By Poppy (30 year mortgage industry veteran/senior underwriter)
It has been a long, difficult and contentious day….between the Brokers, AE’s and Processors, none of whom appear to know that there are two “g’s” let alone a “t” in mortgage. It leaves one not sure whether to be so angry as to find them all and pound some figurative sense into them (get out of the business kind of sense) or just give up in utter frustration and self preservation.
Since when did you all become entitled to the approval on the loan that you submitted, the documentation is seriously lacking and in one case out and out validated fraudulent. I would like to be flippant about this, but I am beyond it, totally disgusted. Not only does the documentation not support the request, but the borrower’s ratios as you the Broker submitted it are 49.987/49.987% - this is an FHA loan the ratios are 31/43%. I know you want me to stretch the ratios, and if it makes sense, I will.
BUT THIS DOES NOT MAKE SENSE.
Now for the least humorous part of this, the actual ratios when the income is derived correctly are 54.032/54.032%, just how the hell do you expect me to get this through the gateway of FHA, particularly when they do not have a dime in the bank and their credit is hideous, including a late payment on the mortgage you want me to refinance in June of last year with the Bankruptcy discharged January the year previous to that, and let us not ignore the 15X30 and 6X60 and 2 Charge Off’s and 1 Lien since that Bankruptcy on consumer credit. Oh, and they want cash out….well people in hell want ice water too.
NOW HEAR THIS - FHA IS NOT A SUB PRIME DUMPING GROUND.
You are not allowed to continue your sloppy, slovenly, inane, and fee driven submissions. You are not allowed to whine, threaten or act like and utter ass when I decline these files any longer, it is no mystery to you that the loan is going to be declined, I see by the credit report at least 10 other mortgage underwriters at 10 other wholesale houses have already declined this “gem”. Understand this, no amount of whining, threatening, kissing up, posturing, and lying will change my decision.
I am not a substitute for your processor to condition the file for the necessary documentation since you do not have the foggiest idea of what comprises a complete loan submission.
Here are the rules - You will submit the loan with the following items:
- Current computer generated paycheck stubs (no photo shopping allowed)
- 2006 & 2005 W-2’s (again no photo shopping allowed)
- If there is OT or Bonus Income a written VOE for 2006, 2005 and YTD is required to break out that income (no altered documents allowed, information is validated)
- Commission income greater than 25% or Self Employment requires 2 (two) years Complete all Schedules Tax Returns (no fantasy/manufacturing allowed, I will execute a 4506T)
- Signed complete Final Divorce Decrees and Separation Agreements are required if the borrower is divorced
- Two months most recent Bank Statements complete or Two month VOD (no photo shopping allowed and the institution will be called for validation)
- A Credit WORTHY Credit Report (no cut and paste allowed, I do pull a new credit report)
- A completely filled out and accurate 1003 (DISCO will be run)
- Preliminary Title Report with either Borrower or Seller Vested (county records can and will be checked) a MCAW (not a 1008 this is an FHA Loan we do not use a 1008 on them)
- Legible Appraisal (be advised if the comps are all from January 2006, April 2007, etc…, Core Logic will be run and the Appraiser will have to hustle his/her bustle out to the field again for two new comps to support value, that have sold in the last 90 days, if they indeed can)
- And all other “real” supporting documentation that FHA requires considering the income being used to qualify/assets used to qualify or other out of the box issues. Out of the box does not mean a letter from the CPA promising that this year he will take less deductions from his self employed income that he did the last year i.e. 18,756.00 expenses last year and only 2,534.00 in expenses this year, that does not and will not fly, ever.
How hard is that, this loan is going to pay your house payment for the next month or this month depending on what is relevant, for heaven’s sake take some pride in your work. Just because the borrower makes 10.55/hour does not mean he/she works 40 hours a week (they rarely do), do not expect me to take that 10.55/hour and multiple it by 40, then by 52 and divide by 12 to get the monthly income.
That is not going to happen, we average best case year to date and prior year, worst case, year to date and the prior two years. If the income is declining I will only use the worst case, i.e. the average of the year to date declining income. Oh, if they are self employed or 1099M income borrowers, I must have two years of income derived from that source, TWO years.
Now for the really easy part of this puzzle, if the borrower does not qualify DO NOT SUBMIT THEM, get a new borrower that does and do not waste my time or your time. If you folks spent the time that you do arguing with me, submitting this piece of whatever (I have no really apt descriptive words for these files and even cursing does not adequately describe some of them) and going over my head to threaten me; by going out and getting a couple of truly qualified loans, you would be financially sound and not have to rape the one approved borrower that you do have in your pipeline with the obscene financing fees that you charge.
Quit being so cheap and pay an experienced Processor to handle your files, it will make you money in the long run and lower your blood pressure, and mine too I might add. Another hint……FHA has a web site where you can get a copy of their manual (better known as guidelines), a 4155, along with all of the bulletins that change certain segments of the 4155 - download the damn things and READ them (this applies to all AE’s, Brokers and Processors).
A quick word to the AE’s - would you stop telling the Brokers “oh yeah, our underwriters will approve it”, no we won’t, frankly if you want the business that badly, then you fund that loss leader out of your own pocket, bet you won’t either. Quit going back to the same bad actors that choose you adversely to dump the worst of the worst after it has been declined by everyone else.
In other words, stop scrapping the bottom of the barrel for your business, sooner or later I have to waste my time on it, and then waste my time again to argue with you as to why I did not approve it, then waste even more time arguing with that particular Broker who would lie to sell his/her aging mother for a dime. If this sounds redundant, it is, this is what I do all day long, all week long, all month long….
These are the facts, we are returning to the “old” days in lending, those of you who can not or will not make the transition to this novel methodology of decisioning, please, I hear that TSA is looking for some good folks out at John Wayne, if you can pass the background check, get your application in now before the rush.
To those of you who already do the aforementioned “good/complete/honest/knowledgeable/approvable” submission - THANK YOU - YOU ARE SO APPRECIATED.
No Responses
Poppy,
Thank you Thank you Thank you.
I got so feed up with brokers and upper management bending over to cover for the crappy files I went into another field. If brokers were regulated like other professionals (CPA, Financial adv, etc) a good percentage of them would be in jail by now.
Posted on January 14th, 2008 at 11:38 am
You should just be glad to have a job. Stop complaining. You are supposed to put the brakes on the deal. You are the gatekeeper. In every field on earth salespeople push the limits. Just say no and be happy to have a job because many do not. Get a grip. Furtheremore things are more complicated in an automated world.
Posted on January 14th, 2008 at 11:40 am
I am glad to have a job, what pushed me out was when the upper managment would remove the Fraud from the file and say get new doc’s just so they would not upset the broker was the last staw. It happens more then you think.
Posted on January 14th, 2008 at 11:47 am
Great article. I can’t tell you how many times I have received loans like this from an AE or LO screaming why can’t I approve this type of loan.
One of my answers is that I’m not in the business to approve loans that will be in foreclosure. Frankly if all borrowers were qualified as they are with a VA loan we wouldn’t be in this mess. Notice we have heard nothing about VA foreclosures.
Posted on January 14th, 2008 at 11:48 am
Well said! Most “L.O.s just don’t have a clue. I’m kinda glad that the market is in the tank. It gives us long term professionals to do our job profitalble and let’s all the other part timers go back to their jobs at grocery stores, auto sales etc… I reccomend, do it right the first time, charge the fee that your worth and service your customer correctly. This is not brain sergery. Read the guidlines and follow the rules. Its not that difficult.
Posted on January 14th, 2008 at 11:51 am
TO ANYWAY:
It is obvious with your attitude you are one of the those that do this type of loan. Every time an underwriter has to waste time with this type of crap it delays approvals for the borrowers that can be approved and for the loan officers/AE’s that know their jobs. ANYWAY if you are in this business GET OUT give us all a break..
Posted on January 14th, 2008 at 11:51 am
Well DA,
What did you expect from an industry practice DOES NOT require Background checks on it’s employees. I know this because I work at a well known Bank that currently has a 38% fallout ratio on applicants who cannot pass a standard background check and all these applicants came from mid-size to small mortgage companies. Apparently the Department of Corporations in California (where I work) does not require S-Corporations to submit to any hiring background proof to them for monitoring. The whole Wholesale/Correspondent Lending industry some experts are saying have as High as a 30% ratio of people doing loans at these small (CFL License shops) do have serious criminal records but are allowed to work due to no background checks required. I just heard of a loan officer who submitted a loan to our company but was not heard from again due to his arrest with the IRS for tax fraud. Wow!
Posted on January 14th, 2008 at 11:58 am
Poppy u r the bomb!!! I have been in the business almost 30 years and I always read your column aloud to the l.o.’s in my office. Just to let them know that we aren’t as dumb as they think we are!
Posted on January 14th, 2008 at 12:00 pm
So are underwriters the most ethical in the mortgage business?
What’s funny to me is that I keep hearing veteran LO’s and brokers saying that all the crap has been cleaned out of the industry and only the good guys are left. Yet when I speak with Poppy, she sends me these emails to post.
Personally, I think all underwriters should be able to flag fraud in a nationl database and then it is reported to regulating authorities to take immediate action. This seems like a simple and fast solution to combat mortgage fraud.
It is apparant that they have first hand knowledge of broker fraud, but are told by upper managemnet to not report this because of a fear to lose that broker shops wholesale busines.
Posted on January 14th, 2008 at 12:00 pm
To Anyway.
Get a grip. Learn the guildlines! If the borrower does not qualify under a paticular program, move on to the next. If there is no program available for your borrower, advise them with proper guildence, place them in database as a possible future deal and move on to the next! But please don’t submit stuff you clearly know is not going to be aproved. It just slows my pipeline down for quality submitted loans. Albertsons markets surely could use a good bagger or cart retrival person. This in America. Your allowed to move jobs if desired. No offense, just straight truth.
Posted on January 14th, 2008 at 12:04 pm
My personal favorites recently have been the SIVA products 10 yrs on the job and the employer ( some warehouse manager in Miami making $80,000/yr) never shows up on the credit- but KFC does!! Or the employer who’s having “phone problems” when you call for a verification the number is disconnected so the brokers send an LOE stating they are having “phone issues” and they are working with the provider to get it resolved. I think Brokers have gotten dubmer in the last year..if that’s even possible! Or maybe they think underwriters don’t look at credit or validate anything and just make decisions based on their word! I’ve been in the industry…sub-prime for 10 yrs and this is as bad as I’ve ever seen it! Fraud Fraud Fraud…lenders should tighten up and prosecute these people instead of putting them on a watch list!
Posted on January 14th, 2008 at 12:05 pm
[...] Submitted by Eddie V. [...]
Posted on January 14th, 2008 at 12:05 pm
And your paycheck is paid by whom? You job is to do what?
That’s right, the fees that are charged in the loan are what pay your salary, and your job is to be the one who sees the (fraud, bad ratios, unqualified income, credit concerns, etc.) and then make the “Underwriting Decision” to deny the file. If you want to cut down on bad submissions, then call your AE’s in for a little training, and then dispense them to their accounts to train these untrained LO’s on how to properyl (qualify, submit, price, etc.) FHA loans. Remember, your AE’s are the front line protection for your from these problems. And while there will be plenty of stupid brokers out there who will always submit crap, it is your job to sift through it and find the “Gems.” So with less than 500 FHA Secured loans funded since Bush rolled this program out, you’ll have plenty more to go through. So grab a shovel, and stop whining.
Posted on January 14th, 2008 at 12:08 pm
Norcalbroker, isn’t your job to train LO’s to not submit crap? Isn’t you job to make sure the LO sifts through the crap before it is submitted to underwriting? are you saying that is an AE’s job?
Posted on January 14th, 2008 at 12:12 pm
Well said Poppy! I gave up in August of ‘06 after 30 years as a Senior
Underwriter - just got plain sick of devoting my life to a job that my employers really didn’t want me to do. If they had, as they used to back in the 80’s and even the 90’s, this huge mess would not have happened. The lenders caught the “greed” bug from those big bohemoths, i.e. Countrywide who, “pushed the envelope” and taught the brokers and other lenders how to wring every penny out of their employees, the market and finally the economy, thinking “outside the
box”. Those underwriting boxes were developed by actuaries who created them to price risk! It used to be the underwriter’s job to assess a loan file to find balance in and around the box, but that went out in the
very late nineties. What a surprise that, since most of the big players in the lending field don’t have a college education, that the value of the
risk based pricing has been ignored for so long. Thanks so much for
ruining an industry that used to a pretty good job of self regulation.
Greed, pure greed, at all levels of corporate America.
Posted on January 14th, 2008 at 12:34 pm
You go!
This is great…I thank you and admire you.
Having been in the Industry for 30+ years….it is enlightening.
Posted on January 14th, 2008 at 12:34 pm
No, my office is a small shop that I quality control, so it’s not an issue for me. But when I was working on my brokers license I worked in Large offices…50+ LO’s. and there was NO Training, no real support. Most of my product knowledge came from great AE’s and personal studying. I am not putting the responcibility on any one party, there will always be garbage LO’s out there (even with National licensing, that will not change) all I am trying to say is this:
1. As an underwriter you job is to approve / deny files that are submitted, no?
2. If you are fed up with the same problems happening over and over, then there is probably something your AE’s can do in the field to help curtail this.
3. There will never be a day when an underwriters job is to rubber stamp loans, so to expect for all your loans to sail past your desk is incredible.
4. there will always be bad loans coming across your desk. As someone with that much experience, you should be more than used to it. This is not the first difficult market with people thowing loans up against the wall, nor will it be the last. So get used to it and stop complaining, especially when your a salaried employee…IT’S YOUR JOB!
Posted on January 14th, 2008 at 12:40 pm
“4. there will always be bad loans coming across your desk. As someone with that much experience, you should be more than used to it. This is not the first difficult market with people thowing loans up against the wall, nor will it be the last. So get used to it and stop complaining, especially when your a salaried employee…IT’S YOUR JOB!”
TRANSLATION: Oh, there’s nothing wrong with FRAUD — fraud is NORMAL. EVERYBODY HAS FRAUD. Don’t complain or draw attention. Just do your job as usual.
You gotta be kiddin’ me — it’s attitudes like that that are part of the PROBLEM.
Remember, you’re either part of the problem or part of the solution.
Posted on January 14th, 2008 at 12:48 pm
Call me ignorant but I can’t believe that brokers and lo’s submit crap like described above. I have been a lo for 7 years and just got my brokers to open up my own 1man opperation. I don’t and will never understand why these crooked lo’s, brokers, ae’s and others have not and will not be prosecuted. If this was any other kind of fraudulent activity, these people would be fined and thrown in jail! Why can’t the people who can do something about this see the PROBLEM here???
Frankly it makes me sick that I, as an honest and hard-working broker, have to compete against these slime balls that call themselves loan officers and brokers! For all you brokers and lo’s that say its not your job to decide if the borrower qualifies…You are a moron and should be working at McDonalds!!!
Posted on January 14th, 2008 at 12:49 pm
norcalbroker,
It is obvious, to me anyway, that you miss the entire point from what you say on 1. The point being made, and a real good one at that, is this. If you do the math yourself and see that is will not pass then don’t send it along. All your other points and any effort you have made to back your argument are immediately lost. Your credibility is ruined from the outset. If the loan is questionably on the border line then go ahead and submit because that is then their job to look at it. All the garbage coming through means no one is looking at them before submitting and just passing them along. Stop this! Just pass what is border line and /or that you feel will pass after a thorough review and leave the crap at the door…
Posted on January 14th, 2008 at 12:52 pm
Wow, whining like a 3rd grader.
Grow a set of balls and deny the POS and stop shining already.
Posted on January 14th, 2008 at 12:58 pm
All of these: Stopy whining posts?
You guys know who are posting them, don’t you?
It’s the fraudsters themselves.
See, they never want anyone to say anything about it because it’s supposed to be okay. If too many people start belly aching then things might — GASP AND SWOON - change.
That is why you get the condescending, stop whining remarks.
As if to stand up for the truth and for integrity could EVER be considered whining?
Only a very dishonest person would say that, someone who’s used to getting over, someone who likes to say, Oh, Commmmme Onnnn, EVVVVERRRYBODY does it.
EVVVVVERYYYYBODY does NOT do it — it’s not NORMAL, or okay, and it’s not up to Poppy or any other underwriter to clean up the trash that others keep submitting.
It should be clear that this practice needs to STOP– how bad will it have to get, damn?
Posted on January 14th, 2008 at 1:05 pm
Wow! I am hearing a lot of anger and finger pointing. I think each side has a valid point, but name calling and telling people to go “bag groceries” is just an attempt to hurt people’s feelings. I was an AE for a long time and my wife was an underwriter for even longer. I was known for thoroughly looking at my files and not putting up with BS from my brokers, however as the market started turning down, fraud became rampant. Yes, there are some AEs who turn a blind eye in order to fund one more deal, but for us that tried to keep the quality of our loans intact, the prevalent fraud was out of control.
It is easy to be angry at AEs because they are the ones bringing in these “crappy” loans plus they are the ones making a lot of money. But I believe that if you put an underwriter (even with 30 years experience) in the position of AE, you would see the same loans coming in. That’s why lenders hire underwriters!
Posted on January 14th, 2008 at 1:11 pm
You’re all missing my point…
There will always be crap sent in because people are desperate. Whether it’s a 100% commissioned LO with no reserves trying to force a 60% ratio’d file though on a hope and a prayer, to the total and complete fraud file. I am not condoning fraud, or sending in crap to begin with. My office has a 80% minimum submission to fund ratio with all of the lenders we use on a regular basis, so we don;t constitute the above problem, or are “fraudsters” as previously hinted at. My point was that regardless of the quality of the file, one of the underwriters duties is to be the gatekeeper to the approval. Deny and move on, and if it is a consistant problem from specific brokers, get your AE’s involved. I am in no way admonishing responcibility from the broker / LO…but it is the job of the underwriter to deny the file.
Posted on January 14th, 2008 at 1:17 pm
And for everyone cheering on this article, from the brokers perspective the best way to shore this problem up would be to deny the file right away and not put up with the incessent whinning of that particular LO and get your manager and/or AE involved. Complaining about having to do your job in this market is a little lame, be happy you have files to work on in the first place.
Posted on January 14th, 2008 at 1:20 pm
Your tenor sounds like you are upset and mad that you have to sort through the details. I think that you can disapprove of a loan without the rants and upset at those who are also trying to create a living. Education is the foundation and that accepting others lack thereof does not make you any smarter. If you do provide the guidelines in a most tactful manner you will probably have a better pipeline.
Posted on January 14th, 2008 at 1:22 pm
It not just the brokers or the LO’s that are slick. I just got a set of tax returns from a borrower for 2 years that were fifty pages long. I smelled a rat as soon as I looked at the first page where it did not say copy. then went to page two and saw self prepared. I called the client and questioned them and got nothiung but slience on the other end.Needless to say I withdrew his file letter about a half hour later.
As far as the frustration with FHA, DTI is going to be the biggest poreblem moving forward to get people to qualify for that loan. The past five years many have used their houses as ATM’s and continued to rack up debt even after they cleared the decks. Well it is here now no more inflated values and no more 50%DTI what are they going to do now?
Posted on January 14th, 2008 at 1:23 pm
If you are aware of fraud … you can report it to HUD’s OIG Hotline:
— 1- 800 - 347 - 3735
— fax: (202) 708 - 4829
— e-mail: hotline@hudoig.gov
— HUD Office of the Inspector General Hotline
451 7th Street SW
Washington, D.C. 20410
Posted on January 14th, 2008 at 1:41 pm
Thanks Poppy
As a vet Underwriter of 25 years and a Licensed Loan Agent I have watched the beauty of the business go down the toilet. I’ve indured refi booms, downturns and loans from frick and frack but it’s disgusting that quality loans became a numbers game and has cost us all regardless what position or where you stand in this industry.
Posted on January 14th, 2008 at 1:43 pm
Kevin,
My only point was that it is an underwriters job to say no to a deal. Yes a salesperson should not submit something unrealistic or stupid or that does not fit guidelines but the world is not perfect and borrowers do not all fit into neat and tidy places. I have always known my guidelines and ran a team for a large mortgage lender and my deals were straight on the front end and the back end. Underwriters should also drive the behavior of their team members and not underwrite garbage loans. And yes people should be grateful to have a job and any job for that matter. A job does not define who you are. The character of oneself makes the person.
Posted on January 14th, 2008 at 1:55 pm
Brilliant article. It’s one of the things I’ve been saying for some time. The subprime days are gone! Brokers and lo’s are going to have to change their business models, adjust sales goals and create new marketing plans (find “new cheese”) if they want to survive in the current climate. This is where the licensing and education of loan officers is important. If lo’s in todays environment will not or are unable to adapt, then they’re going to starve. I can appreciate the underwriter’s frustration, as I underwrite for the lo’s in my shop and get frustrated with thier questions and dare I say…stupidity; and being a underwriter myself, I approach my personal client(s) file submissions from the u/w standpoint and make sure everything adds up and fits in the proverbial box and constantly submit a complete file.
Its not surprising to me, however, that fha has become the “dumping ground”, considering all the bantering about fhasecure, how the government is going to provide relief, and even local radio spots claiming to have a federal government backed “subprime relief” mortgage.
What most subprime lo’s fail to understand is that FHA has much tighter requirements and guidelines than even fannie/freddie, let alone subprime (which is non existent at this point). Yet, for some reason, people seem to think that FHA is the “new subprime”. Until fha offers a stated income product, it will never be able to replace what subprime did.
Posted on January 14th, 2008 at 1:55 pm
Thanks Poppy for looking at this correctly. Curious which shop you work in OC with your John Wayne Airport reference. For any HMC/LO who thinks its right to push this muck into the system: hurry up and quit the business. The less of you the better for all.
Posted on January 14th, 2008 at 2:08 pm
No underwriters have answered my question.
Are underwriters expected to just deny and turn the other cheek to fraud? See no evil, speak no evil, hear no evil?
Posted on January 14th, 2008 at 2:15 pm
Good Job!
For all the Brokers and A.E.’s who read this and are still in denial; you won’t be for long. As an industry, the faster we flush you out, the better for all concerned.
Either learn the business (most of you never did) or get the ___k out! Most of you came to the industry because you heard about the money you could make; you should have come for a career.
Once you learn the business (if you can), you will need to have the courage to train the Broker and turn the loan down before it goes to U/W if you know it does not meet the guidelines. Oh, did I mentiion “learn the business.” Read and get to understand the guidelines. Ask questions. Be honest. Work hard. And, you can still make a good living in the Mortgage Industry.
Posted on January 14th, 2008 at 2:17 pm
Underwriters just need to keep doing the job they’re paid to do, assess risk, so just keep declining the bad loans. The companies themselves should ultimately do the math. AE’s and brokers that submit loans that can’t or don’t close are a financial liability and ultimately will be gone.
Posted on January 14th, 2008 at 2:28 pm
I can certainly agree with the article that it takes too much time to deal with loans that are not worth everyone’s time or effort. I don’t think that you have to have a college degree to do loans, because I don’t have one and I’ve been processing loans for the past 16 years. I think that you have to have a conseience to do loans and do them correctly. If you wouldn’t do the loan yourself, why would you give the borrower a crappy loan. I think the industry is to blame for the downturn of the past year. If a borrower has a 500 credit score wanting a 100% loan and stated income then I would be a little skeptical that the borrower would be able to pay the loan back. Not everyone should get a home loan, there should be certain guidelines that each borrower has to follow.
Posted on January 14th, 2008 at 2:35 pm
Michael Hayes:
I’m afraid that the decline in the mortgage industry is having the opposite effect of what you are desiring. I think the best and most capable people left, or are leaving the industry. Soon, all that will be left are the people who either do not have the education or the ability to find another career.
Posted on January 14th, 2008 at 2:39 pm
To moe
Different companies have different tolerances and procedures for fraud. I have worked for lenders that just turned down the deal and moved on. Other companies would put them on a watch list and if they submitted more fraud ( which was caught ) then they would be cut off. But never have I worked for a lender in over 10 years where they actually prosecuted the brokers. They say it would cost too much money…which is what closed fraud files do..cost money! The company I am at now is a small correspondent lender and they will actually threaten the brokers with prosecution, but I have yet to see a followthrough with that threat. My sole job at this company is fraud prevention/detection. I review the files before they are sent to the MI companies for a decision and do final audits prior to funding and at this point we are at a 20% closing ratio of files submitted, most of the fallout is due to fraud.
Posted on January 14th, 2008 at 2:41 pm
There was a time when lenders and underwriters loved crappy deals, so get off your high horse and try to find a way to help borrowers who were suckered into bad loans.
Posted on January 14th, 2008 at 2:45 pm
Moe,
when property values were sky rocketing, wall street wanted to cash in. That being said, there was a blind eye turned to fraud on ALL levels, from origination through appraising through underwriting through securitizing and through the rating of said security(ies). Now, as we collectively suffer through the meltdown and implosion, it’s being found out that fraud was more prevalent than thought. All in the name of greed.
Now, the spigot has been shut off, and everything is being looked at through a microscope. Fannie/freddie are primarily the only ones left purchasing mortgage loans, and they’re dictating the rules. I’ve got lenders everyday telling me how they’re losing programs faster than ever.
Bottom line is, those with the money are going to make damn sure that no fraud has been commited.
As far as your question, Moe, I can only speak for myself. If there’s any fraud commited by the client, i immediately decline the loan, and then discuss with my lo. if i find that my lo created the fraud, immediate decline of loan and immediate termination of lo, period. in my scope of duty at my company, it’s my duty to q.c. the file before any of my lenders receive the package. i’m not only out to protect my client and my company, but also my lenders.
Posted on January 14th, 2008 at 2:45 pm
Moe,
and no, fraud should not go unpunished ever…on one instance, i’ve contacted my state’s atty. general, and that lo was none too happy with me. i run a clean shop and that’s why we’re still in business!
Posted on January 14th, 2008 at 2:48 pm
Thanks Heather and Mi.!
Posted on January 14th, 2008 at 2:53 pm
As a Broker it really sucks that we get lumped into one category. I have worked very hard to get where I am today and take pride and have intergerity in my company. A lot of these “Brokers” that you speak of hold CFL licenses which is much different. They run these sweat shops and are in it to make as much money as possible and as quick as possible. The LO’s aren’t qulaified, haven’t done any schooling, are basically telemarkerters calling up people and trying to get a deal. I have actually seen the crappy side of retail steal deals from me and not discloseinformation they should of. I had a miliion dollar deal with a company, that I won’t mention there name, but have since been bought out, deny one of my files for no reason- really good file. The Realtor in the deal then went to the retail side of the same company and they said no problem, they could get the deal done. To
help out my agent, I sent over all of the information to the retail rep and she purposely didn’t disclose a payment they had on their other property, because it didn’t show up on there credit. She got the deal closed in 2 weeks and made me look like an idiot to my realtor. Why don’t we hear about these types of stories? Becasue no one wants to blame the
actual Lender for doing the deal, when they in fact did them.
Posted on January 14th, 2008 at 3:11 pm
This is a general comment towards the industry and should not be named at “brokers”. I cant tell you how many loans that we could not do as a broker either for ratio’s, credit, or bad ss#’s that ended up with an “institutional lender” since they do not check basic ss# information.
FHA is a dumping ground always has been! The market pays the biggest rebates and commission on this program, and takes the lowest FICO’s, highest ratio’s, and easiest allows 100% GIFT (abvious it’s the seller) down payments. This business needs a major CLEANING UP this means originator’s, underwriter’s, realtors’s, and appraiser’s. FHA also needs to minimized rebates so as not to make is so EZ to rape borrowers. 3% rebate, 1 Orig, 1 1/2 dicounts, plus SRP’s, is a normal FHA payday.
Posted on January 14th, 2008 at 3:20 pm
Poppy stop being so righteous!
I am sure you looked the other way when you were doing SIVA and SISA’s. Not to mention No Ratio loans to hourly paid borrowers. Underwriters are just as much to blame for this mess as everyone. I am sure that all operations staff from underwriters to receptionist cashed in Bonus Checks in 2004 thru 2007 with all those 100% SISA loans that were made.
Posted on January 14th, 2008 at 3:27 pm
just one question 28….how much cashin in did you do because of said loans?
Posted on January 14th, 2008 at 3:33 pm
i admit, i originated my share, but not at my borrowers expense. if the loan didn’t make sense for my client, i did not push that product. if they did not fit into a product, they didn’t get a loan, period. its how i sleep at night.
Posted on January 14th, 2008 at 3:35 pm
This is such crap, why can’t they be reported for fraud or put on a watch list with the rest of the company! Anyone who thinks about photoshopping a document needs to get their approvals yanked.
These are the people that need to leave the industry, if you can’t figure out how to calculate full doc income get the hell out! I can train my lab to do that.
I talk to probably over 30 right now before I actually get a loan to submit, but when I do its a good loan.
Anyone who’s not FHA approved, DON’T DO FHA LOANS. There’s not legal way to get a referral fee (unless on a reverse). GO work for an FHA shop if you want to do them!
Posted on January 14th, 2008 at 3:39 pm
EDDIE V is a fool!
Posted on January 14th, 2008 at 4:14 pm
No Ray, you are the fool! You are obviously not on the inside when it comes to seeing the future in this industry. I know in California the Department of Corporations and the California Lender’s License Investigative Division has already NOTIFIED Hundred’s of small and mid-size Lending Sweatshops, that mandatory audits of background check’s for there employees will have to be submitted in the coming months to see exactly who is working in our industry with shady backgrounds. Any company hiring people with CRIMINAL CONVICTIONS will have there licensed suspended or possibly terminated. GUESS WHAT, many of these shops are already running for the hills and scrambling to weed out the garbage! All I can say is LOAN OFFICER WANTABE BEWARE!
Posted on January 14th, 2008 at 5:27 pm
To whom..
Quit your complaining and get back to work. I deal with so many processors that comlain because they have so many files and are so on edge all the time … so if you don’t like your job then quit!!!! My god it doesn’t take a rocket scientist to figure out that most of the hard loans these days have some sort of fraud attached to them … so just shut up and do your job like your supposed to, not picking files that you like and don’t like …. just doing your job!!! LO’s who committ fraud on loans will get what they deserve eventually, but I don’t think it was in your job desrciption to bitch and moan if loans are coming through with fraud attached … just do your job, which is to look at files and push them through or decline them. If you don’t like it then go back to Walmart!!!!!!!!!!!!
Posted on January 14th, 2008 at 6:35 pm
“BP, can you please report to the Deli Department. BP, please report to the deli department — and get off the company computer”
Posted on January 14th, 2008 at 7:33 pm
Frankly I am surprised to not see more posts by processors. Typically
owners of mtg. broker shops waste none of their precious time training
their loan officers. It has been a common practice for years for loan officers to hand off a file to a processor and the processor was expected to figure out how to get it done, where to get it done and throw it against the wall at as many wholesalers as possible until one finally said okey dokey. Then and only then were they to process the file to only what the UW required (or AE on a pre-grade) and told by their bosses, don’t you dare verify anything more than that. At the end of the day, who got the bigger pay check? Of course every one wanted in on the action as a loan officer.
And for those of you who think licensing and continuing ed is the answer, think again. Anyone can pass an exam after taking a cram course.
Licensing only prevents those w/ past criminal records from getting in. Once an individual gets in and for whatever reason they decide to step over the line in commiting fraud, they will continue to do so until caught and prosecuted and thereby automatically placed on a national list should one ever be put in place.
And yes, I had an experience where a wholesale lender did not
want to know about fraud. We had the loan locked/reg. with a company (out of business now of course) that we ended up never even submitting the deal due to DTI based upon a completed VOE. My competitor (who just happened to be my former employer) got the deal done w/ the same wholesaler and when I smelled the rat, I called the HR dept. and
spoke with the verifyer who admitted the loan officer from the other company peronsonally brought their VOE to her and that how she filled it out for them vs. us was none of my business. When I confronted the
wholesaler and provided them my VOE upon their request, they did not call me back as promised and never returned any of my calls. That was the last deal my company sent them.
A more recent case was a deal my company declined based upon a completed VOR for the current address that stated the borrowers were past due 1 1/2 mo rent and had been running past due this amount for the past five months and were now 2 1/2 months past due as of the date of completion of the VOR request! When the loan officer confronted the borrowers they said their realtor was aware of this (apparently turned down by someone else before us) and was sure their realtor shared this with us. When we confronted the realtor, he confirmed he knew about it but was sure the borrowers told us up front and figured we had a way to get around it! To make a long story short, a competior mortgage broker
got the deal booked (FHA no less, same exact way we had the deal structured) and I hoped and prayed it would be a first-year delinquency.
I called the landlady after I found out it closed and she told me they never paid the rent current until the day they moved out and she never completed a VOR for anyone else. (the AUS required a 12-month VOR)
Naturally that was the last deal we got from that realtor and anyone else in that realtor’s office. You can all say, we are probably better off but my
point is, had we ratted out to FHA there would have been that little thing called “prior knowledge” and in so ratting out the loan officer and the mortgage broker he worked for, so too would the realtor have been ratted out and one realtor flapping their gums to every other realtor in the county about our self-righteousness would have helped my company how?
Some of you will say that makes me part of the problem and on a small scale you may be correct. We will continue to lose realtor business because we won’t “figure out a way around it” but you can imagine had we dragged a realtor into it, it would have been made to only sound like sour grapes on our part—-we would have been made out to be the bad guys who take down realtors!
The first and best defense against fraud, is an honest, seasoned, professional processor and only if that processor is on board with a broker (lender, loan officer, banker) who shares that same sense of what is right and what is wrong. Afterall, regardless of how lazy the broker is, at the end of the day, they are accountable for every loan officer that works for them.
A seasoned processor underwrites the file before it ever gets to the wholesaler’s UW and I agree that only in those cases where the deal is borderline, should the wholesale UW ever be bothered. I hear day in and day out from UWs “you just can’t believe the #$%& we have to waste our time on” including files that are not even put in any stacking order to the even more common complaint today-”too many brokers think FHA is the new subprime, if only they would familiarize themselves with what an FHA loan is”———–and turn times go to crap while good deals on good borrowers submitted by good brokers sit in the que.
As I see it, underwriters should be our professional friends and collegues-they can only become such after we both in turn, earn the other’s respect.
Posted on January 14th, 2008 at 7:44 pm
I have been in the industry for a long time and I have worked as an LO, AE, processor and then and underwriter. To be honest with you a lot of the problems were because of people above us. It was a lot of people being told what to do and they did it to make money. No one really thought of the end situation.
Unfortunatly I agree from both sides. It is an underwriter’s duty to look at the file and say NO (and have someone back them up on it which is few and far between) There were a lot of loans I would say No to and someone else would say YES….. AHH… But at the same time from a broker LO standpoint if you know it’s not a good file don’t send it in. Really you are just messing up your borrower more and creating more of a problem for everyone…
The mortgage play falls on everyone and instead of saying you do this I do that - You would think you would work together to get thigns through. Be educated as to how things work and why your borrower’s ratio’s are jacked instead of saying “who cares” and someone ( underwriter or AE) should be educating people on the ratio configuration.
In a world with minimum total education and lot’s of money the best you could do is at least learn how to do your job well…
Posted on January 14th, 2008 at 7:45 pm
Thank you so very much for this posting. So unfortunately true.
Posted on January 14th, 2008 at 8:04 pm
[...] unknown wrote an interesting post today onHere’s a quick excerptIt has been a long, difficult and contentious day….between the Brokers, AE’s and Processors, none of whom appear to know that there are two “g’s” let alone a “t” in mortgage. It leaves one not sure whether to be so angry as to find them … [...]
Posted on January 14th, 2008 at 8:17 pm
Here is the bold and undeniable truth - SALES RULES. I can decline these loans ad naseum, and do, and for mi.mortgageguy - I declined the holy living &%$k out of the SISA’s and SIVA’s that were not supported, did not make sense and that were flimsy attempts at confirmed fraud.
The upshot is that the Broker and the AE rule, they complain and our hands are whacked with the corporate ruler. Never mind I never said what they have purported I said in their complaint, that is not germaine, SALES RULES. Worst of all we are disposable - there is another underwriter out there that will approve this garbage, did approve this garbage - and will get your/our/my job when they are tired of not being able to co-opt and control you, and, recognize they never will be able to. The only satisfaction that I get from the “other” underwriter is that those companies that replaced me with the “other” underwriter, are, closed.
Now for the Training issue, I have tried, and tried, and tried to get the Broker and AE to pull down a copy of the 4155 or use the FREE AllRegs on the e-FNMA site. At this point I secretly think they are for the most part, shhhh…..illiterate.
I have explained until I am blue in the face, politely, why an appraisal in an Urban location can not have comps 1.5, 2.0 and 1.2 miles away with sales dates from 01/07, 03/07 and 06/07 in Phoenix, AZ, appraisal date 12/7/2007. I do not even try to explain Bracketing and other esoteric issues that comprise an appraisal any longer, the few brain cells that I am speaking to would implode under the duress.
Every “real” underwriter reading this understands, we are exhausted, beat up, fed up, sad, betrayed…..to many adjectives to describe how we feel. We love this industry, we got into it to HELP people and our community, now we are experienced risk managers and analysts that no one wants to listen to……that DOLLAR though, speaks volumes. We all have been in it to long to leave it, and to long to want to admit that it has all gone to the rats that purloined the real spirit of the the industry. WE ARE A COMMUNITY SERVICE INDUSTRY. We still in our folly believe that the industry will come around and return to the normalcy that supported the industry and community that we serve for years and years prior to this insanity of the last 4 years.
For those of you who are in shops where it is getting/gotten better, I am so glad for you, so glad that there is a glimmer of good returning, albeit I am afraid way to late in arriving.
One more thing for the fellow who mentioned that FHA is more stringent than FNMA/FHLMC, sorry - you ought to see what we are doing to FHA with the blessings and by the requirement of management. God help FHA, they are going to have a debacle on their hands here in another 24 months or so and we the tax payers will be bailing their rears out of the mess right about the time Option Arms are belching their venom on the market. No, I am not the class favorite presently - I am an oldie, but moldie in the FHA credit analysis game, just because the manual sez 12 months 0X30 - don’t mean the prior 12 months can be littered with 4X30, 3X60, 2X90 and one 1X120 (mortgage credit ratings). The modern FHA underwriter apparently feels that the aforementioned is Okdokey, much to my chagrin. Damn I have so much to learn in today’s mortgage world. OMG are there really two g’s in mortgage?
Posted on January 14th, 2008 at 8:22 pm
Yeah, I think it came from the higher-ups, too. Back in 05/06 I was in meetings, and told not to trust my gut. I was told on stated deals, if they signed the application, then that’s what they make. I was told (and a bunch of other UW’s, too) by EMAIL to not use any tools (such as realquest.com, mapquest, public records, salary.com, etc. to validate a file. Also, before we could put a quality control review we had to get our branch (production) manager’s approval. What a f’ing joke! But yes, I cashed all my bonus checks from 05 & 06. So am I to blame? I guess so.
I think if you add stated income to the mortgage process you’re just begging for fraud. I mean, c’mon, where do you draw the line? When we finally had to use payscore and salary.com to “verify” stated income, it always seemed like it would be in the 90th percentile, or higher. (I have no idea why.) I work for one of the GSE’s now. I’m just glad to be employed. My previous employer closed last summer, and we were getting a lot of crap files during the last year, but during the last couple months there the bins were empty, and I was grateful for almost every file we got.
Speaking of fraud, I remember calling on a written VOE since the bonus income was written differently from all the other income. Turns out the $12,000 bonus was actually somewhere around $1,200 and this blew up the ratios. The processor from the bank seemed to have no idea about this (maybe the LO did it?), and she still really wanted to close the loan! After review w/ the branch manager they weren’t even placed on the watch list. I don’t know how much more blatant you can get, except maybe for the nail technician that made $220,000 over the past 2 years according to her W-2’s (I added a condition for a signed 4506T - I don’t think I ever received it).
Posted on January 14th, 2008 at 9:29 pm
by definition, stated income is fraud…how about the easy answer…no documentation…mitigate the risk with credit (score, history, trade lines, etc.) ltv, and by adding .25 - .5 to rate.
Let’s take a look at true no doc loans from a different (lending) perspective:
the big issue is insurability…what makes a loan insurable…if you have a stated income loan, you’re asking someone to “state” an income (usually the lo, to make the deal work to get paid)…
here’s what you have (hypothetically) 745 fico, 8 trade lines dating back 10 years…refinance 85% ltv…
and let’s say the guy works the register at Walmart & makes $9000/month…just to make the deal work…2 months later it goes into default, thus triggering an audit…they find that the income was GROSSLY overstated, he really makes $9.00/hr…
fraud associated with the loan and loan is no longer insured….
instead of stated, use a true No Doc loan, where guidelines of the lender do not require any verification. higher risk? sounds like it…but…the insurer(s) understands the loan type and asses the risk, which requires a bigger hit or add-on to the rate…now same loan goes into default, and an audit of the file is done, and it’s found out that the guidelines did not require any documentation, therefore no fraud was committed!!! loan is insurable…a true no doc loan really is as anti fraud as a full doc loan…just have to assess and mitigate the risk associated with the loan a little differently..
believe me, in lieu of blatant fraud, which is a stated income loan, true no doc is the answer…but unfortunately is not seen as such…stated loans will forever live on..i guess the industry will never learn
Posted on January 14th, 2008 at 10:08 pm
Dear everyone,
AE’s, LO’s, and UW. everyone plays a roll in approving cruddy loans including you UW’s that complain that management bent over for the broker or AE. Fact is, if you have/had a problem with it you should of gone above your manager. there are such things as regionals, HR ect…but didnt want to lose that job or paycheck did ya. Stop blaming everyone else, we all played a role in this current sitaution in the industry!!!! Work together to create the best loans possible and it is everyone’s job to weed out FRAUD!!
Posted on January 14th, 2008 at 10:10 pm
Couldn’t have written it better myself.
Posted on January 14th, 2008 at 10:20 pm
poppy,
in your post (56) i think you were meaning to address 28years? I’m in complete agreement with your article.
Posted on January 14th, 2008 at 11:07 pm
I noticed that after the fact…..and yes you are correct. I never expect as much response as I seem to get when these get posted. It also never ceases to amaze me that just about everyone of the detractors thinks that I got bonuses, spiffs, whatever for underwriting. Never got one, would never take one. In fact those in the A paper world for the most part never saw one of those compensation packages, at least the folks I know, however in the sub-prime world…..so I guess we know where the detractors may have oozed up from.
You know I have nothing against sub-prime, started looking at it in the mid to late 90’s when we graded it and required money down (novel idea) and complete verification of income and assets (another novel idea). The methodology and risk models were sound and the borrower was not set up to fail, which I am afraid was the case with this debacle we are witness to. Now I would just like to know who, is the beneficiary of the failure in this case, certainly not any of us left in the business, good or bad.
I wonder, outside of the money - who really did benefit from all of this and in what fashion?
Posted on January 15th, 2008 at 6:57 am
Poppy,
For your question of who benefits from the failures the answer is everyone and no one. In the short term, everyone benefitted. Borrowers got homes (they couldn’t afford), people in the industry got paychecks/commissions (they didn’t deserve) and lenders got sales (that didn’t exist). In the long term everyone suffers. Borrowers lose their homes, people in the industry lose their paychecks and lenders take writedowns and have to seek money from foreign investors. The CEOs still win regardless of what happens, but that is another discussion.
Posted on January 15th, 2008 at 7:45 am
Al,
you are right on…and i look forward to the ceo discussion…
Poppy,
anytime you post any type of article suggesting any kind of broker/lo fraud, you’re going to get responses…and a lot of them…so keep them coming, as i for one enjoy sharing my opinions and experience(s)
Posted on January 15th, 2008 at 8:57 am
Poppy….
As I sit here reading this all…I want to “hug” you. You may not know it but you are speaking for thousands of us out here who have learned to keep their opinions to themselves. I, like you, can’t keep my mouth shut…I guess that is why I am not working right now!…Not only have I been on the underwriting side, but in Credit Risk…We know too much! And it is a bad nightmare when you have to tell Closing Managers & Funding Managers that they cannot forge signatures or change documents…
Or have a processor or AE Manager threaten you with “glassed over blank eyes”. Or come to work with a threat written on your desk calendar because you would not sign off on a SIVA, when the tax returns that were in the file clearly showed they did not qualify.
These are all reasons I was laid off from my duties of underwriting. (And yes I went over my Manager’s head with this one)….only to be let go as a “trouble maker”.
In my opinion and history….this is how I see it.
Remember 15 years ago? Credit Risk was not “controlled” by Sales. Reputable companies had training programs and the bottom line was to provide homeownership to people in the communities….which was an overhead expense that was dropped.. Somewhere in the process over these last 8 years especially, Sales convinced Corporate that they were being “picked on” and they could not compete with other companies. More and more “inexperienced” sales people, processors and managers were being hired.
Experience was a “bad” thing, they wanted to hired new faces so the “sales” team could train them the “right” way. I quickly became aware that these people did not have the structure of Integrity that we grew up with in the Industry….it all became about the money.
So you keep on believing in that which you are such an expert in….it has to be a hard win battle out there right now…I wish you well!
Posted on January 15th, 2008 at 10:23 am
mi.mortgageguy … the answer to your question in post 46 is “none”.
A point for all … i find it very amusing that the often used argument for rationalizing fraud on stated income applications is that the lenders offered stated income programs and it was up to the lender to “catch the fraud”. However … there is no legal support for this argument … the legal definition of fraud is “a false representation of fact — whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed — that deceives and is intended to deceive another so that the individual will act upon it to here or his injury. The common definition of fraud is “the crime of cheating somebody: the crime of obtaining money or some other benefit by deliberate deception”.
Fraud must be proved by showing that the defendant’s actions involved (1) a false statement of material fact, (2) knowledge on the part of the defendant that the statement is untrue, (3) intent on the part of the defendant to deceive the alleged victim, (4) justifiable reliance by the alleged victim on the statement, and (5) injury to the alleged victim as a result.
The relationship between parties determines whether a statement is fraudulent. A misleading statement is likely to be fraudulent when one party has superior knowledge in a transaction, and knows that the other party is relying on that knowledge. Misleading statements are fraudulent where one party exploits a position of trust and confidence, or a fiduciary relationship such as those between attorneys and clients, stockbrokers and clients, and mortgage brokers and lenders.
Bottom line: fraud is illegal. Federal and state criminal statutes provide for the punishment of persons convicted of fraudulent activity. Fraud violation of banking laws are subject to federal prosecution because of the mail and wire fraud statutes.
So … what is a mortgage brokers legal responsibility … to state accurate and complete information on the 1003 … not some “fairy tale”.
I’m certain that all would agree.
Posted on January 15th, 2008 at 11:26 am
Bigcityloans,
I agree completely 100%. The problem is…when there’s a commission involved, your typical lo is going to push the envelope to get paid, end of story. It’s sad, but true. Most lo’s do not care about responsibility, only about getting paid, and accurate and complete information could result in loss of deal…Again, I’m on your side, but i’ve seen the “underbelly” and unfortunately, it aint pretty. Yet, in all fairness, there are supposed to be checks and balances in place to detect fraud, on all levels…and unfortunately, in the name of greed, many, many instances were overlooked…again, sad but true.
Posted on January 15th, 2008 at 12:03 pm
While I am not looking for a job right now, I believe I am an expert in loan documentation. I have been a title agent for 8 years, with four years title experience before that. I am also a licensed attorney.
Regrettably, there isn’t much I haven’t seen, at least twice.
I have a resume, but I think my basic qualifications speak for themselves.
One reason for this post, though, is more specific. What are your thoughts about mortgage broker liability for refinancing somebody out of an equity-stripping lease-back option to repurchase? The customer has not had much luck in finding an attorney to take her case, and if she refis out, probably loses her claim. At the very least, by paying off the equity-strippers mortgage, she loses her leverage to get her money back.
Posted on January 15th, 2008 at 1:28 pm
I would audit the loan for TILA and RESPA viloations and conduct an interview with her to see if you can substantiate fraud, federal and state violations so you have ammo. Was money paid out side of escrow? Any funny money can throw off APR and thus make the loan rescindable.
Posted on January 15th, 2008 at 5:15 pm
These are looked at has a refinance transaction. Think about it?
Posted on January 15th, 2008 at 5:15 pm
Very well said Poppy… You just described a typical work day for the last 7-10 years.. Hopefully this will all go away and integrity returns to the industry.
Posted on January 15th, 2008 at 9:04 pm
I am heartened by the production professionals and support professionals responding to this post, Thank You. I mean that, it gives me hope after a day of slogging through this crap that I get to analyze.
You are all correct the SIVA, SISA & No Ratio Products were FRAUD the day they came out of Product Development and Risk and offered to “wage earners” with the 80/20 Combo mechanism and relaxed decisioning requirements (only follow the guidelines mandate, forget prudent decisions).
When they were first developed by World in the 80’s the thought was 30% down and state the income, verify the assets. The typical consumer using that product was Self Employed, not that they did not allow wage earners, but it was a sophisticated product priced with the risk model considered. The cost was high enough in rate and price that the average wage earner used the Full Doc product, additionally he/she did not have the funds to come to the table with 30% down. At that time the rates were also significantly higher than we have had in this “artificially manufactured let’s stimulate the market era”. We had a real time relationship with rates and documentation as well as the required investment.
This whole tragedy has been driven by more than just greed and avarice, it is a “market of smoke and mirrors” with so many convincing themselves that they are justified and entitled, to hell with the consequences.
Fraud has always resided in our industry, just not to this extent, now I sense that has become a “normal course of business”. There is in my book little fraud and big fraud, most of you will disagree with this weird view, but I have had to come to terms with the reality of Fraud.
Little Fraud for example, is the “sin of omission” -”Golly, yeah he was divorced, he had a child support payment, but you can’t find it, so how did you?”. No I can not find it, unless I am in a State that reports that stuff on the Title Report - a lot do not. Am I aggravated when I do discover it on the paycheck stub, you bet, but do I decline the loan; the borrower still qualifies ’cause I am good at finding income that is ligitimate, or do I penalize that borrower ’cause his LO is a P*&%k. Aha, here is the dilemma, I am really concerned about the borrower, first time home buyer - how was he to know that he had to spill his guts about that little number. No, I take the borrower’s side and do the best I can give the P*&%k of a LO a walk and get the proper documentation and move on. The LO of course is furious that I dug to deep, idiot it was on the paycheck stub, and lets loose with any number of invectives and threats, yep he is a P*&%k (sorry guys, never had a woman LO pull that one :)). Loan still approved and closed.
Now for the BIG Fraud - complete Tax Returns -2 years mind you reflecting the borrower a mechanic on heavy equipment, supposedly self employed making 159,856.00 per year (2006) and 138,762.00 (2005) -after expenses. Now there were no salary or employee costs, no insurance costs, - this was a Schedule C filer. The borrower has had a credit history of less than 2 years, very limited and low max credit limits. The bank statements are truly, for want of a better word, Funky. Somehow the photo editor that was used did not match type fonts very well. The borrower was lacking a solid Social Security number, from my point of view he was born in 1969, the Social Security number was issued in 1950. He had no directory listing as per the Broker he got business by word of mouth and contract. Contract (1 only) was extremely Funky - the guy who signed it lived in the Borrower’s present primary residence. Now how do you think I handled that one…….well, sneaky me, ’cause I wanted her (female LO) to get reported to the Treasury Department (the shop I worked in did that), asked for a signed 4506T. Wonder why…… the LO, B*&%h that she was was incensed, went over my head, that did not work (thank god). NO ONE, had ever questioned her, how dare I. “These were perfectly good tax returns.” My response - then get me the 4506T (translation -I want your @ss in a sling). Long and short of the tale - I declined the loan, sent the file to risk mit, they got the tax returns without a 4506T, they have their ways. These were not perfectly good tax returns, the bank whose Statement was altered was contacted and yes it was altered, not even our borrower’s account. The Social Security Number belonged to another party. The institution proceeded to bar the Broker B*&%h and turn her sorry @ss over to the Treasury Department with all other participants in the transaction.
How often does that happen, rarely, they do not turn them over to the Treasury Boys except in a few shops. When I have found this degree of egregious fraud in the past, for the most part I was told to approve it or better yet IMPROVE on it. My response, get the hell out of there.
Now think about this - both of these examples were from this year, they were full doc files. I was supremely lucky that the shop I was in had no tolerance for this behavior. It was the first time in over 5 years that I had worked in that sort of environment, where it was not tolerated. My employment experiences for the past 5 years, excepting this shop, all required the underwriter to ignore and quite frankly often improve on the fraud. No exaggeration, it was de rigeur and in their minds part of the job description.
Having said that, you can only imagine how bad it was with the Stated Products, a person working at WalMart as a clerk on the floor - does not by any stretch of the imagination make 8000.00 a month. What was really tragic, since it got a Refer from CLUES, they wanted me to raise the income until I got an Approve return from CLUES. No, I did not, I walked out that day, with a lot of class and dignity, praying that I could find another job. That company went out of business last February. I keep track for prurient interest and some small degree of vindication.
It is only a very small degree of vindication since I believe that we good industry professionals are all paying for the bad deeds promulgated by this 5 year era of “smoke and mirrors”.
Posted on January 15th, 2008 at 9:48 pm
I’ve been following this forum for quite some time now, mostly the homeowner’s forum - but lately this one has attracted my attention much more. As a guy stuck in this market with an upside down loan, it’s a little hard to have compassion for this industry - but many of you seem like stand up folks feeling the same sting from the other end.
Thanks for all you do. I hope you have great 2008!
Tom
Posted on January 15th, 2008 at 10:08 pm
I agree. the bailout folks pretty much universally ignored TILA disclosures, and did not realize that the literal name on a real estate document doesn’t dictate what it is in fact. That is, just because something is called a “warranty/quit claim/whatever deed” doesn’t mean it is. In this case, it is unquestionably an equitable mortgage, consequently a refi of a consumer’s principal dwelling, with no attached TILA disclosures, NORTC, etc. Probably HOEPA violations as well (although, I’m way less familiar with how HOEPA works).
Posted on January 16th, 2008 at 10:45 am
Tom,
I wish I could say it is different but it’s not…. Everyone was affected by this on a much larger scale, this affected the entire world. And it was caused by everyone….. Unfortunatly a few bad apples ruin the bunch.
Posted on January 16th, 2008 at 7:18 pm
MOE
I’m in Florida, are you looking for underwriters in your area? I run the audit dept at a small correspondent lender..fraud detection pre audit and QC final audits. I’ve been a subprime underwriter for 7 years. “one of the good guys” In the industry over 10 years.
Posted on January 21st, 2008 at 4:58 pm
Someone that I worked with in the past sent me your email link and thought that this would be something that I would be interested in pursuing as an employment opportunity.
I have been in the mortgage industry for over 10 years. I have exposed several fraud attempts. I have even exposed an underwriter attempting to commit fraud. People that I have worked with in the past have always brought suspicious or questionable documentation for my examination to determine if fraud was being committed. I have even dectected when an underwriter was frauding documentation.
If you are interested in working with me, I would like to further explore working with you.
Posted on January 28th, 2008 at 5:48 pm
I have been underwriting for the past 15 years, I specialize in quality control,due diligence and audit of loans. If you need any one with my experience please let me know.
Posted on February 6th, 2008 at 5:02 pm
Well Well Well, where were you when I was training ridiculous UW with no experience whatsoever in doing FHA/VA loans. Good for you! If we are good at what we do and submit a CLEAN package, and get an underwriter with at least 60% of your knowledge, we would have happy clients in deed, not to mention a mortgage industry going down hill because of bad LO, AE and Brokers!! Let me know what company you work for, and clean files will come your way!!!
Posted on February 18th, 2008 at 2:19 pm
I am looking for a position as a mortgage fraud investigator. I have had experience in that field. Retired police officer, FBINAA graduate.
Posted on March 17th, 2008 at 11:26 pm
Come on now, everybody does fraud, when a client qualifies for a lower rate, lenders ask as u wanna make a point on the back end, so to me that’s fraud for profit, just keep doing what ur doing. its a roller coaster ride, it has to go up again, just save ur money and keep on doing what ur doing, the lenders and investor can’t have the money sitting in their warehouses, it’s like drugs, u have to move them, does no good sitting there…..
Posted on March 21st, 2008 at 3:17 pm
Moe,
Both Myself (Ex -Sr. Staff Review Appraiser at WAMU with 9 years experience in Mortgae, Loan and Portfolio Reviews and Due Diligence)and My wife - (Ex SVP at Bank One - Training Respa, HMDA, Processing, Underwriting, etc with 21 Years in the industry) - Believe that you either “part of the solution or part of the problem” and love what you are doing and absolutely would love to be part of it.
We both happen to be looking for jobs due to the meltdown.
We are in Indiana.
Posted on April 10th, 2008 at 1:43 pm
Moe,
I am both a licensed mortgage broker and licensed private investigator in Indiana. I have emailed my CV to you, and would be interested in discussing ways to address mortgage fraud issues.
Brian Kertin
Posted on April 30th, 2008 at 1:54 pm
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