Stated Income Loans Gets Originator Indicted - That was the eye catching title of a December 20th 2006 article by a staff writer at the Originator Times. Was I shocked, or I was appalled, and sick to my stomach... and just a little bit curious.
While the few kindred spirits of Active Rain who know me, and actually take valuable time out of their day to read some of my long and exhausting blog posts probably already know my feelings about the mortgage industry's growing problem that is stated income loans, I was still slightly shocked, and a little bit frightened, to find out somebody in my industry, has been indicted and charged with a crime for doing something that thousands of loan originators do every day, knowingly lying about a borrowers income in order to get them approved for a mortgage.
The Originator Times article was brief and to the point, and read like a eulogy. "Kourosh Partow, a former originator and branch manager for American Home Mortgage and Countrywide Home Loans was indicted last week for allegedly inflating incomes of borrowers that applied through him for financing."
I'll say it again...I was frightened, and I wasn't the only one. Headlines like this one were jumping around the message boards over at the Broker Outpost: "Disturbing!!! Are banks setting up loan officers?" Even though I don't use these loans very often, I do still use them for the reasons they were intended; self employed borrowers, borrowers who are in predominantly cash businesses, like waitresses or bartenders, or maybe the occasional married couple where a spouse works, but has poor credit and can't qualify on the loan. I ran into my co-worker Mario Rea's office and screamed..."did you read this?" "How can they arrest one of us for doing something that many of us do on a regular basis...something that is basically encouraged by our industry?" The article gave me no answers, and I think it was written in as deliberate a method as to not offer any. So I started doing one of my favorite things...researching the TRUTH.
It didn't take me this long to find this article in the Anchorage Alaska Daily News, from a week earlier by Richard Richtmyer entitled: A seventh linked to mortgage fraud ring. It seems Mr. Partow wasn't indicted for simply originating "stated income loans" as the previous articled explained so simply, but in fact Kourosh Partow was part of a 7 person "mortgage fraud ring," To be more specific, "Prosecutors allege that Partow overstated income and assets on the mortgage applications of 6 co-conspirators, and also for falsifying documents." A June of 2006 article at JuneauEmpire.com written well before the indictment shed even more light on the situation by explaining according to public records Partow had his license revoked in Wisconsin 4 years ago for forging loan documents as well, but found a job again in Alaska which is the only state to not regulate the lending industry.
And so it appears for now the mortgage industry is still safe, There isn't a stated income witch hunt going on and I won't be arrested anytime soon for originating a "stated income loan," but this might be a taste of what is coming down the pipeline and I can say I'm not frightened anymore, not even a little bit, because when used properly, these are an excellent tool to help people by houses, but I still strongly feel that until lenders severely scrutinize and limit the process of stated income loans, then we are still light years away from fixing the growing mortgage problem in this country.
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