always pay that rate. If they still have a problem qualifying, just tell them to make up an income number, and don't, under any circumstances, bother to try to verify it. By the time the mortgage adjusts we'll have sold that time bomb to some gullible investor anyway," Ponzi said.

"We've scored huge bonuses from those subprime loans and squeezed our stockholders to get them. Now, we owe it to them and our customers to begin behaving rationally," Ponzi added.

"We've foreclosed on many homeowners who could have kept up with their mortgage payments if we had just reduced their mortgage balance a little. By kicking them out of their homes instead, we've ended up owning a lot of homes that are producing no revenue, are worth a lot less than a smaller performing mortgage on them would have been, and nobody wants to buy them. As a small gesture of restitution to those homeowners, we will be donating our future bonuses to homeless shelters and food banks," Ponzi promised.

AAAML is also urging its members to make mortgage balance reductions any time the effort can prevent a foreclosure. From now on, any homeowner who calls or writes asking for help with a mortgage payment problem and doesn't get a satisfactory response within a week will get their mortgage balance reduced by 50 percent -- automatically.

"We will now support strong federal bankruptcy reform legislation, without any of the pork barrel amendments we had been insisting on. We recognize that our actions led to many of those foreclosures. There is no reason that the homes of innocent consumers should not be excluded from bankruptcy laws, while companies like mine will be able to use the same laws to protect us from our irresponsible practices if we run out of bailout money," Ponzi added.

Price Commander, Chairman of the National Association of Really Large Real Estate Brokers (NARLREB), also apologized for the culpability of some real estate professionals for the mortgage meltdown and for the industry's anti-competitive practices.

"Many real estate agents steered naive home buyers to mortgage lenders who they knew would give them mortgages they couldn't afford. Most prized were recent immigrants who spoke little English and had limited education. Those buyers had virtually no understanding of financial matters, and came from cultures where business relationships were based on trust. Our members and the mortgage brokers made an easy commission. The buyers got an education in capitalism American style, so everybody was a winner, at least for a little while," Commander commented.

NARLREB renounced those practices and its own past efforts to thwart the nation's antitrust laws. In recent years the U.S. Department of Justice's Antitrust Division and/or the Federal Trade Commission had launched 6,873 separate antitrust lawsuits against NARLREB and its state and local subsidiaries.

"Thank God for Bernie Madoff for taking off some of the pressure," observed Commander.

The group also decided that they will all support the repeal of state "dual agency" laws their members had passed in recent years. These laws allow a real estate broker to represent both a home seller and a home buyer simultaneously.

"We now admit that we can't help sellers get the highest price while we're helping the buyer get the lowest price at the same time, and the many lawsuits that have resulted have become a real headache," observed Commander.

Consumer groups were delighted by the developments.

"I thought that someone was playing an April Fool's joke on me when I heard about the announcement" said Bruce Hahn, President of the American Homeowners Grassroots Alliance.

Apparently they were, you April Fool.

Courtesy, Bruce Hahn, President of the American Homeowners Grassroots Alliance, Washington, D.C. Really. Hahn is the real author of this "breaking news story."

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

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