Home : Blogs : Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans : Mortgage Knowledge at its BEST!!!! (Jeff Belonger)

A conversation I just had with an underwriter

Account Executive: "You want answers?" Jack Nicholason

Underwriter: "I think we are entitled to them!"

Account Executive: "You want answers?"

UW: (YELLING): "I want the truth!"

Account Executive: (YELLING): "You can't handle the truth!!!"

Account Executive: (Continuing): Son, we live in a world that requires loans. And the loans must be brought in by people with elite skills. People who thrive on cold-calling, rejection, and false promises. Who's going to find it? You? You, Mr. Operations? We have a greater responsibility than you can possibly fathom. You scoff at sales divisions and you curse our lucrative incentives, commissions and bonus plans. You have that luxury. You have the luxury of not knowing what we know: that while the cost of business results are excessive, it drives in the loans. And my very existence, while grotesque and incomprehensible to you, drives REVENUE! You don't want to know the truth because deep down in places you don't talk about at staff meetings......you want me on that sales call. You NEED me on that sales call. We use words like discount points, yield spread, fixed rates and purchase agreements. We use these words as the backbone of a life spent negotiating with Lenders and Borrowers. You use them as a punch line!

I have neither the time nor the inclination to explain myself to people who rise and sleep under the very blanket of revenue I provide and then question the manner in which I provide it. I would rather you just say "thank you" and went on your way. Otherwise I suggest you pick up the phone and make a sales call.

Either way, I don't give a **** what you think you are entitled to.

UW: "Did you overstate the income?"

Account Executive: "I did the job I was hired to do."

UW: (YELLING): "Did you overstate the income?"

Account Executive: (YELLING): "You're ***damn right I did!!!!"

(This was taken from a Few Good Men.....)

So many of us talk about fraud, those mortgage programs that might seem to be good to be true (Rules that aim to cut the risks on 'exotic' mortgages!!!!! ), and so many things that could make this joke come true. And Ken Stampe wrote : Pay Option Arms - Suicide in a Mortgage Loan and Brian Brady wrote : But can they afford it?

Here is a good story by Roberta Murphy -- Bad Loan Storm Ripples Now, any thoughts on these blogs???

Now, don't get me wrong, I do all kinds of loans, but where does someone draw the line? Over-step the boundaries? But then again, so many on here criticize that the foreclosure rate is running high and blame lenders and products. What about the behind the scenes picture. NOT knowing if the client just spends and buys. Goes out after the fact and buys two cars with great credit, but now their ratios after buying are now 75%. And if used in the mortgage business, as a 75% DTI, they wouldn't qualify, unless they went stated or no doc. Whose fault is this? The loan defaults, do we blame the lender? I ONLY believe it should be the blame of the lender if they were unscrupulous.

As I have said....this is not real & I didn't make this up. It's a joke that has been traveling the mortgage world for the last 6 months. But it holds some truth to it.

Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 01/11/2007 01:09 AM

Comments (61)

exoctic mortgages, lending, fraud, jeffmortgageman, new jersey, real estate

61 Comments on A conversation I just had with an underwriter

JAN

2007

Jeff :: You get bonus points for creativity on this one, whether you made it up or not. My experience with a limited number of mortgage brokers leads me to believe this is more true than any of us would like to admit openly.

Jeff Turner.... thanks a lot, that means a lot to me coming from you, someone that is very creative and has easy flowing blogs with some great thinking and insight. thanks.

And how many don't WANT the truth? But aside from the real point of the post...I just love the Jack line because it is SO true.

Love it!

Bill

Ardell..... everyone wants the truth, but not to many can handle the truth..... LOL

Bill..... thanks.,..

very interesting on how you used this and tied it in with today's lending. And I loved this movie and Jack. Great scene!

90% of the people in an option arm are in the wrong loan.

and if i dont originate the loan, some other loan oficer will. because buyers are getting more and more educated on loans....

how does that old saying go? "give em enough rope....."

You know, that made up conversation sounds soooo New Jersey! lol Of course not everyone wants the truth; If i want a house and you can jack up my actual income so I can get it? There are people who want that, for sure! Jack Nicholson would never lie would he ? lolol

That is a classic. I suppose that some very "creative" lenders, account executive, home loan consultant ot officer have been there before. I have heard it before. Sometimes people will do anyhting to jack up their income.As you say other times you have no choice but go stated or no docs.

Jeff GREAT POST!!

Believe it or not a mortgage broker was in my office minutes before I read your post and we were talking about how brokers who get too creative are hurting our market.

Is there some kind of "education disclosure" you can make up and have the client sign to show that you did properly educate them about the product? Just a little CYA.

Jim..... thanks for the compliment.

Tom.... is it that high or can we just assume this? Just curious. I love stats, but where did you get the 90%? In regards to the 2nd remark. I agree to a point, but it still depends on the type of loan. That comment seems open-ended. The rope part...sure, happens often. Hence the reason why I added that at the end, it can come down to the client, no matter what we do. They can get themselves in trouble without a lender..... thanks for the input.

Carole.... so, New Jersey? soooo New Jersey? lol why is that? I do think this ties in well, people say they want the truth, but they beg us to lie, as I mentioned in my previous blog. You are begging me to lie to you!!!! People Skills : Part 1 of 2

And would Jack never lie? hhhhmmmm.... he was trying in the movie.... lol thanks for your input.

Lloyd.... I am sure most have been there before.... but how far does one stretch it, is the question. Thanks for stopping by.

Heather..... so, is this broker a steady person? That you give business to? ;o) Seriously though..... define creative. I consider myself to be ver creative, but that is in regards to utilizing all of my resources.... knowing my products and using something that one may have to offer, that is never talked about or mentioned. Hard to give an example on this though. I just go through the motions when it happens.

But after defining the word creative... then we can stipulate whether it was being creative or just fraud.

Renee.... you snuck in there..... that is something to think about, but I think that would be too hard. Maybe a quick booklet in what to look out from other lenders. Key words and phrases that might indicate that they are lying or bait and switching.... but would the client even read it? Or do we try and educate online instead... or blog? thanks for sharing

I'm gonna have to share this at my next LO meeting.

Jeff, Do your exotic mortgages swing around brass poles? Great blog. Humorous and informational. You the man!

Great post Jeff. I was cracking up reading it. It's very timely also, I was just reading an article here New York about how the state is poised to start really cracking down on mortagage fraud rings.

Brian..... please do and let me know how it's received....

Chris...... ha ha ha..... and I will keep that comment to myself. Just look for an e-mail. But thanks for the compliment.

Kevin..... thanks for the compliment. Cracking down I don't have a problem with, if fraud is involved. But if everything is disclosed correctly, then where to do you go from there? thanks for sharing and the input.

Hi Jeff. It also goes for the buyers, sometimes they don't want to hear "the truth" that their dream home maybe out of their reach at x particular time.

I know overstating income is a common practice usually encouraged by lenders. I've had a lot of experience with it, and I know in many cases it can be a useful tool and in others it can be abused. There are a lot of problems that can arise from this, but my feelings are that it's ultimately the lender's responsibility.

Loan products are complicated. You have to be in and up on changes in the industry on a daily basis to keep up on things. (That's part of what I was hoping to hear more of on ActiveRain. More nitty gritty in depth stuff from loan officer to loan officer, or professional to professional.) There's a lot to learn in finance. A good loan officer is going to know what's going on and educate their client to the best of their ability. It's impossible for a client really to know, with all the loan options out there, what is best for them. That's why they must utilize their loan officer as a trusted debt adviser, to help them through these decisions.

There are carefully calculated statistical models that determine the over all benefits a lender will derive from lending money. If that fails, the banks have pressured congress to tighten up bankruptcy regulations. If things go too far they'll do it again, or look for a bail-out.

I do think the responsibility's is upon the lender first, and the loan officer second. Lenders are in business to make money and they know what the are doing. They aren't throwing their money away. A loan officer knows the business far better than the borrower and should advise and prepare them accordingly. Sure a borrower may buy a car and over extend themselves, but statistically speaking a lender knows who they are lending too, and over all the loans they give, they're going to make their money, one way or another.

Jeff: Nevada has an agency disclosure booklet that explains agency disclosure to the client. If you want me to email it to you I will. I don't think that another form that explains an arm or interest only financing would be a bad idea or hard to write. Make it paragraphs and have them initial next to each paragraph. At the end of the form have them sign and date it as receipt of the "education" they just received.

Blanca.... I agree.,.. and that is where the client gets taken advantage of when shopping. A lender might make it sound cheaper now, hoping that they bite on the idea... fall in love with the house, and then when it goes backwards...they still go through with it, even if their payment is higher. Loan officers know this at times.

Caleb...... thanks for the input. Not that I don't agree in regards to the loan officer and the lender, that it's responsibility. But still, in my opinion, to a certain degree. And yes, we know who we are lending to.... but if you meet the guidelines, why should I change anything? If I am not bending guidelines, the client is still getting a good deal, and everything has been explained... and if I put someone in a 100% financing with no money out of pocket, why am I looked upon negatively. And I only say this because I see so many on AR even, take a certain stance against lenders. Then people bring up the fiduciary repsonsibilities up...which is more directed towards the realtor.

Caleb..I brought up the example of buying news cars and over-spending for several reasons. Yes, there are loan officers that don't care...that put clients in loans they have no business in....or that it was never fairly explained to them, so they could make a rational decision. But those that just keep spending after the fact and they lose their house anyhow. We can't be credit police.

There is more to it than that....I do see your point, but there is more of a fine line than what is explained. I do thank you for your thorough comments and your input. thanks

Renee..... yes, please e-mail me or fax me anything that you might have. Maybe I'll start a new trend. When it comes to disclosures, I always have them initial and sign the full application, because I had one client tell me that I told him it was one term, when it said another. I said...are these your initials? And said yes..... I said, we went over this part 3 times. He still denied it. So...yes, initials are a good idea, but clients can still argue the point. ;o)

Renee....you should have my e-mail... jbelonger@comcast.net and fax : 775-361-6619 thanks

Just kind of what I had gone through with a loan company recently..... greart post, Jeff....

Jeff,

Thanks for the response but you just hit the nail on the head for me. As a former broker I see the loan officer's value is heavily in being a debt counselor. For most people a home purchase is the largest financial move they'll ever make. Loans are complicated and there are many options to suit many buyers. That's why a loan officer is very important to the process. They must fit the loan with the borrower and try to meet the borrowers needs. I would not a expect a borrower to be able to understand the loans, that's why I'd pay a loan officer. As a loan officer you represent your clients interest and in that sense, as their advisor, it's your responsibility and just good business sense to help your client manage debt.

Of course a client can go out and do what they want. But to put them into something the are trusing to to help them understand is like a Ski instructor taking me up to the top of the expert run and and saying, "Here, you're not qualified for this, but I think you'll make it down.

Regarding lenders, however, they are resposible for the money they hand out. I would not expect 90% of borrowers to fully understand that they are getting what is right for them.

Alex... thanks for that great compliment.

Caleb..... after both comments now, I can see that we are on the same page. I totally agree, that I am like an advisor. I need to help them make the correct decisions. We agree on that...and yes, because there are so many options, programs, and an explanation that is sometimes not easy to follow, we as loan officers have a duty to handle this for each client. But......

Yes, but.... my comment in regards to being their personal credit councelor.... I can't run around and make sure they don't crazy after the fact. And even if they are crazy prior to the loan or purchase, if they meet all standard guidelines... with great credit scores and such, at what point is someone to say no... when even the DU system, the computer says yes... because it fits the FNMA credit risk standards????

Hey Jeff, I really like the beginning of this post. One of my favorite movies. Unfortunately I deal with with unscrupulous LO every day so I'm a little tainted. I think it's the market I'm in. Just about every deal I get is 100% financing with seller paying the BCs. And inevitably I have issues trying to get them closed. In my area they just throw against the wall and hope they stick. I'm just real glad I don't work with buyers.

OK, I have been watching this blog go back and forth. Each rebuttal with its unique perspective but; I don't see anybody mention the dynamic relationship a Real Estate Agent and Loan Officer's have that affect the consumer? How about the fact that sometimes an LO in order to keep the relationship with a realtor is cornered into making the deal "work"?

I understand we all need a paycheck, so is it morally correct to put consumers in this kind of pickle? Is it worth it?

We all know that even though this is the most important investment a person will ever make, consumers will always go on with their emotions and not their logic, they want the house and they want it NOW.

I said that because I lost a relationship with a real estate agent a few moths back because I told his client it would be prudent to wait a little bit longer. Notice: I didn't said NO I told him WHEN. The agent was so mad and told me "You are supposed to do your job by closing the loan, saints have never died rich" I still get a chill behind my back when I think of this.

So, while I can see why some lenders will feel compelled to close the deal at the consumer's expense, it all boils down with the kind of business you wish to run for yourself. The only "truth" you should hear is yours. Albert Einstein said ‘Try not to become a man of success but rather try to become a man of value" But in my own words I say "I may never be the most successful Loan Officer but I will always be the best" 2 very different things!

Good post, Jeff. Creative, as Jeff T. noted. I'm not sure I agree that everyone wants the truth. Maybe that's pessimistic but...

Bryant..... thanks for the compliment and for stopping by. Maybe I should move down to Florida. Hey, I do have an employee that lives and works in Florida.... hhhmmm... she is a great person and knows what she is doing. Anyhow... thanks for the input, because I can relate those that stick these loans up against the wall, hoping that they stick.

Blanca...... boy, did you hit one nail on the head. I agree.... many loan officers are cornered. And what would be interesting is the true fact of those that would deny this, but actually would think this and follow through with it. If so many realtors didn't feel this way, how come so many loan officers are as good as their last deal?

Anyhoo......I like your statement at the end..... very nice and thanks for sharing. And thanks for pointing this out. I will admit, I do think about this, but just never really mentioned it in any blogs. Usually it's because my mind is going a million miles a minute. And I forget.... thanks for the reminder.

Jeff D. ....... thanks for the compliments.... and for your input.

Renee, I have a document that I have my borrowers that go stated income sign. It educates them as to this is a stated income loan and that they are stating the income for certain reasons. It is a nice little CYA form. If anyone wants a copy of the form, let me know and I will forward (just change the company info to your company.)

Blanca, if the realtor does not respect the fact that you are watching out for both your and the realtor's client, then I would not mind if they took business somewhere else. If you make one exception, they will ask you to make another and try to lead you down the road of fraud to help put a buck in their pocket while it is your butt at risk. I agree with telling the truth... even if it means loosing a relationship. How goes the saying... The truth shall set you free.

Jeff & Caleb, while we cannot control the habits of the borrower, we can educate them to help them down the right path. If they go on a spending spree before closing, we can try to pull back on the reigns by warning them of the risk of loosing the home before ever owning it. If they go crazy after the fact, we can help control that by offering a 6 month credit review. This is where we can provide the borrower with a copy of their credit and outline to them what they need to do to stay on track to get to where they need/want to be before they need to refinance again or better themselves, or make sure that they have not over extended themselves to where they may loose the house and put them back on the straight and narrow. The benefits to this is you keep your name in front of the for the opportunity to refinance, provide foreclosure bailout if they really screw up in the 6 month period, and get referrals. (that is if I am understanding the comments correctly)

You crack me up Jeff - I love that movie....and the analogy to mortgage fraud is beautiful.

I'm with Bryant (why does that always happen?) - we deal with such unethical LO's constantly in this area. We have been getting questionable offers in our hands at least once/week - IT'S SCARY!!

Jason..... please send me that document, if you don't mind jbelonger@comcast.net or fax : 775-361-6619.

In regards to your comments... yes, I agree...you are watching out for both your client and your realtor. But one thing that is not mentioned, it's really hard to best describe what we are talking about without true examples. And even with that, there are so many factors that involved, and if all of them aren't out in the open...on the table, then most times we are just assuming about much of what has been talked about. Just my opinion. But your description of how you take care of someone might be totally different than mine and might mean differently.... and might be less of what I meant and do or vise versa. Basically.,.... we all need to get off our high horses in here and just do our jobs.

This is not directed at you, but after reading your comment twice, I read this so many times. Blanca actually just came out and hit the nail on the head. We all then can go ahead and make oursleves look better than this. But if my rate is a 1/4% better than your rate, but you had all intentions of treating your client right, can I come back and make a statement that you didn't, because your rate is higher? Just food for thought. But think of the meaning. For the most part, all I see is talk. And then all we have is to go off of each other's personalities that show through these blogs and comments..... but again, what is real? SO many unknowns.... that is all I am trying to bring up here.

Last.... you talk about how we can't control the habbits... but that we can counsel them.... but then you mention that they will always be in front of you... and if they ever needed a foreclosure bailout, or cash-out, you would be there for them. But then .....aren't you going against what was just preached, the self-education...educating... counceling.... but then to be there to pick up the pieces? I hope this makes some sense. And again, this was not against Jason.... but against all comments like this, that scream out... I want to help your client no matter what. At least that's what it says to me.....

Ines...... thanks and thanks for the compliment. Please explain to me what they do, that you think is so bad and or wrong, so I can better understand. I would appreciate all aspects.... thanks

We are getting offers directly from LO's with customers that have not even seen the homes (first red flag) - then they want us to increase the asking price (pay a lot more than the listing price) and want the sellers to give the difference (second red flag), they assure us that the house will appraise for A LOT MORE than listed (third red flag), and then they want more than 6% seller contributions (do I need say more?).

JAN

2007

You think your so smart, Lieutenant Belonger? You just ruined a country today.

Ines...... your first sentence is sad..... very sad. In regards to the 2nd part.... I have done this one or twice AFTER I have had an appraiser confirm that the house is worth much more. example: I have a client right now, buying a house that has been on the market for about 4 months and started out at $220,000... then went to $210,000.... then to $200,000..... then to $194,000. My appraiser came back and confirmed that the house is worth about $205,000. I worked out the numbers for the client and she has about $4,000 to work with, but I don't want to use all of that up. I then spoke to the realtor and they agreed to a price of $198,000 with $4,000 seller help.

Now.... I know exactly where many of you realtors come from.... but I do my homework before the fact. And in all honesty, I see nothing wrong with this approach that I used. I didn't have anyone do contracts yet until I confirmed value with the appraiser. Now...on another note..... any appraiser that I use, I never ask them to over-state value. They know to do their job and do it correctly.

I would want your honest opinion in regards to what I just wrote. But in regards to your last sentence... impossible. There are no programs over 6% seller help. So, I guess what you are saying is that they want the rest on the side or under the table??? which would mean it won't even show on the HUD. These are things that I don't do.

Brian..... did I tell you parade rest? Stand at attention and don't move.

Oh yea.... Ines..... I can handle the truth.... ;o)

Jeff - the first thing our BROKERS tell us at office meetings is that going above asking price is a big no- no. But there are exceptions. In your case, $4,000 is acceptable and everything appears in the contract and HUD. I just had a LO offer $595,000 on a property listed at $550,000. The property will appraise at the $595K or close, but $45,000????That's a bit steep in my opinion, and then the same buyer wanted a 6% seller contribution.

We had an offer a couple of months ago where we received the wrong fax from the LO's office. (the fax was not intended for us). An appraiser had not even been to the house yet and they had an appraisal for $200K above the asking price and a new contract with our seller's signature forged all over the place. These people were reported and hopefully will be behind bars for committing a Federal Offense.

Ines.... wow.... okay. I am glad that we are on the same page. Having a loan officer wanting a client to buy it for $45,000 over asking price would only benefit the buyer if they got that money back. LOL If they didn't want the money back, then the seller has a great offer. lol

So....did this loan officer ever tell you why they were offering this much more? Did anyone state that the buyers wanted the difference. That is the only conclusion to this. thanks

Great post - the tie-in with the movie was great!

I think a lot of this comes down to whether on not you have a Broker with ethics who's in it for the long run, or some putz who's just trying to get-rich-quick.

When I got started years ago I have to admit that it was very hard for me to let someone go if they wouldn't listen to my suggestions because, as we all know, all that Client has to do is go to another Broker or 2 and someone WILL do the loan even if it's a terrible choice.

Once you have a few people come back and actually thank you because they realize that you were right, you have a Client for life.

Some people really do shock me with their stupidity - like a recent re-fi who threw a fit because I tried to confirm this salary. Yes, it was full-doc AND yes, it was explained to him - his comment was "But I didn't think you'd REALLY check?!?" good thing I did as he was lying.

We can not be held responsible if a Customer lies to us or after being warned what not to do, goes out and ruins his credit, loses his job etc. We ARE responsible if we withold info or convince someone to take a loan that we know to be a poor choice.

The LO did state that the buyers wanted the difference and it was clearly written in the offer. The reason the house was priced under appraisal is because it needs some work and the seller wanted to be reasonable and sell. The buyer said he would need that difference to "fix" the home. My answer was if you need the money to fix the home, get a line of credit or a second loan, knowing the house will appraise for that much more, but don't expect the sellers to give you back $72,000. We are on the same page Jeff. But it is really frustrating to get these offers constantly and they make us look like we are not flexible and being unreasonable.

Jeff,

I just emailed that form to you.

I do agree with your comment that you can preach all you want, but it comes down to your actions to show who one really is. Truth is relevant and can be twisted to meet the means by which one wants to present themselves. Yes, we can give examples, but unless we are all there to witness it first hand, we do not know the whole story.

As for the last point, I will try to clarify what Knightlines Mortgage does for its clients. We review credit every 6 months (2 times a year.) We provide this service to all clients (bad and good credit.) A lot can happen 6 months time when it comes to credit (identity theft, layoff of a job, spending spree, etc.) While there are things that can be taught and counseled, there are other things that are just beyond control (habits.) By providing this service, we can help keep a client on the right path to credit well being. Now, there are those that no matter how much time and effort you put in, it just does not sink into their heads how to manage money and maitain credit worthiness. For there people, all you can do is try to help the best you can, and sometimes helping them is telling them "NO!"

As for the "Screaming out... I want to help your client out no matter what," yes there are those that do this, but I will say that I will help the client out no matter so long as it is legal and in the client's best interest. Sometimes, that includes telling the potential borrower "NO! It is not in your best interest." or "No, you do not qualify for that price of home." or even "No, you do not qualify at all for a home." Sure they could go somewhere else to get the deal from some other broker, who will help them out no matter what, but at that point, it is the client's fault not mine (they chose to ignore my advice) and my license is not at stake for doing that loan. I know that you were not directing the comments at me... I just wanted to clarify myself to the comments that were made.

Marc.... thanks for the compliments. Sure, it comes down to someone having ethics. Don't we all have them? ;o) And I agree, when I first started, it was hard to let someone go.... now.... some come back, not many, but it's nice when they do. Meaning... if I give them what I can do, but they tell me that they got a much better deal.

Now, in regards to thye income thing. I can see if they forged a W-2 and or pay stub. Because if there is no overtime involved, in most cases all you need is a verbal for employment. I do remember explaining to a client what a 4506 was... and when he was asking questions and seemed hesitant, I just said... just tell me everything and be upfront. WOW>.... at least we got it out in the open. thanks for sharing.

Ines.... ¿Desde que estamos en esa misma página, que tal un puñalada en un cliente suyo? LOL

In regards to the $72,000 back... is the loan officer just that much of an idiot? lol Was he wearing red that day? Or yellow? As in red flags... look, see me. lol It would be like a person in the Army wearing yellow in the day, while with his troops in the woods, and everyone wearing grean. Or wearing white at night... lol My favorite in the service when on missions was those that smoked at night. LOL Hello...

Jason...... yes, I got the e-mail...thanks a lot. Overall, You did clarify everything for the most part. Thanks... and I do like your credit service that you do offer. Do you mind if I steal the idea and implement it into my sales?

Not at all... go for it. Hope it works for you.

This is a funny post with a good message behind the humor.

Jason..... thanks again.

Brian..... thanks for that compliment...

but I don't see the humor behind this. "I am few yards away from the enemy, something that you will never experience. I am the one putting my life on the line, protecting you and your loan officers....who don't care, and who carry-on at bars... stuff your faces with the finest foods.... and can sleep in, while I am on edge, trying to get that loan done, at all costs... " LOL

JAN

2007

Jeff - very funny usage of the movie lines. That was great. What concerns me is that your following information stated the sentence below:

"And if used in the mortgage business, as a 75% DTI, they wouldn't qualify, unless they went stated"

Wait a second, they wouldn't qualify "stated" at 75% DTI. The implication is that by going "stated" the loan officer would be fraudulently increasing the client's income in order to lower the DTI from 75% to a ratio that would meet guidelines. Committing fraud to "qualify" borrowers is still fraud.

I want to make sure I'm following your call to action in response to the fantastic humor in your post. Having read your blog and posts in the past I think you take a strong position on personal accountability for the consumer and I know you believe strongly in the loan officer's role to educating the consumer. Where I would like you to clarify is this;

it seems you are saying you do not have a problem with a loan officer mis-using a stated income program to qualify a home buyer because that customer COULD go out 1 day after closing and add debt which would result in a higher DTI anyway.

Am I misunderstanding you here?

Ken Stampe - Bank of America

Ken.... I am tired at this moment, but I will try and clarify. In regards to the stated.... this can get very deep. Let me ask you a question. If your client was making $50,000 a year. But they had a side job that they could not be documented and it was actually the same line of work.... and they made another $20,000 by doing this. And when I say not documented, I am talking by the normal means.... how would you treat this.

In regards to the your last statement. I think you are reading into everything now. I never said that I don't have a problem with loan officers mis-using stated income programs.... I was trying to convey that I can't worry and care about those that run up bills after buying a house. There is a lot more behind this. But you can only educate so much. And I am not going to someone's follower or crediot counselor.

thanks, jeff

Perhaps when you are better rested you can see where I was coming from. Like I said in my last comment, I've read your posts and comments over the past months and felt that the way this blog came across to me was not in alignment with the impression I have of you or your position on this issue. That's why I asked you to clarify.

Perhaps I'm the only one that inferred it the way I explained in my comment, but out of respect for you I wanted to point out that if I interpreted that way then perhaps someone else may do so and give you an opportunity to clarify.

I would treat your scenario with stated income for the non-documented job. That is within guidelines assuming the employment can be verified as to guidelines. It's the person with a job making $50,000 a year and has a 75% DTI who the loan officer makes up a second job and completes the application with $70,000 in income so their customer qualifies. It sounded like you were justifying this by saying that it's the lender's fault to catch it and that the customer at a 35% DTI could purchase items after closing to take them to a 75% DTI so who cares.

Like I said, that's how it came across and that's why I asked for your clarification....still a really, really funny post. Now go get some sleep.

Ken

Ken... I am still lost with your last comment. You said you would treat my scenario with stated income. Meaning?> treat it how? 2nd... I never said a 2nd job was made up. Not sure if you were using that as an example. But much of this is getting too detailed and now confusing. sorry

Jeff-good point. We do get blamed for alot of what is going on now. But I have seen so many times customers needing that new expensive, big, german car to go with their new bigger house. It's time people start taking accountability for their own actions.

Ann...thanks for stopping by and for the comments and input.

FEB

2007

Jeff,

I believe it is the responsibility of the client to read the loan docs. If they see soemthing there reported wrongly then it is up to them to bring it to the attention of the loan officer. Of course we all know there are horrible loan officers out there, but by in large I think most of themare hard working and honest, and they get the blame for everythng. It's like the client is a child that must be protected at all costs and while that may be true that protection begins with they themselves. Only my humble opinion. :)

Great post. :)

Roberta.... thanks for you input and feedback. In my opinion, sure, we could say that the client needs to read the closing docs. But so many put their trust in loan officers, which they should at some point, hence why they don't read everything. And another thing to point out, even if they did read everything and came to the conclusion that it was not what they were told they were getting, it puts them in a bad situation, especially on a purchase. Yes, it's easy to say, then don't sign anything. But not as easily said when you are in the position.

And in regards to refinances, sometimes even harder to back out, because if that loan officer knew that you needed that money so bad and they actually gave you something that wasn't promised, this is even harder to back out of. Because it could ruin you financially at the time. Sure, you can go after the mortgage company. But when fraud is not the case, it's tough. All you can do is complain, unless you had a lawyer right there with you.

If any of these things ever happen to you, I always advise that one gets a lawyer ASAP. I had a client do this once with another mortgage company and he won his case, 6 months later. They reimbursed him for his closing costs.

Again Roberta, thanks for your input.

Jeff,

I KNOW you're right. I used to be a mobile doc signer before I became a Realtor. It was scary the number of people that didn't read a thing just signed their names. I know trust is important but to blindly trust is just so dangerous. Most Loan Officers are honest and try to do a good job, but for those that aren't these people are just like rabbits and they are just lying in wait. You wrote a good article and good response. :) Besides whenever a lawyer gets involved who is the winner? :/ Not the client!

MAR

2007

Jeff, only saw this TODAY. Excellent, excellent, excellent............. and funny as Hades.

Roberta..... thanks for stopping back in. Looking forward to getting to know more about you and going from there. The lawyer take on things.... not always, I have seen some lawyers be useful. But I will leave the rest of that alone... lol

Rob..... thanks for that awesome compliment....

MAR

2007

This was a very good post -- and I'm sure someone has had that exact conversation somewhere in the world!

It's true that some customers want what they want, no matter what. And if you don't give it to them someone else will. But I would not feel right putting someone in a house that I know they can't afford simply to close one more loan. It's a totally different situation when a borrower does make enough income and can pay on time, but they have other extenuating circumstances that makes the loan difficult. Then it's good to be a "creative" loan officer. That's your job -- to find a lender that is willing to take the loan and to structure the loan so that it will work. We can't be baby sitters, but loan officers should take responsibility for what they do. Someone is coming to you for expert advice.

MAR

2007

Tonisha..... thanks for your compliment and for your input. And yes, some clients think they know what they want and some of them won't let you tell them any differently. Even if you can prove by true numbers that it would be better. Okay, so we can't help everyone... but why go to an expert then? Sure, you have to be careful and that you can't trust everyone.

Again, thanks for your feedback and input.

OMG, that is awesome, if I were handing out points, this would be 500 no doubt!!

MAR

2007

Robert.... I really apprecie your enthusiastic comment...... thanak you very much, much appreciative.

Very creative post!

I think I had this argument with a processor vs lo scenario once...

What I like is the play on operations vs sales

MAR

2007

David.... thanks a lot for that compliment. I am sure many of us had some type of discussion in regards to this.... may it have been the consumer, the underwriter, another loan officer, your manager.... you name it. Thanks for stopping by.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?