MortgagesUndressed

The Option ARM fraud tri-fecta hit me today. First on the radio, second on a fax a relative sent me, and third a phone call I received. The radio add was clearly deceptive, the fax I will share some of with you, and the phone call full of hope and a prayer about a friends great offer. A loan officer friend. I hate this.

As I listened to the radio add I wanted to just throw up. No pictures here I promise. (I did think about it). Then my relative and the phone call seemed so hopeful and the offer so full of crap I wanted to send them all to jail. Why the government doesn’t address this false advertising I dont know. They should start by making an example of the big boys, the on line lead generators that lead with this 1% full of baloney product.

The heading: OLD TERMS and the current lender info

followed by their data and the heading:
INTEREST RATE: 1 %

Payment TYPE: FIXED

No one is going to give you a 1% fixed rate. NO ONE NO ONE NO ONE NO ONE NO ONE. GET IT!
For your tender review, here is part of the fax I received and some commentary.
Dear (My relative)

REDUCE YOUR MORTGAGE PAYMENT TO $772 PER MONTH.

(My relative) after carefully reviewing your original first mortgage loan amount of $(the amount) with America’s Wholesale lender, we have PRE-QUALIFIED you for a new mortgage payment of $772 per month. This is a fixed payment

Commentary: My relative thought it was her lender by the way the heading was organized. She loved the payment amount. It is not a fixed payment except through being a negative amortization loan. You pay $772 and the difference is added to your mortgage balance.

There are three more paragraphs of fluff suggesting they could take cash out and go have a spending party.

My new Friday Fantasy is that some day someone will write me and say they read my tirades and were saved.

Very Serious rental fraud: Click here

At least it seems like under the table:

They want me to put a check in an envolope to give to the buyer after closing. Should I do that? I agreed to pay them $8000 for closing costs and the costs only came to $5500. They say I owe it. Do I?

First the easy answer: No No No to the envelope thing. No to anything like it. No to any compensation that isn’t shown on the HUD 1 closing statement.That is unless you want to commit a crime and feel like row row rowing your boat gently down the stream.

There is no excuse for this. That money could have bought the buyer a lower rate. It could still do that or reduct the purchase price. A pro would have watched their numbers.

Take note of who the lender was and remember never to do business with them. They could have anticipated this and given the buyer a lower rate. If they did this on purpose, even worse.

Determine if the Real Estate agents are in support of your doing this. Kiss them off if they are. Close your transaction and send them all on their way.

You now have two options: Lower the price or give them time to redraw the documents for a lower rate.

I have seen sellers in this postion, position to keep the money by acting up. If you take that option, shame on you and don’t email me again. Larry Cragun

This is prompted by a meeting today, with our mortage attorney. Kathleen and I are open for business now, our top loan officers from the past are back.

The purpose of the meeting was to make sure we are doing all we can do in compliance etc. A one and half hour interview was 60% about fraud prevention. We went through scenario after scenario of what is the latest borrower and loan officer scam in the marketplace.

Such a pity. The good news, is the fraudsters are being reeled in. The entire industry is after it. No more ignoring it. Almost every bank we are contracting with is requiring us to sign a zero fraud tolerance policy. If we ignore fraud our entire net worth is on the line.

Consumers, play games and commit fraud nowadays - plan on doing the jail house rock.

Larry Cragun

Here is a blog posting from a real estate investor who seems to be doing it right. Click here for I am not facing foreclosure . com

I post the email for two reasons: First, we will only promote, if and when we allow advertising on this site, businesses that add to the mortgage community. By add, I mean a valuable service.

Pay days loans are your friendly loan shark. The fees and interest they charge are in the absurb category. They may seem small in dollar amount but in percent they are serious.

Second: If you are in the space where you need a loan until your next check, you are not ready to get a mortgage or a new home. For you I want you to start dreaming. Visit this site daily. Look at a year or two as not far away. Start taking action that solves your problem.

Notice I said take action. This places the burden on you. You can do it. Do It.

Now for the email:

Dear Sir/Madam,
After
visitinghttp://mortgagesundressed.com ,our company

would be interested in an advertisement on your site.

We provide consumers a safe and easy way to apply for

payday loans online. Our advertisement format is

generally 15 words long and it will contain two to three text

links, which we provide. Please let us know how much your site

would charge for an ad of this size. We look forward to your reply

and the opportunity to work with you.

Thank you,

I hesitate to write this because I have decided to like Larry Harold.

But I promised in response to comments made by Larry that I would take the time to respond on Monday, today, to do just that. I did make a couple of short responses, as did he, then he promised he was through.

Before we were done, I decided I liked the guy. When I got his comment I pounced, as I did not like what he said. He was obviously angry, and I think he regrets his comment and will hesitate before he does this again. Now Larry, if I am wrong here or throughout this article, I apologize, you can resurface if you want.

Larry made an attack on Realtors, which I won’t respond to, he did that.

What I feel I must respond to is the mortgage part. Larry didn’t respond to my challenge so I have no idea what he charges people, he did respond in principle.

Here is what I feel I must write and respond to: (for the consumers education)

LH (Him): in regards to your comment on the mortgage consultant making $10,000 on a loan is too much. Well first off, who are you to decide that?

LC (me): The marketplace is. I have personally audited over 3,000 files. I know that if you tell the customer what you are charging and how rebates work, and that you are charging this much, they will resist you or they will start shopping elsewhere for a better rate. There are so many lenders out there that would love to take a loan and make less than half of that number, the market would decide. Every loan officer and file I saw making $10,000 on a file used lack of disclosure to get away with it. Every loan officer that charged that much from my company was terminated. Those who care about their customers think long term. They know by giving their clients a good rate they get repeat business and keep a pristine reputation. Those that charge high fees, are in it for the bucks and need to get out. I am days from starting back into the mortgage business. I have decided to initially take the 3 top earners we had in the past. Is it a coincidence they were the 3 that charged the lowest fees? The answer is NO, there is no coincidence here!

NEXT POINT:

LH: So logically loan officers should get paid more than real estate agents, but that is not the fact.

LC: This is absolutely wrong. I have done both, soon will do both again. Go get a real estate license, try and make a living at it, you will change your tune.

Next Point:

LH: Also, let it be known that with out loan officers there would be no loans, people could not buy house, they could not consolidate high cost debt, and real estate agents would not have any income either.��

LC: This is silly of you to say. It would be more accurate to say that without Fannie Mae and Freddie Mac and the great secondary market we have there would be higher rates. Being a loan officer is a privilege. You tap into a complex system that is fueled by billions of risk capitol. You are allowed to earn a great living and golf on friday. You benefit by the technology explosion and probably take loans from your porche overlooking the golf course. You have a broker who has huge risks, if you commit fraud or error,he is liable. YOU ARE THE LUCKY ONE. You have little risk, you have little investment, you require little training, you have little oversight and accountability.

NEXT POINT

LH: Well to start Larry Cragun, you can believe whatever you want. The majority of loan officers do not hide numbers. The majority of loan officers don’t deviate from the initial good faith ��ESTIMATE��, and also inform their clients of every change that has been made. If they don’t then it is illegal.

LC: Sadly my experience is loan officers who make $10,000 on one loan do exactly what you say they don’t and I have documentation given me that will prove it.

NEXT POINT: THis comment sickens me

LH: Also lets take note of the fact that no one is forced to sign anything.

LC: You tell that to the borrower who has found their dream home. They have driven by it or visited it 10 times in the last 5 days before closing. Every one they know and love is involved in the happy new occassion. They have given their landlord notice or sold their other home. The UHaul is ordered. They have cashed in their 401 K. They get to closing and if they don’t sign it all falls apart. This point is exactly why SHARKS get away with it. In reality they must sign or lose their dream.

NEXT POINT:

LH: Everyone that closes a loan does it on their own free will. A person has 100% right to walk away from the table and for refinances has a 3 day rescission period.

LC: This comment tells me a lot. It applys to refinances. I don’t believe you do purchases because of this statement. So let me address refi’s. Rates can go up a lot in 30 days. So the customer is at closing, charges are higher than told, the rates are higher now, guess what? Customers are pressured to sign.

NEXT POINT:

LH: Now its funny that you talk like I was the one who did the loan for your friend, which is not the case. I understand its a desperate attempt to get feedback.

LC: Larry, my new old friend in the computer, I don’t attack you I attack what you wrote. It does seem to me you are a good guy. I also seems to me you disagree with my thesis on high fees. My jumping on your comment was an attempt to use this as a learning experience for borrowers. Now I hope it has been a learning experience for you.

Lastly:

LH: If your going to make accusations about an industry Larry please have some sort of statistical analysis to back it up, otherwise it has no credibility, and I have just waisted 5 minutes of my time on even commenting on this whole thing.

LC: I think it was perhaps the best 5 minute education of your career. I hope so. I want the industry full of honorable people.

Larry Cragun

In a recent posting I took a Reno, Nevada loan officer to task for making over $10,000 on my friends loan. I said, “The real shame is what the loan officer was trying to make on this transaction, almost $10,000. These borrowers have good credit, just needed a non standard loan, one hard to shop and compare for rates. CLICK HERE FOR THE FULL ARTICLE.

November 1st a loan officer who identified himself as Larry Harold, took issue with my article. He said, “… in regards to your comment on the mortgage consultant making $10,000 on a loan is too much. Well first off, who are you to decide that, and secondly you are pointing fingers at the wrong people. I have seen realtors take over $30,000 in equity for simply showing it. Usually they don’t do much work and defintely don’t do more work and take on less risk than loan officers. So logically loan officers should get paid more than real estate agents, but that is not the fact. Also, let it be known that with out loan officers there would be no loans, people could not buy house, they could not cosolidate high cost debt, and real estate agents would not have any income either.”

As I invite your comments on this article, which I do, I also use this comment to point out the reasons for this website. We started with MortgagesUndressed.com as a consumer service to expose and make transparent the mortgage business.

This is an example of what I mean, a good one. The person who made this comment did so of his own will and choice. I sensed some passion in what he wrote, I am sure he is sincere. He even seemed angry with me in a how dare I tone. He posted a name, probably a real one. He left me his email address. What more open and public disclosure forum could there be? The only thing to accomplish that would be better would be to have every US citizen find this debate.

This article and comment will be in this blog as long as it is live. His name and comments are in the blogoshpere for all doing research to find. It gives the consumer a way to arm themselves with knowledge. If Larry Harold is his real name he has courage and guts. He layed out his position. Now it’s part of the marketplace as well as my comments, and yours if you add them. I Love this forum.

Debate it is, here goes.

To the commentor, Larry Harold. I respond by telling you I don’t believe you tell the consumer you will charge them $10,000 or more. I believe you hide the numbers. I don’t believe you can prove to me with a Final HUD 1 closing statement from an actually Escrow closing you did this and were up front with it.

I believe you did one of or a combination of these things: you charged a loan origination fee; you improperly added a loan discount fee to a real discount fee, you could have earned a rebate the customer couldn’t clearly see, you would have added your junk fees and given the borrower psycho babble as to what they were, and finally you may have worked for a bank or mortgage bank that earned money not disclosed on the HUD 1.

If you tell the consumer you are going to charge them $10,000 or more, fine, take your gamble with the competiton. The industries problem is how easily the consumer is duped and not informed.

PROVE ME WRONG LARRY HAROLD SHOW ME THE HUD! I DARE YOU AND DON’T BELIEVE YOU WILL!

PS: Is your name really Larry Harold? If so, you should start a blog and write your opinions and defend your positions. You should advertise the blog to all you do business with. Give them access to your heart, mind, beliefs, opinions, and knowledge.

I discovered this after interviewing a mortgage company president a couple of weeks ago. I have subsequently found that some smart mortgage bank loan reps are spreading the word.

The word, “sell a stated income loan and get insomnia.” How so? Stated Income means just that, you state your income on a loan application. It is a fast and easy way to avoid documentation. Sometimes you make income that doesn’t qualify, but you do make it. For example, I had a real frustrated Seattle Seahawk apply for a loan with me. He had one year remaining on his contract. His income didn’t qualify as he needed to prove 3 years remaining on his contract. It was early in my loan career, I didn’t work for a bank that had non conventional products. So, he gave me the boot, found another lender.

David Porter received a lot of press this summer by coining the term “liars loan”, regrading stated income loans.

If you needed to make $15,000 a month, just go stated income. Of course it backfired when you said you were a school teacher making that salary. What school district is that anyway the underwriters would ask as the denied the loan.

Liars loans worked for a lot of liars. Uh, lets see, I am a contract military expert consultant. I make $15,000 a month thanks to the pentagon. That is liars speak for I am in the reserves and I lied on the application. Legal right? Wrong.

My first bank manager warned me, write a loan with crime in it, and you will get the blame. When the Feds swoop in on a fraudulant loan the borrower liars all say the same thing. “The loan officer told me to do it.” Guess who goes to prision? “The borrower and the loan officer.” Sounds like a movie title doesn’t it?

That is why my friend in the mortgage business says his company is through writing stated income. He wants to sleep at night. So do I. As we are days from being back as a mortgage broker, Neighborhood Network Mortgage Inc., I too don’t want insomnia.

So look at it as a health issue. If your loan office won’t sell you a stated income loan, undestand he or she is merely looking after their health. Sleep is important for ones health you know. Larry Cragun

This Web site provides information about the States� January 2006 settlement with Ameriquest Mortgage Company (the �Settlement�) Click Here. On this Web site you will find detailed information about the Settlement and who may be eligible to receive restitution payments, as well as answers to frequently asked questions.

The Settlement resolves an investigation by the Attorneys General and/or banking and finance regulators of every state (except Virginia) and the District of Columbia into claims that Ameriquest and other affiliated companies had engaged in various unlawful mortgage lending practices