Fixing the Mortgage System…In One Week?by Tim Manni
Nationally-syndicated columnist Peter G. Miller writes, “Fixing the mortgage system is crucial if we’re to prevent another financial meltdown.”
Miller offers six steps to fix the system; six steps that he says can be done starting this week. Let us take a look at a few:
Second, lending rules must be changed so that loan officers have a fiduciary obligation to borrowers, in the same way that lawyers have an obligation to clients and doctors have an obligation to patients. The creation of a fiduciary obligation for loan officers would mean that aggrieved borrowers could take loan officers and their lenders to court in the event of abuse, a system which seems to work well for virtually every other type of business.
Fourth, have HUD set the interest rate and points for FHA loans — and post that information daily online. There’s no reason this can’t be done. In fact, until 1983 HUD actually did set FHA mortgage rates. Borrowers would then have an easy way to follow the market by using FHA rates as a benchmark.
Sixth, every mortgage-backed security which has a high level of foreclosures should be audited by the FBI to assure that all loans were properly underwritten. When that’s not the case then appropriate action should be taken against the lender, the loan officer, the underwriter and the Wall Street securities packager who were paid for such work.
Click here to read all of Miller’s suggestions of how borrowers, lenders and government officials can help improve the mortgage system.