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Transparency is the new buzz word in the financial world, especially in the mortgage industry. While government officials and financial pundits pay "TRANSPARENCY" plenty of lip service, those of us working on the front lines of origination live with it on a daily basis. I would go as far to say, from a point of sale perspective, MORTGAGE ORIGINATORS HAVE QUICKLY BECOME THE MOST ACCOUNTABLE MEMBERS OF THE FINANCIAL SERVICES INDUSTRY.
Imagine the potential protection consumers might benefit from if all commission based financial services professionals were forced to follow in our crystalline footsteps, conducting every aspect of their businesses in the spirit of undisguised disclosure, in an environment of extreme accountability.
Perhaps it would seem fit to start with car sales? Suppose when choosing a new car, dealers were required to provide an itemized breakdown of each individual cost associated with the construction and delivery of that new car....part by part, component by component, mile by mile. This give consumers the ability to compare the efficiencies and inefficiencies of each car maker and therefore find the best "bang for their buck". Or suppose, if after the first 30 days of driving the vehicle you find that the car maker misrepresented the vehicle's miles per gallon rating. Would the dealer then have to buy back the car? Would the dealer be forced to refund the additional gas expenses?
How about transparency in government affairs? Should the Congress be forced to implement a mandatory initial disclosure period for all proposed legislation and stimulus bills that require taxpayer funding.?
Let's use the old fashioned RESPA rule as a foundation. Taxpayers would get 3 days to review every two pages of the bill, much like the 3 days mortgage borrowers are given to review a Good Faith Estimate and Truth In Lending after their initial application. Too extreme? Billion and trillion dollar congressional legislation affects the wallets of all taxpaying consumers...shouldn't Americans be protected from crony capitalism and political biases? Shouldn't our voice be more transparent in the halls of Congress?
Let's take it a step further. What if the above congressional transparency reform was put in place? In the event the Congress misrepresented any of the legislation, failed to properly disclose costs, or just simply made an error....should the members of Congress and the executive branch be required to pay American taxpayers a "Skin In The Game" refund from their own government salaries?
This happens in in another sector that has long been in the spotlight of regulatory affairs, financial planning.
If you have a 401k, a "value management company" (VMC) could been hired by your financial planner's parent company to assess the initial value of your investment and ensure your financial planner isn't coercing Wall street traders into overvaluing the investments your planner directed your 401k funds. If the VMC determines that the value or projected earnings of the investment are less than what your financial planner represented at the point of sale, then you have the right to request your financial planner refund you 10% of every $1 you lost as part of your 401k's SITG (Skin In The Game) consumer financial planning protection provision.
The mortgage industry is at the forefront of the financial services transparency revolution. However, we hope that politicians and regulators examine the farther reaching implications of their newfound disclosure vigor. If they choose not to adopt and enforce these policies across the spectrum of all commission based financial service professionals, then the mortgage industry and related housing industries must stand up and spotlight that inconsistency in the interest of consumer financial protection. These changes affect our ability to assist consumers with the most important investment they make in their lives. They affect our business. They affect our way of life.
I look forward to collaborating with industry colleagues to discuss the effects and issues associated with regulatory proposals. We must voice our collective opinion to provide transparency on how these changes affect our business. Perhaps, within our own ranks, we should be discussing the regulations and guidelines that best promote transparency in the mortgage origination process?
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Article by:
Frank Ceizyk
Frank Ceizyk
Vice President
Heartland Mortgage, Inc.
"Restoring Integrity To The Mortgage Industry One Honest Loan At A Time"
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