“I’m not surprised, I saw this coming a long time ago.” Those were the words I spoke to a friend over lunch on Friday regarding the current state of the mortgage industry. She expressed her joy in finally understanding why God had not allowed her to purchase a home. She had been bitter for a long time. Having never received an answer as to why she was allowed to set her affections on a lovely little three bedroom ranch home only to have the deal go bad at the closing table.

That was nearly three years ago. However, on Friday she wore an expression of gratitude, having had the convenience of witnessing first hand what happens when you barely qualify for a loan. She found through casual observance that home ownership wasn’t always the blessing it was alleged to be. You see, a close friend of hers, a single mother with five children, had the unfortunate experience of having to walk away from her home due to her inablility to afford the new elevated payments.

As I said previously, I had expected this. Why? Well, I had the pleasure, if you want to call it that, to see the mortgage industry from the inside out during my minimal stint as a loan officer for a local brokerage firm. Prior to resigning after several months of employment, I found myself talking more people out of loans than I had closed. I guess you can say that I wasn’t cut out for taking advantage of people. God’s word was too close for me to ignore.

Proverbs 22:22 – 23 – Do not rob the poor because he is poor, Nor oppress the afflicted at the gate; For the Lord will plead their cause, And plunder the soul of those who plunder them.

Jillayne Schlicke’s father used to tell her that mortgage banking was the “highest calling of all” because it involved helping people live the American dream of homeownership.

“I learned how to spell ‘mortgage’ when I was about 6 years old. It was on a flash card,” said Schlicke, the daughter of two mortgage bankers and co-executive director of the Ethical Lending Foundation near Seattle.

As a widening crisis over nontraditional and subprime mortgages gone bad threatens to force millions of people out of their homes, Schlicke worries that mortgage brokers are well on their way to overtaking used car salesmen on the list of professions least trusted by consumers.

“We’re in ethical chaos in mortgage lending,” said Schlicke, who followed in her parents’ footsteps and became a mortgage banker and now teaches classes for real estate agents, lenders and consumers on ethical mortgage practices.

“All you have to do is open up your spam (e-mail) bin and you see porn spam, and you see Viagra spam, and you see mortgage spam,” she said, adding that the unethical behavior of a small [this may be a bit of an understatement] minority of brokers was tainting the entire industry.

“It’s going to be a long road to climb out of that gutter.”

After the housing market slowed in 2006 and more people fell behind on mortgage payments, the foreclosure stories became front-page news across the United States.

In the last three months of 2006, lenders began foreclosure proceedings on about one out of every 200 mortgages, the highest rate on records dating back 37 years, according to the Mortgage Bankers Association.

Some 1.5 million homeowners will face foreclosure this year, research firm RealtyTrac estimates.

“An American dream has become an American nightmare,” said Howard Pitkin, commissioner at the Connecticut Department of Banking.

Play smart people. Don’t worry about what the Jones’ have, just make sure you are doing what’s best for you and your family. The middle class is getting squeezed out and the politicians are watching it happen. At the end of the day you have to decide where you want to be, amongst the have’s or the have not’s. Right now, the choice is still yours. If you keep playing by “their” rules, pretty soon it won’t be.

Housing “nightmare” tarnishes the American dream

Posted by Rich (subbing for Lo)