Clean Up Real Estate.org

Clean Up Real Estate (CURE) and the Mortgage Crisis

CURE is a nonprofit company developed to eliminate the inherent conflict of interest between the lending industry and the consumer. The Complete Cure system of protection and education for all of the people in the USA who need a mortgage is available free to all consumers.

For the last year mortgage woes have been in the news every day. 2007 was the beginning of the Sub Prime Lending Credit Crisis. 2008 is becoming the year in which everyone is talking about doing something without enough happening. The House and Senate have competing bills to reform the loan process. The Federal Reserve Board and the Federal Trade Commission have several proposals in process. HUD and the Bush Administration have even more. Lots of talk! Little action as yet!

All of this talk and all of the competing bureaucratic solutions are a lot like the story of the blind men and the elephant. Some are holding the tail and some are touching the trunk one or two are pushing on the side but no one seems to have the full picture. The problem is big and complex. Each of the proposed solutions addresses only a small portion of the problem. This is a systemic industry problem. Brokers, banks, investors and consumers are each responsible in some way for the crisis today.

It is very popular to pin all the mortgage industry woes on bad broker conduct. As classic middleman negotiating deals between borrowers and lenders, brokers are easy targets. They are easy targets because brokers do what they do for the money. Being humans with their own bills and mortgages they suffer from human failings. They may even be more motivated to make as much money as possible in a mortgage transaction than they are to act in the best interests of their client.

Banks, of course, also operate to make the biggest possible profit on each transaction. Thus the nature of mortgages puts the interests of banks and brokers at odds with interest of borrowers looking for the best home loan.

Talk about a set up! On one hand you have the consumer who wants to pay as little as possible. On the other hand you have the bank and the broker wanting to make as much money as possible. The broker, being in the middle, has the knowledge and information to tip the balance of negotiating power to either party by conveying either information or disinformation.

Brokers pick and choose what information to present to consumers. They pick and choose from hundreds of banks, offering thousands of rates and loan programs. They pick and choose in a climate of constant change in terms of interest rates and qualification guidelines. With the complexity of the mortgage process and the wealth of unseen information that is generally kept out of sight of consumers, the opportunity for broker manipulation is enormous.

Ben Bernanke, current Federal Reserve Chairman, explains it this way:

Reason and realism show that where there is money, there is greed. Where there is greed, we need oversight. Oversight done by the government has not worked thus far. Borrowers are still being led into bad loans and bad borrowing practices by self interested parties in the lending industry. It is time that a nonprofit nongovernmental consumer advocate stepped into this breach. CURE is that company.

Many brokers are ethical people, working hard to balance the borrower’s interests with market conditions to get the best loan possible for their customers. But some brokers have little true concern for borrower’s real needs and are solely concerned with maximizing their commission. The challenge for the consumer is to tell the difference between a broker who will help, and a broker who will hurt.

Over the years the Government has taken steps to protect the consumer. They have created forms like the Good Faith Estimate and the Truth in Lending statement. They have, however, failed to adequately oversee the process of using those tools for consumer protection. Some even argue that government agencies have directly contributed to the problem by looking the other way as long as the real estate market kept the economy humming.

The latest lending crisis has caught everyone’s attention. Now, Legislators are all set to “fix” the Mortgage industry. Typically, they have aimed their fixes directly at brokers. The “fix” proposes either severe action that will, in effect, eliminate brokers entirely. Or they propose toothless measures like new broker licensing and ethics education requirements. This will in all likelihood have very little impact on any of the brokers who are determined to make money at the expense of borrowers. These kinds of measures will not change broker behavior they will merely ensure that brokers will be aware of when they are acting “unethically”.

While Legislators and bureaucrats are busy scurrying around trying to make hasty new laws, regulations and bureaucracies; Clean Up Real Estate already has a solution; A FREE, tailored CURE for every home loan being written today.

The benefits that a good broker can bring to the home loan process are tremendous. They can distill the complex mortgage market into realistic, tailored options that a borrower can choose with adequate information. They can, in effect, require banks to compete for borrower’s business.

A borrower standing alone would have a much more difficult time navigating the available options. They are far too likely to miss all of their opportunities for loan choices that would be a best fit for their financial circumstances. CURE sees these benefits derived only from legitimate brokers.

CURE believes that the legislators are making a mistake cutting out or neutralizing brokers – leaving borrowers to fight for themselves against the interests of banks and other lenders.

Even more important, is that the inherent conflict of interest existing between brokers and consumers also exists between retail banks and consumers. Where brokers are motivated to maximize their commissions, retail banks are motivated to maximize their profit when they sell their loans to Wall Street Investors.

CURE offers a solution to monitor and mange broker commissions for the benefit of consumers. Cure can not monitor the profit banks make when selling their loans to investors. That information is hidden in the private transactions between banks and their customers for packaged loans. What keeps banks in check is only competition from other banks. Without brokers the banks will have no one watching to see that they actually are competitive in the loans they sell consumers.

CURE also sees the risk of leaving brokers unchecked and borrowers unaided in their conflicted dynamic. CURE Mortgage Monitoring and Individual Loan Certifications are the answer that leaves the benefit of using a broker, while removing any potential harm. CURE mortgage shopping tools enable consumers to turn their brokers into advocates against other negative market forces. CURE watches the brokers to ensure that they are meeting obligations, fulfilling promises, and acting on behalf of the borrower to get the best loan possible each time. CURE is the answer to bad lending practices!