Why Do Lenders Ask For So Much Information?
Today I received an email from the Georgia Department of Banking & Finance. They send out notices usually once each month to provide updates, news, and mortgage related notes that licensed originators in Georgia should know. Today's email was a disheartening one to read, as it related to a licensed originator committing fraud recklessly and blatantly, and thus having her license revoked with a cease and desist order.
Here's what was found, AFTER she was fired for a separate instance of obvious fraud:
"Following the termination, management for Mortgage Investors Group cleaned Petitioner's desk and discovered evidence that Petitioner had forged a consumer's child support documentation, specifically a parenting plan order. Petitioner's desk contained copies of the consumer's parenting plan order and Petitioner's personal parenting plan order. Numbers, filestamps, and other pieces of information had been physically cut out of some of the pages and pasted together on new pages along with photocopied information to create multiple drafts of portions of a forged document. Upon review of the consumer's closed loan file, Mortgage Investors Group determined that a forged document showing a reduced child support obligation for the consumer had been used, unbeknownst to anyone at the time of closing."
Two takeaways here - one, this type of person has no place in our industry, and in my opinion, should be operating from a prison cell. The perpetrator is Melissa Burke Thompson of Chattanooga, TN, NMLS ID 185246, previously licensed to originate loans in GA, AL, and TN. Everyone should know who she is so they can avoid any type of business with her in the future. Her past employment on the NMLS Consumer Access website lists her as a daycare teacher --- surely someone you want teaching your children how to act in life (sarcasm font)
My second, and bigger takeaway, is that this kind of nonsense is precisely the reason why the loan process is so difficult for consumers today. Not only do you have to prove ad nauseum that you can afford the mortgage you're applying for, you have to prove over and over again that there is not a chance you're fraudulently obtaining a mortgatge loan.
You've provided all of your documentation, but we still have to use 3rd party data sourcing to verify what's been provided is the truth - this creates a round of headache and documentation that wouldn't be required in a world where people acted as honest individuals (I'm talking about consumers AND mortgage originators here). You've provided your bank statements that clearly show payments for a specific debt, but we still need to verify that debt through 3rd party sourcing or 2nd layer documentation, because as Ms Thompson evidenced, bank statements can be manipulated. Your child support/alimony? Sure, we see if on your bank statements and paycheck, but as Ms Thompson again proved, these can be fudged. So yes, we need your divorce decree as a 2nd layer of documentation.
People like Ms Thompson make the mortgage process more difficult for everyone trying to obtain a mortgage. They make investors wary of the documentation they'll accept as satisfactory evidence of obligations, income, and assets, and create a situation where people have to turn over their entire life to a bank in order to get a simple home loan, regardless of how well qualified they are.
There are some despicable people out there. Liars, frauds, and those who put their own interests ahead of everyone around them. It's unfortunate. But if you're a well qualified borrower and you're still being grilled for documentation that seems outrageous, just know that it is outrageous, but so are the actions of those committing fraud and making your life miserable. Those dishonest people are the number one reason you need to provide so much information to get a mortgage loan in today's world.