The banks are the ultimate deciders on loans and are therefore to blame for the current status of today’s malaise and malcontent in the marketplace. Wells-Fargo just auctioned off $600 million worth of non-performing sub-prime loans that they valued at 12cents on the dollar and they, along with many more banks are holding up loan modifications because they are holding worthless 2nd mortgages that they want to be paid on and are waiting for either an upturn in the economy or more TARP money.

 It used to be much simpler; a borrower walked into the bank and the banker had an application process that only took a couple of hours and you got your loan or knew exactly why not and how to correct it. Nowadays, forget about it, the banking business is a multi-layered, multitudinous, multidimensional conglomerate that is totally misdirected and completely malfunctioning. One person walks into a mortgage broker’s office looking for a loan and that mortgage broker takes a loan application and collects personal data, including the financial records of the applicant.

That loan originator, the mortgage broker, then pulls the applicant’s credit bureau and than “grades” the applicant “A-paper” or a “Prime loan,” typically a F.I.C.O. score over 720 or “Sub-prime,” typically under 620. In between these two scores we have A-minus or “Alt-A” and these are typically people with good credit but one or two small glitches on their sheets, late payments, etc. These were the people the lenders typically used for the majority of their now long-gone “No-Doc” or “Liar Loan,” loans that brokers and L.O.’s took by the thousands during the 2003-2007 boom.

 They used no documentation because none was needed due to the underwriting guidelines implemented during those boom years and it was all masterminded by the “moneychangers;” the Wall-Street wizards, the huge lending arms, including Freddie and Fannie and even Ginnie-Mae, entities that bestowed upon the banks and even mortgage companies an underwriting system known as the desk-top underwriter, GUS, a guaranteed underwriting system, that gave the holder of the software the “authority” to, in effect, approve his own loan. I know this very well because, the plain truth is that I, as an L.O. for a local mortgage company, took a part in some of these very loans and have seen many of them since then go bad.

 The banking industry is so structured towards a corporate, Capitalistic marketplace that shows no mercy towards anyone in a weaker position, or less informed than them, and takes every advantage of the borrower they can that, I believe, it is beyond repair and must now be replaced and let me tell you why: After the loan application is taken, as I stated above, and the credit package is submitted to a lender, the lender, the bank, is then totally in charge and the mortgage broker is handcuffed, simply passing on that lender’s directives to the borrower and other “interested parties.” The lender itself employs so many people, and at so high a cost, that the typical closing costs on a loan are between 5-10% of the loan amount.

 This is due to the fact that a large lender has: processors, loan originators, account executives, prime reps, sub-prime-reps, account managers, pre-closers, pre-closing managers, post-closers, post-closing managers, a lock desk and manager, funding managers, computer technicians, technician mechanics and support, trainers, underwriters with the mandatory manager and a gaggle of secretaries; a vice-president for every department and, depending on the lender’s size, an assistant V.P. for every Sr. and sometime Jr. V.P., in fact banks have so many vice-presidents they bump into each other going to the break-room.

America has only one V.P. and we can barely find anything for him to do but banks have to have one for every department; go figure that out, and remember these people all have to get paid and who then, do you think, pays them? Yup, you guessed it, the borrower(s). And, of course there is the usual fraud being committed by those in the employ of these institutions that have so much cash lying around and that can be “taken” by the highly-educated, highly trained executives with just a flick of his pen on a piece of paper or a touch of the keyboard on a computer.

The problem is worldwide and they are actually executing bankers in China for massive fraud of the banking system. Of course, this is an extreme measure and can only be done in a Communist State and can never be sustained for a very long period of time and I am not suggesting a Communist system but a system whereby everyone, including banks, especially banks, act like Human Beings and treat others like they are also Human Beings and not just a credit score or uninformed person to be taken advantage of. I realize that this is considered a radical view but it really isn’t anything new for it was first introduced 2009 years ago and maybe you’ve even heard of it; it’s called “do unto others as you’d have them do unto you,” a.k.a. Christianity. The present system does not work and a six-year-old child can plainly see this, just as anyone else can, except it appears, the bankers, who apparently have eyes that do not see and ears that do not hear, except what they want to see and hear.
Jesus cleared the temple of vendors selling wares because he said they had made his father’s house a den of robbers. If we don’t clear our house of the bankers and their failed and failing systems, bankers who see their money only as a commodity to be sold for profit, then we and the systems we are currently living under will go down with them.