TEXT OF INTERVIEW
TESS VIGELAND: The government has tried all kinds of ways to keep borrowers in their homes to mixed results. Well, here’s a new, non-government program that may at least assist with future mortgages. It’s called the Fair Mortgage Collaborative. It’s non-profit, created by housing industry insiders. And it’s vowing to help change the kinds of mortgages we’re offered, and the way we get them.
Howard Banker is the executive director and I asked him to explain exactly how the program works.
Howard Banker: Pretty much it’s a Good Housekeeping seal of approval for a lending delivery system. What we do is we save the consumer, any lender on our list is available for you and you should contact them. So, we do not offer loans, we only provide lists of certified lending organizations that can consumers can use.
Vigeland: So how will that work? Will you look at any loan that comes through, that any consumer asks you to look at and say, “Yes, this works for you” and “No, this doesn’t”?
Banker: Well, we look rigorously at the lender. So we look at the loan products that they offer and we compare them to the rules that we’ve established. And our rules require that the lender act in the consumer’s interest, not the other way around. The consumer must be offered the best product for which they’re eligible at the best price. There are a list of products that the lender is absolutely not allowed to offer. The lender offers those products, they can’t be certified
Vigeland: What are some examples of that
Banker: One example is something which isn’t used too much anymore, but will come back. ANd that’s called the “Stated income loan.”
Vigeland: The so-called “Liar loan” is what I think we’ve all heard it referred to.
Banker: Well, it’s quite accurate. What it does is it just simply allows the consumer to say what their income, with no verification.
Vigeland: Right. Well then, how are you going to police that process? Your organization is certainly not going to look at every single mortgage loan that is offered and granted.
Banker: Well, funny you mention that. Actually we are. If a lending organization becomes certified, they deliver to us all the mortgage loans they make and because nobody’s perfect, certainly, some loans will pop up. Well, we’ll then deal with the lender and make sure that those loans are appropriate for the consumer. But yes, we will be checking all the loans made by all the lenders that we certify.
Vigeland: This Fair Mortgage Collaborative is made up of lenders and brokers and people who do the technology around mortgage lending, are you concerned at all about a perception that this is the fox guarding the hen house? I mean, why trust the same folks who got us into trouble in the first place?
Banker: We have heard that said. And that’s why it’s important to understand the difference of how we work. The folks that own the Fair Mortgage Collaborative, which in fact is a non-profit organization, are themselves all non-profit organizations. And so they have no financial interest in the success of the organization. Their interest is protecting consumers.
Vigeland: OK, so the lenders themselves are not part of the apparatus that will be determining whether mortgages are good or not.
Banker: Correct. Just as Maytag doesn’t own the Energy Star brand. Energy Star brand is applied to an appropriate Maytag product.
Vigeland: Then, why not just support the Obama administration’s consumer financial protection agency? I mean, what you’re talking about sounds very similar to what they have proposed.
Banker: Their proposal is great and we full support it. And if it actually does come to pass, in our lifetime, it would be a very very powerful tool. And if it does what we do, then we absolutely will dissolve ourselves. We have no investors that we must repay.
Vigeland: When will these certifications be available?
Banker: They’re currently available.
Vigeland: So you’ve already determined some lending organizations that meet your qualifications and people can find out who that is on your Web site?
Banker: That’s correct. And by the state that they live in and pretty soon, we’re going to have a zip code finder, so that the consumer can simply punch in their zip code and up will pop lists of lenders that they can contact.
Vigeland: Alright, we’ll put a link to that on our Web site. Howard Banker is the executive director of the Fair Market Collaborative and boy, they’ve chosen the perfect last name to be the executive director of the place.
Banker: I guess so.
Vigeland: Mr. Banker, thank you so much.
Banker: Thank you.