Here’s the deal, I get real cranky having to decline over 60% of what I am looking at, real cranky.

“Please get the scum out of the business, all of our livelihoods depend on rehabilitation of the industry by the industry. We are after all a Community Service Industry, let us all Serve our Community as an Industry by shutting these SOB’s down.”

Damn, Poppy you get it, you really do! That is a perfect call for change. Moe, it’s experts like these that will attest to the fraud going on in the industry, even now, right? These are the people you were talking about!

Virginia if you’re out there, I’d like to hear your response to this post!

It’s a pleasure to meet you, Poppy, to read your words, to read about your struggle to do the right thing amongst so many doing so wrong!!! Thank you for giving me back my faith. Yes, there are those in the industry who see the evil, who have heard the evil and who will speak of the evil . Thank God!

Jacmac~

As I said in a previous post, I started my career in 1983 as a junior underwriter and worked my way up through the business to ultimately be a SVP of Operations (this is in the mortgage banking field). I received my real estate license in 1999 and have been in sales ever since. As an underwriter, it is your job, your duty, to review all files to determine the borrowers’ qualifications and the saleability of the property. It was your responsibility to make sure, to the best of your ability, to be able to spot any fraudulent activities and stop it. The underwriter is the last line of defensive for an lender before the loan goes to funding.

This underwriter appears to be educated, experienced and doing her job. She is a little verbose and redundant but sounds intelligent. Congratulations! That is exactly what she is getting paid to do. As you can tell from previous posts in previous forums, I am an A paper loan officer in a jumbo market. My clients are sophistacted and internet savy. I make an average of 1 to 1.25 points on each deal, split with the owner of my firm. I pay for my own educational costs, marketing costs, health insurance, life insurance, errors and ommissions insurance etc. I work 24/7 and am always available to my clients. I am referral based only and do not pay for any referrals or leads. I am honorable, ethical and follow all of the rules. I can underwrite ANY loan package better than most underwriters today. I despise what has happened to our industry. I HATE that peope are suffering HOMEOWNER AND PROFESSIONAL through no fault of their own.

I don’t understand why you are calling me out on this but if you can be more specific as to what you want me to comment on, I will be on line on and off today.

JacMac and Moe~

My question regarding your class action lawsuit was re: hundreds of thousands of homeowners participating. That is where you will have a hard time. If you target on specific group of perpetrators where all the players are related (realtor, lender, broker, loan officer, etc), that is another. I am not against the consumer and I am not against prosecuting people involved in criminal activites. In fact, I have personally been involved in testifying AGAINST those types of people when I was in the underwriting arena. I just think that if you do proceed with any litigation, it should be well thought out with a good prospect of winning.

Virginia – Hundreds of thousands was a fantasy number. I am sure that I can never rally that many people and it will be based on Truth in Lending Act violations, so this will not be frivolous. We go after the lender and that’s it. They need to fix the loan or rescind it per the law. Shouldn’t homeowners that are going into foreclosure have a line of defense using the law?

I am sure JacMac just wanted to hear your response to the fact that there still is rampant fraud going through the mortgage system. But I’ll leave her to comment on that.

Now, why are you going after me when we have all had healthy debates? If I ever comment in short attacks it’s because some moron that is not a regular to my blog, comes and makes a comment bashing me or my mission. I mean, Virginia, this is my blog and for the most part I let everyone speak their mind, but I do not need drive by commenters taking one tow punches and just leaving. So, sometimes I comment of color. Most of the time it is in healthy fun.

And as far as the short non-intellectual comments. All I do is write and I suck at typing still. I need to take some classes or something, but I am answering emails, comments, writing posts, letters, articles all daly long 24/7 and sometimes I just like to keep it short, especially when it’s in response to an idiotic comment directed at me.

I would like you to stick around Virginia. Jacmac and I are both 36 years old. While mature and a little wise for our ages, I am sure you have a leg up on us.

Forgive me if I have come off on you the wrong way in any comment or post and remember that I am a consumer advocate, homeowner advocate, people advocate and I want equal rights and justice for all. Regardless of race, color, creed or social status. I always post compasssion for all, even for the mortgage professionals (which most consumer advocates would never ever do)

Oh and this is my blog, so if someone gets out of line with me, I reserve the right to tell them off. I’m sure you would do the same

It would actually be nice, since you are a great writer and a long time veteran, to maybe be a guest blogger for this blog. I think you and several other commentators should be heard. Just a thought.

Have a great day everyone. I have to take my boys to the park. It’s a nice day here in So Cal. 70 degrees and sunny in Corona.

Moe, 70 degrees!!!! I’m jealous.

Viriginia, don’t take things I write so personally. By trade, I am a writer so sometimes I write colorfully. You wrote: “I needed you to know that I was an underwriter for over 18 years” . . .

Okay, this is a need you have, and I understand it. You wanted me to know you knew your stuff and wasn’t just blowing smoke up my a$$.

But I didn’t need to know that. It wouldn’t matter to me if you were flipping burgers in McDonald’s which a lot of the people who were in your industry will find themselves doing soon (I’m not making fun with the way things are going I think this is a reality) — I think everyone who is a thinking person has valid opinions, and you know sometimes, it’s not the person in the thick of things who can see the clearest, sometimes it’s the person on the outside, because the one on the inside can’t see the forest from the trees– they’re biased and influenced, jaded even.

I’m not speaking about you in particular, but that’s just my general opinion.

I wanted to hear you comment on the rampant fraud in the industry right now, that is still on going, Moe is right.

I’m sorry that you and your friends are suffering. Generally, I am upset when anyone suffers because at heart I am a people person and care about people. That is why this issue has struck a cord with me, because we’re not talking about numbers and dollars and property, at the heart of this issue are the lives of people, lives being torn apart.

I’d like to see a study about how many marriages fall apart due to this very issue. Everything has a domino effect.

I do congratulate you on your success, sincerely. I think any woman who is accomplished is something to celebrate.

If we all agreed and met eye to eye, we’d never learn from each other and grow, so please stick around and challenge me and whoever else you feel have a flawed opinion. I welcome that. I look forward to reading you in the future!

Beuatiful, I wish you were my underwriter!!!!!!!!!!!

I see part of your problem; you keep repeating yourself, verbatim, paragraph for paragraph. Maybe you should proof-read your writing!! Your frustration might be reduced some. No wonder you are turning down 60% or what you see; learn to read what you have in front of you!

Tim,

I understand your anger, but more education and licensing will not mean a thing. Those who are going to defraud and commit crimes will do so, no matter what licensing and education requirements abound. Greater licensing requirements will only serve as a barrier to entry into the field, resulting in less lo’s and driving costs up even more. And if you look at what happens to industries that have such barriers, you will see what I mean.

I must also disagree with you placing all the blame on the lo’s. Yes, there are many bad ones, but most have left the business and have gone on looking for the next “money opportunity”. The marketplace is now cleaning up after them.

The blame first and foremost must be placed at the foot of Wall Street. If Wall Street had not ‘created” this demand for subprime, set up the warehouse lines for lenders, and then not bought every piece of paper that they could get their hands on, then this would not have occurred.

Wall Street’s demands for the paper resulted in more lenders starting up, getting their warehouse lines and going for it. As the lenders saw Wall Street buy everything, they loosened standards even more to push out more paper. LO’s responded to the demand by the lenders and the loose standards and the mess began.

And don’t forget realtors. They were konly after the sale. They did not care who they sold to, just get the deal.

So the lending mess is a result of everyone in the chain. But it was a chain started by Wall Street, who if you look at all the past “bubbles” that have occurred, whatever the industry, has had their hand in it from the start.

You should have been in the industry when I started doing loans. Standards of today are what I dealt with all the time. B Paper was difficult to get approved, and rates were high. And it was even worse in the 80’s, when I bought my first home.

a 30 year underwriting veteran typing WTF

know what I think

I think moe writes every single comment himself.

Jerry…I’m available! :0)

Our industry was messed up before Wallstreet got involved. Back in 1998 when the last crunch hit some big players fell. The ‘little guys’ i.e. New Century, Option One, NovaStar rose up as a result. The problem is, though, when they brought on their sales staff, the comp structure was set for $30 million a month in production and was never adjusted as the company grew. I knew an AE who was making $3 million per year on commissions alone. It was a vicious cycle — the sales staff was highly compensated to produce, albeit a necessary part of the business — and senior management who wouldn’t or couldn’t stand up to them because stockholders liked their dividends that resulted from those sales. Here enters Wallstreet — we have traders bidding on portfolios of loans not knowing or understanding what a DTI or LTV is and again, a highly compensated sales staff motivated to get every loan bought in a pool — good or bad.

Ninety percent of the people in this business are giving the other ten percent a bad reputation.

Dr. Diamond you hit it on the head. I got out of retail and into wholesale in January of 2005 with Fremont. Halfway through ‘06 I switched to another lender that offered both Alt A and Subprime. I LOVED being an AE. Then in first half of 2007 my lender imploded and I got on with Bear Stearns thinking that Wall Street was out to eliminate all the middle men and that’s what Bear told us as well. Then right after I started there they pulled all the programs and left it at 80 full doc and 70 stated for a month, brought back 100 percent for literally three days in the beginning of August and then cut it all back again until the end of september. At that point I decided that being an AE was not the way to go because there were no programs and the comp sucked. I ended up coming back into retail but not as a broker but a banker and a w2′d employee. I gotta say I LOVED being an AE and am proud to know that I was one of the better ones. It was a GREAT job and I got paid well and had a lot of great relationships. That job now just SUCKS. Everyone I know that is still in wholesale is not making any money, and I’m talking about guys that for YEARS made high 6’s and some even in the 7 figure range. At least with retail you still have a shot of making some cash but wholesale forget about it. Wall street thinks that with all their “A” programs coming out that they’ll return to the halycon days of subprime and Alt A volumes but they don’t have a clue on how to originate A paper. I like retail but I do miss being an AE.

I thought it was the five C’s:

character, credit, cashflow, collateral and conditions (you could also add compliance)

Poppy, just shut the hell up you friggin whiner

OMG! This is great! I am an underwriter too and see some very “creative” loan submissions…

the underwriteres are to blame, the look the other way while the loan was approved. they did it for the money! Guilty, all of you!

the underwriteres are to blame, they looked the other way while the loan was approved. they did it for the money! Guilty, all of you!

One possible answer is the UMBA (Upfront Mortgage Brokers Association:

History: I became a Realtor in the mid-west in 1969. When the CRS (Certified Residential Specialist – a Realtor’s association) started in 1972 I was one of the first to join as a “charter” member. Why? Because they (the CRS Association) were proponents of doing things the “Right” way, the way the job should be done – with honesty and integrity. I knew that if I were to refer a customer to a CRS in a different state that the customer was much more likely to receive fair treatment than if they just picked out “any” Realtor in their new location. I still refer customers moving from the area to Realtors who are CRS’s in other states.

In 1983 I entered the Mortgage Origination business and worked for Banks such as Norwest Bank (now Wells Fargo) and US Bank. In 2003 I joined my first Mortgage Brokerage firm here in southern California.

About a year an a half ago I discovered the Upfront Mortgage Brokers Association. I reviewed their philosophies and commitment to their customers and immediately joined up. It’s currently a small group of like minded individuals who are willing to provide the home loan borrowers with exceptional service and honesty in their dealings, and are willing to put it in writing. Needless to say, if I meet a customer who needs mortgage services in a different state, I refer them to another UMBA member.

My point?
Legislation and rules changes will not stop the dishonest loan officer, and yes, that’s where it starts. If the loan offer has any integrity he or she won’t put a customer into a mortgage product that is detrimental to their customer’s financial well being. UMBA members receive referrals from other association members and are under constant scrutiny to make sure that they deserve to be members. In this way we can police our own without the “help” of the politicians.

How can you tell if a Mortgage Loan consultant is honest? There is no real guarantee, however – if they have taken the extra step to voluntarily pay the dues and sign a commitment with a Professional group such as the Upfront Mortgage Brokers Association they are a better choice than the yellow pages. (Licensed real estate agent, Realtor or CRS)… (Mortgage Loan officer, Mortgage Broker or an UMBA member), which one would you choose?

We all love to do business with people we trust and who trust us. A great start in earning that trust is to show your customers that you are willing to go above and beyond the “norm” by joining and supporting professional organizations such as the Upfront Mortgage Brokers Association. You can learn more about them at: http://www.upfrontmortgagebrokers.org

Jack McKenzie, thank you for making this statement: “If the loan offer has any integrity he or she won’t put a customer into a mortgage product that is detrimental to their customer’s financial well being.”

That’s the bottom line. It is very true, also what you said, “We all love to do business with people we trust and who trust us.” — personally, when I start to have the feeling that I’m being treated like a number or a file, or lumped into a group and not regarded as an individual, I feel I’ve been devalued and treated as less then.

Many people going through loan modification or who reach out to their lenders for help when they face payment shock are treated like trash.

Eventually people do not want to do business with people who make them feel that way.

I get the feeling that too many people in the industry regard individuals who come to them for loans, not as a potential relationship to do business but a source of income, someone to prey upon and fleece.

I get the feeling that this view of the general public is shared by too many bankers, loan officers and mortgage brokers alike, to the degree that it has created the massive crisis we are now facing.

In short, a lot of people seemed to have forgotten that they are dealing with real people with real lives, families and feelings.

That’s pretty low in my book.

The worst comments I’ve read here calling homeowners ignorant, at best, and debt addicts at worst, don’t dispel but confirm this opinion.

JacMac, You wrote: The worst comments I’ve read here calling homeowners ignorant, at best, and debt addicts at worst, don’t dispel but confirm this opinion. I can see why many people have this opinion. Unfortunately, a number of borrowers who come across my desk usually fall into one of these two categories.

To the ignorance issue: As an 11-year mortgage veteran (I’m 33) I find it shameful how uneducated the average consumer is about loans and lending products. My brokerage takes time with individual borrowers to educate them on products without going into too much detail on underwriting requirements. When we’ve had to tell borrowers they will not qualify for that SISA because of XYZ guideline. Many have gone to other unscrupulous brokers to get the loan done. In the end, the borrower may or may not have known misstating the income was fraud, but they’ll claim ignorance either way. As for the unethical guy down the street, I’m glad you’re gone.

To the debt addict comment: I think it’s easy to see mass America is loading up on unsecured debts and undertaking more than they can afford. I believe it’s mostly due to our mass marketing and America’s “I deserve it” mentality. Advertisements for nearly everything are touting “treat yourself” or “you deserve it” or “get what you really wanted.” That the reason why the average household has $6k in credit card debt. It’s called living beyond your means. With the banks new, creative financing plans you can have it all. Only one way to get it- Finance it! Damn tomorrow, the repayment and the consequences. Are Americans debt addicts?——You bet.

Poppy,

I don’t envy your situation. Some of the fraudulent things you have mentioned in this blog have literally blown me away. I couldn’t imagine perpetuating some of these no-brain schemes to get a loan approved. The stupidity abounds with many of these fly-by-night brokers. Underwriters and lenders alike must band together with honest, hard-working brokers to start a “sh*t list” of who’s sending these obviously fraudulent loans. A committee of industry peers could review the situation and documentation to decide if the offending party be placed on this higly-publicised, industry-wide list, also made available to governing and licensing bodies.

As for the underwriting and Lender’s responsibilities, stop hiring nit-wits with no experience or accreditations and sponsoring them for DOs and SAR#s. I’m tired of educating these losers. Make them learn the underwriting guides! Poor underwriting has to stop. Pay good underwriters what they deserve and back them on their decisions. Underwrite loans based on quality on quantity. And for goodness sake, stop securitizing garbage.

My comments are going to be substantially different than the others here. I was doing mostly FNMA conforming refinance loans all my 20 year career as a loan officer working for a mortgage broker. A maximum of 10% of my loans were purchases. I did maybe 15 subprime loans in all my life, and most of them were refinances on homes with plenty of home equity, not purchase situations, and certainly not 100% financing. I think I did maybe one or two 100% financing loans in my whole career. So I have been mostly unaware of how common was the 100% financing that has driven the Real Estate market prices upwards through the stratosphere from 2001-2005, followed by the fall off the cliff for Real Estate prices and the subprime industry. As I see it, the mere existence of 100% financing – even worse, the 100% financing available to investors and to investors pretending to be owner occupants – has caused the near death of the subprime industry in particular and the lending industry in general. 100% financing has alone caused much of the devastation we see now. When buyers have no skin in the game, none of their own hard earned money used as down payment and the discipline and patience needed to accumulate that down payment money, it is inevitable that they will walk away when they lose their job or the Real Estate market experiences the inevitable downturn. I don’t doubt the apparently all too common examples of fraud listed or described here, whether it is trumped up appraisals, falsified employment, investors pretending to be owner occupants or vacation home buyers, etc. I never knew how pervasive were these abuses because I wasn’t doing them and neither were others in my office. But even these abuses would not have caused the extreme damage they have done if Wall Street had not aggressively offered and securitized 100% financing like drug pushers. No money down used to be relatively uncommon through about 2001. After that, the floodgates were opened and it became the only game in town. People are warned not to use margin (leverage) to buy stock when the leverage usually cannot be more than 50% LTV. Yet those same people were buying homes with 100% LTV and maximum leverage. This is our downfall. Now the subprime industry has suddenly eliminated 100% financing but it is too late to avoid the worst financial crisis for America since the Great Depression.

In 2004 I read the writing on the wall that the Fed induced low interest rates were going to come to an end, and my business (mostly doing “no cost refinances”) would dry up to almost nothing. I was right, and it wasn’t rocket science. I had been through the jump in interest rates in 1994 which destroyed my business and my income for about 2.5 years.
During this time I started to study money. I discovered that gold is real money, and that gold is a hedge for a falling US dollar. I learned that the US dollar had been declining since 2001 in the Forex markets and is likely to continue to decline. I learned that gold prices had gone up at the same time from a low of about $256 an ounce in 2001 to about $375 (a few years ago) and $833 today (all easily tracked at http://www.kitco.com ). In 2004 I jumped in head-first into buying gold and silver coins, and gold and silver stocks. And my portfolio has more than tripled during the same time that the lending industry has crashed and burned. I never could have done it without the capital generated (earned) by my years as a loan officer. That portfolio is now the source of 99% of my liquid assets, not my job as a loan officer which I have all but given up (having done just three loans in 2007, my heart is not in it anymore.) Over the next three years gold is likely to go up 100% or more, while Real Estate is likely to decline up to say 20-30%. To me it is as clear as the nose on my face which is the better investment. I know that few people will listen to me, and that most people do not take precious metals seriously as an investment, but that is what I have done to fly away from the lending industry rather than crash and burn like most of my colleagues.

It is the 3 C’s – Credit, Capacity and Collateral, of course the idea that Credit = Willingness to Repay; Capacity = Ability to Repay/Assets to Afford the Ongoing & Initial Outlay, and Collateral = Value/Marketability of Property/Asset Supports the Request (simplistic at best and goes to the fact that the Asset’s Marketability supports the continued desire to repay and supports the amount of the credit requested -these days not so simple). Then, the one that you all suspect -if we have to take the Property/Asset back will we be made whole.

The 5 R’s refer to Blemished Credit issues – Rehabilitation, Remorse, Restitution, Recognition, Recidivism. Rehabilitation = New Credit Reestablished over a reasonable period of time with no adverse rating; Remorse = I screwed up, and am I sorry; Restitution = Paid Back the Collections, Judgments, Charge Offs, etc…; Recognition = What caused the issues, and Recidivism = Why it will not happen again (there are variations of the 5 R’s, probably predicated on the type of credits involved). It helps to have these issues encapsulated and not chronic. Chronic = No Loan, i.e. None of the 5 R’s, you just do it ’cause you can and have gotten away with it for years. Better known as Chronic Financial Mismanagement.

Now as some of you who are in the business for over 10+ years have guessed, I am an A paper kind of person. So for those of you who think I ushered the Sub-Prime Crud through the door of mortgage heaven, NOT. Yes, I did underwrite Sub-Prime, NO, I was not a favorite of the AE’s, Management or Brokers when I did so. I treated it like FHA paper, just because it was Sub-Prime did not mean it was a free for all, to all who came to the party. I never, ever got a “bonus” for underwriting and would/will not work for anyone who “commissioned” their underwriters. Absolutely lacks any degree of Ethic or Integrity.

Did I make some loans that have gone/may go south…..yes, why – because we all looked at credits that had Guidelines that were absolutely ghastly. The idiots in Risk and Product Development were smoking something a little stronger than a “leafy green substance”. As often as possible – I found a supported reason to Decline the request, as often as not management signed off.

Just for s*&% and giggles – go back a year and look at those guidelines – then tell me you would lend your money to someone with the Credit Reputation we saw reflected in the requests we got for 80/20 Combo’s, let alone an 80/20 Combo in and of itself comprised of NINA, SIVA, SISA, NINANE, No Doc, No Ratio….. Unless you are presently smoking something stronger than a “leafy green substance” it would be NOT.

Now for those of you beyond the “Blame Game” and other inanities – go look up the traditional concept of Prudent Man Lending. More than anything, that got me to HR on a regular basis, I tended to ignore the more esoteric guidelines, in favor of Prudent Man Lending – ’cause it was some other man’s money I was granting the approval to lend. Trust me if it was mine, it would never have been lent, and so it goes of the other man’s money as well. Prudent Man Lending = Fiduciary Responsibility.

So this could be the end of the beginning of the end of the mortgage baning mortgage broker business. Who knows!

I also am an underwriter (predominantly FHA, VA and conventional). Never did a subprime loan. Now, though, I get more trying to be submitted through FHA than ever before with credit that does not meet FHA credit criteria or the new FHA Secure. I just do not know how people got their existing loan with the credit. AND, yes the fraud is incredible even in the full doc files. Sorry, folks, I work wholesale and this is a very serious problem. I decline over 60% of my loans for credit alone and let’s not forget going from $300 to $1300 monthly payment with no reserves or ability to repay the new loan. That would be setting up the person for immediate failure. Looking at bank statements where the person spends every dime they make eating out daily, spending money on all kinds of things with no apparent ability to save AND I not speaking of the NECESSITIES for living (food, utilities, fuel, etc). This really breaks my heart(truly). People deserve to own their own home, but with the frantic, crazy inflation in housing prices over the past 5 years basically took many people out of the market to buy that starter home as wages did not keep up with the massive explosion in housing. Don’t tell me there hasn’t been any inflation. When you take the basic major expenses out of the calculation there would not be any, but through those items back in and you get massive inflation (food, fuel, housing). I just love how the fed gov lies with statistics.

The other major issue is that most programs are credit score driven through an automated system. Get that automated approval and you are in like flint. To me, the AUS’s began part of the problem with doing away with part of prudent underwriting guidelines. Just try to decline a loan that receives an LP or DU approval. It isn’t pretty.

I am still underwriting and it gets more difficult on a daily basis with the loans I see. I still believe in homeowneship. I just do not believe in the verbal abuse I receive so often from brokers out there (NOT ALL though) when I have to do my job and decline a loan or ask for documentation to have the loan meet the product guidelines. Please don’t beat the underwriter up we are human too.

Thanks for putting this guy on Blast Moe, at least they caught one of these guys and he can do no more harm!

He may not be able to do any harm, but I’m sure one of his “discipiles” will continue on. One of the things I’ve seen in the industry is that if somebody sees somebody else being successful, is to learn what they are doing and implement it for themself. Then that person will put their own spin on it and twist it into their own. So they got one guy, but there are plenty more out there still predating on consumers.

Unfortunately, we can’t stop them all. Where there’s $$$$ to be made, greed kicks in and the criminal minds begin churning out new ideas. Even with all the new laws being put into place, the criminal types will work up new ways and schemes, no getting around it.

It all comes back to consumer/client education, and blogs such as this, that allow you to put your own experiences for everybody to see. Jacmac, as I said, I for one truly appreciate your questions, as it’s made me realize that no matter how much I think I’m educating, if my client doesn’t understand what i’m explaining, then I’m not doing my job. your posts have made me more aware of how i’m educating my clients, and for that, I thank you moe for this site and you jacmac for your input and questions.

That’s one of the best commnet I have ever had and I am touched that you have taken a look at your business from a different angle.

I can tell you are one of the “good” guys MiMortgageguy. Thanks for your comments thoughts and input. It ios greatly appreciated and thanks for paying it forward!

POPPY !!!!

WOW, I love it that you just put it out there !

This industry is a mess and will take some time to fix, in the meanwhile there are a lot of homes & families in the middle. There are those dirty little f***ers that did a lot of house flipping, refi 100% that don’t deserve sh*t, but there are a few who truly are going through a hardship and need some help from the banks.
Some of these borrowers were screwed by the greedy LO, appriasal, lender, AE etc.. those BS programs NiNa, NoDoc, SiSa, Neg Am 1% loans, etc were just fuel for the already greedy fire. YSP kept making them go the extra mile to get the borrower approved on loans the LO knew in 3 years they could not afford.

MOE I am so grateful for this blog –