In an impassioned yet somewhat contrived and disingenuous “finger pointing” appeal to the National Press Club, the Mortgage Bankers Association’s Chairman John Robbins yesterday placed the blame of the subprime meltdown squarely at the feet of “unethical” predatory lenders while simultaneously insisting that the extent of the damage has been overblown.
“I know the good my company, my employees and thousands of my fellow mortgage bankers have done for families, for communities, and for this country. Frankly, Id imagine my brief tenure as Chairman of the Mortgage Bankers Association would be celebratory. One part victory lap, one part implementation of initiatives with a lasting impact on the industry I so cherish. Yet I stand before you mad as hell. I have to be angry. It would be too depressing to accept that a very few, unethical people, can give my profession, and me, a black eye.”
Robbins goes on to use passionate words for everything from the role of Mortgage Bankers in promoting home ownership to immigrants utilizing subprime loans to get their share of the American Dream.
“Many of the people in this category are not mere victims of unscrupulous lenders. They’re smart people who took a calculated risk to get into a home, all along planning to refinance before the big jump in their ARM. We can’t leave these people twisting in the wind. They were practicing financial planning and attempting to take advantage of the opportunities they saw in the future. They were betting on themselves. To keep their financing options open, we must avoid a credit crunch.”
Yet when addressing real estate speculators, his tone quickly changed.
“It’s clear that our first steps are to help those that are in trouble. We mean homeowners living in their own homes. We’re not for rescuing real estate speculators. Blanket forbearances that bails out investors could actually drive up delinquency. Some might view it as a way to get out of their obligations… Even the talk of blanket forbearances could spur a surge in delinquencies.”
When addressing the question of who was responsible for the current state of the subprime market, Robbins risks an association “battle royal” with the National Association of Mortgage Brokers by pointing the points the finger squarely at “the short term folks” who care only about “their commission”.
“We need to identify the problem… unethical people. They’re responsible for this mess. The short term folks. People who get a commission when the deal happens. For them it’s the number of loans that count. Good loan, bad loan... who cares. For them, it’s all about their commission. … For the people who caused this problem, there’s no such thing as a lifetime customer. The closest they get is someone you refi every six months until they sink. They, not people with marginal credit, are the ones that need to be stopped. Frankly, it’s too easy to hang a shingle out and call yourself an expert in mortgages. We need licensing of brokers with a threshold that will weed out those unwilling to be responsible.”
In a particularly emotional and sappy portion of his address, Robbins recounts what it means to him to be a mortgage banker.
“Their stories take me back to one of my very first originations. The Realtor had left the keys to the house with me and asked if I could drop them off to the buyers once all the paperwork was done. Well, I went to their apartment, and we were sitting around a little Formica table… bright red. And I handed them both the keys at which point they both started crying. They said they never imagined they would own their own home. That was 37 years ago and you know it just never leaves you. There isn’t a day that goes by that I don’t stop and think about that scene going on thousands of times across this country. And that’s why, despite my temporary black eye, I’m proud to be a mortgage banker. Thank you.”
Later in the Q&A portion of the appearance, Robins is asked how immigrants in the past received financing to buy homes prior to the boom in subprime lending.
“Those that could afford to do so, and not all could, accumulated a traditional 20% down, waited years, and years, and years to obtain home ownership when they had the possibility to do that. But then home ownership was for the wealthy and the powerful not for the masses.”
Here Robins continently forgets that until recently the national home ownership rate had traditionally hovered at about 65%, hardly limited to the wealthy and powerful.
Furthermore, it has only been during last ten years, with lending running footloose and fancy free, that an extra 5% of Americans have been draw into home ownership many without down payments and with volatile and exotic affordability loan products.
Watch the entire National Press Club address on BNN!