MortgagesUndressed

Over and over I have emphasized, the best chance you have for a good mortgage experience is to use a lender your real estate agent has had experience with. An illustration of why I say this is a recent actual example.

A first time home buyer refused to use the Real Estate Agents recommended lender. He found something sinister in this. Instead, he went on line and found a lender using Google. It turns out this lender talks a good game, but is obviously a dope.

(Sorry, for the 60’s slang)

Against the request of the buyers agent, this Googled loan officer, in a hurry, ordered the appraisal before the inspection. The inspection caused the transaction to be cancelled, and now the slick talking Gooled lender is convincing the first time home buyer this is common practice.

Guess what? The buyer is paying for two appraisals now. Stupid! Not necessary! Not right!

Larry Cragun

If you are a rip off artist loan officer you better hope your borrowers don’t find this website. They will learn to watch out for you. They will learn to look up what is written about you on blogs. You also better hope I don’t get the proof you ripped someone off because I will report it, you, and the facts.

Last night at 9:30 I received a call from a person in a state of panic. Closing is next week. The Good Faith said they needed A little over $4000 for closing. The closing papers arrived yesterday, they now need over $11,000.00. I told them to give the lender a chance to fix the problem, if they don’t we will report every single fact: names, company, everything.

I did go look at the closing papers. The loan officer is trying to make $10,000 on this deal. $6500 in rebate. If that holds up as to what is truly being sought after by this loan officer, she is a rip off artist and you will know her name one day.

Loan officers, you don’t deserve a $10,000 fee on a stated income 692 middle FICO score borrower. You just don’t. It is abuse.
I did a search on Technorati and don’t find one posting with the loan officers name. If the facts are as they seem, the name may appear soon for all the world to see.

This brings up another point. Go to the blogosphere, see what is written about people you are about to do business with. Write about your bad experiences.

We recommend it.

After all, we are about transparancy. We are a consumer advocate site.

Larry Cragun

False Income Documents and Verifications Underlie Indictment of Missouri Couple

I address a July 20 article that appeared on the mortgage fraud blog. Ida Mathis, 52, Kansas City, Missouri, and Larry D. Wills, 50, Kansas City, Missouri, were charged in a two-count indictment returned by a federal grand jury in Kansas City, Missouri for wire fraud and money laundering as part of a fraudulent mortgage transaction.

One of the federal indictment alleges that Mathis and Wills, aiding and abetting one another, defrauded New Century Mortgage

by submitting false documents

with a $472,500 loan application in connection with the property located at 100 W. Bannister Rd., Kansas City, Missouri. CLICK HERE FOR FULL ARTICLE

Please understand the crime you commit if you submit a false document.

It isn’t worth it.

If you are following the topic and have done this, you might not be sleeping well. The press releases from the mortgage fraud blog are picking up steam.

Its too late, you are guilty. What do you do besides vow it isn’t worth it and never to do it again?

Here is a not to do (besides never again) and a to do.

Not to do: Never be late on the payment, ever. A sure way to have your file reviewed and end up being carefully scrutinized is to go into delinquency status.

To do: Pay it off NOW NOW NOW. Even if at a higher rate, pay it off.

Larry Cragun

To: Ann’s Story - Scene 1

To: Ann’s story - Scene 2 - Why did I say the loan was easy?

How Could Ann Have Been Overcharged?

First one could ask what is overcharging? using a $300,000 loan as an example, what would you say? What do you think you paid in fees to your lender - loan officer? Some think 1 point or per cent, some think two. Paying two points on $300,000 is $6,000.00. Is that competitive? I think I will leave this up to you to comment on for a while.

I can make my point now though.

When you are like Ann: obviously new at the mortgage process, unfamiliar with loans that don’t require employment documentation, in a needy situation, in a hurry, and sorry to say - a single woman you are in a position to be charged more.

There are other situations than Ann’s that play into overcharging. For example: those that have difficulty speaking the English language often pay very high fees by their circumstances. Having credit issues is another.

When you are willing to accept a higher rate, you are usually causing or increasing a rebate situation for the lender.(see article on reabates. Were Ann willing to pay an extra 1% in interest, she would have possibly allowed the lender to make a 2% rebate. This might not be disclosed. Overcharging for sure is when a lender charges a two per cent origination fee and takes a two per cent rebate. That is four points. Four points on $300,000 is $12,000.00. As my granddaughter Savannah might say, YUK. I guarantee that is overcharging. I guarantee this happens to unsuspecting or unaware borrowers. I guarantee this is wrong. I guarantee that there are loan officers that do this, I guarantee they will boycott our site.

I don’t care about them. I care to expose and undress them. I care to make things more transparent. I care to educate you.

I spoke yesterday with attorney John Long. He is an industry expert. He is excited about what we are doing on this site. We will be meeting next month to see how we can support each others efforts to help the consumer and clean up the industry. John has some exciting initiatives underway.

After retiring our mortgage company I audited over 2,000 files. I decided as it was time to shred them, I would take 6 or 7 files a day; shred and look at each file closely. I already had a process to audit a high per cent. Here is my conclusion: 93% of the loan officers are straight shooters. They care about integrity. I believe one reason we grew fast in our company was that I made it clear, no hanky panky. We attracted the good ones.

These 93%, the good ones, I believe will welcome this site and what we undress. These are the ones we plan to endorse and bring to you here eventually. These are the ones you should be doing business with.

Larry Cragun

This is one reason I write this blog. First, I will say I have read many of this guys articles, some are very good.

Michael Mahoney, area code 714, is a loan officer. He writes an article about second mortgages. If you were an inexperienced borrower here is how this article can mislead you: He gives you some product information. Fine. In the second paragraph he talks about fees. He references an $800 fee and says to check consumer protection. Whoopee, who is going to do that? But he so easily passed off the fact its 8 Points. Hey fella, where’s the beef? By that I mean the rest of the story. Where is the info about your local bank or credit union? The one that won’t charge any points? The one that doesn’t pick up a rebate for another bit of change. The one that probably has a lower interest rate! The one that won’t charge for an appraisal, credit report, processing fee, or other junk fees mortgage companies usually charge.

When I was a loan originator the local banks loved me, I always sent people to the local banks for their seconds. The clients loved me for doing so. Hey, it’s the right thing to do and wow, it’s good for a reputation. When our company was doing gangbuster business, if I had a loan officer do a second and make one dime on it, he or she was fired.

My advice; tell the whole story. Serve the customer. Inform your viewers about options other than those that serve yourself. For second mortgages, suggest they have other options. To not offer this is absolutely unforgivable to me.

I can hear you say, some don’t have the credit to go the route I propose. Most do and you didn’t discuss that option.

Larry Cragun

I have written about this already. Click here for the full story I wrote on June 2nd.

Visit the FraudBlog.

To Scene 1 of Ann’s story

To go back to part one click here. Ann was in a bit of a panic as she was sure she didn’t qualify. I noted this urgency placed her in a position to be overcharged when in fact her loan was easier to do than a standard conventional loan.

Here is why: Ann had 3 major strengths in her financial picture: a credit score of over 700, equity of over 33%, and more than 6 months cash reserve in the bank. Her new commission job left her with having to attain her loan in a program that doesn’t ask for any income information. The rate was about 1% higher than a fully documented loan.

So, in fact this loan was approved and closed with ease, with no verification of employment, proof of income amounts, no tax returns, no pay stubs, no w-2’s to submit.

Some loan officers feel that if they know a nitche program the borrower doesn’t, as in Ann’s story, it is an opportunity to make a fat fee. I call these “fat fee lenders.” Fat fee lenders won’t like this forum. How I want to undress fat fee lenders. Help me out here, world.

Larry Cragun

FIrst, my kudos to the 90% that love, and stand for integrity.

What does this topic have to do with you the consumer? I write this to put up some red flags. Much harm can come from the acts I point out. Also, if a loan officer will sell out, he may be willing to sell you out. This site is about undressing those that need a dressing down. It’s just that simple.

10 Stupid, illegal, or fraudulant things I have seen or caught loan officers doing.

1- Signing a customers name to a document, addendum, gift letter, application, etc. This is forgery.

2- Using a photo copy of your signature to do the same. Still forgery.

3- Producing a phoney stock certificate for your file. Fraud - Claiming assets that aren’t real

4- Having you sign two applications and/or loan application packages. Often a tool of fraud

5- Telling borrowers that the 1% Adjustable rate mortgage stays at 1% if they select that option. Fraud

6- Telling a borrower stated income need not be realistic to what you make. Fraud

7- Signing a fraudulant certification in your behalf. Forgery

8- Gamble with your lock. Watch for a future article, “Who is Gambling with your rate lock?” Often Fraudulant

9- File a lawsuit against a client for commissions, because the client backed out before closing. Illegal

10- Persuade the in-house notary to notarize a document that was fraudulant. Fraud, Forgery, Illegal

11- Take a bank verification directly to the bank, alter it with similar penmanship.Forgery

12- Collect a deposit from the client in the loan officers name. Fraud - Theft

Hey, thats 12 I know,there are more. Its sad.

There is much to discuss about these in the future. Let me start with number 4 of this list. This seems harmless. In the situation I came upon, the loan officer claimed he just wanted to have a clean set of application forms so he could later make it look nice and neat when submitted. There were many reasons, none good for his doing this.

What I want you to think about is that this original is submitted to the lender for underwriter review. It represents your claim as to your financial picture: employment information, assets and liabliities, monthly payments and debts, etc. You need to represent what is true. How could you do that on a blank application? You can’t. So don’t sign blank application paperwork. Look with a carefull eye to a loan officer that asks you to. You receive a final version at closing. Check to see if it is truthfull.

Obvious right? Not a common problem right? Wrong!

I just came across a case reviewed on the mortgage fraud blog that illustrates what a few people will do to get into the home they want. It also shows what can happen if they cheat. I had a case very similar to this one.

Here we have a tax preparer that created phoney tax returns for clients to qualify for mortgage financing. One was closed with First Franklin.

An almost client of mine came close to doing the same thing. However, he was overcome by a last minute change of heart. He confessed to me what he had done on the day he was to close. He didn’t close, thankfully, and had to explain to his wife why they weren’t moving after all. Although he avoided the completion of the crime he lost a lot of credibility with a lot of people. He also lost a $5,000 earnest money deposit. The sellers were furious as they had vacated the home, but chose to accept the release of the earnest money deposit to them rather than pursuing other damages.

These cases often come to light when a loan becomes delinquent. At that point it may be underwritten again. New verifications may be sent to those employers, banks, etc. that provided documentation for the original file. There is also online capacity to retrieve part of you tax return information. You usually sign for the lender to obtain this information in your loan application.

When you are looking for it, it is pretty easy to find fraud.

Fraud is so serious a problem new tools to find it are being utilized regularly.

There are legitimate ways to get into a home if you just don’t qualify under conventional rules. Follow the story on Ann I recently started. http://mortgagesundressed.com/tags/anns-story/ I will expose you to different programs for this purpose. Actually First Franklin, a lender in the fraud case, offers such programs. These people probably could have qualified for a program with a little higher rate to offset the higher risk and not have defrauded the lender.

PS: What about conscience? The good news in my example, is that conscience was the driving force. This was a good young man at heart. I suppose it was a defining moment for him. I have high hopes of how he is doing now. Larry Cragun