Is It True Loan Officers HAVE MORE FUN?

By
Mortgage and Lending NMLS #94045

Here's a sad expose about a Loan Officer recently convicted for mortgage fraud in Seattle. The only problem is that this article, while well illustrated on the front page of the Seattle Times, is that it leaves some doubt as to just who this crook represented (besides himself). He is apparently not blonde. We can assume seven years in the slammer will be no fun whatsoever.

Re: http://seattletimes.nwsource.com/html/localnews/2008793819_webbrooks27m.html   

The article about Chris Brooks, a former loan officer at America Mortgage of Bellevue, paints the suggestion that he was working as mortgage broker. What really bugs me is their use of the term 'loan originator' on their graphic expose as the bad dudes who originate fraudulent loans in this case.

The graphic illustration occupied half the front page on February 27th. Graphic link: http://seattletimes.nwsource.com/ABPub/2009/02/27/2008792274.pdf

The reporter handily did not bother to mention that America Mortgage who employed Mr. Brooks is a mortgage lender, i.e., a national mortgage bank with their own investor relationships for whom they underwrite and package loans, and not a mortgage broker. It appears that his company, America Mortgage, actually underwrote and funded these fraudulent loans and sold them to other banks while Mr. Brooks, a convicted felon, was operating as an unlicensed bank loan officer at America Mortgage.  

Surely his employer might be drawn into the discussion in a fuller examination of his complex scheme? Had his company been exercising standard underwriting practices requiring document authentication on so many transactions, staff would have been alerted to the hidden schemes outlined. The author does not mention if his employers at America Mortgage were named co-conspirators and also tried. How could they not be aware on some level? There were far too many people involved in his deceptive practices described in excruciating detail.  

Please understand that the very programs named in this article, namely those featuring 'no income verification' were inventions of banks, not brokers. Brokers do not invent loan products. Only banks who are investing their money can cook up these loan products. They do so to fill their coffers with more loans to sell to the CDS market. Perhaps you've heard of the result there?  

In the Seattle Times article, the story is illustrated by a colorful graphic outlines the 8 steps for "How a Loan Becomes a Scam: I note item 4 on this chart identifying the 'loan originator/mortgage broker': "Using the appraiser's report, a complicit loan originator submits a fradulent application on behalf of the straw borrower..." (you know the rest of the story, apologies to Paul Harvey, may he rest in peace).

It appears lots of folks do not realize the difference in an unlicensed 'loan officer' working for a lender or bank and a licensed 'loan originator' working under a broker's license. This story calls Mr. Brooks a loan officer in one sentence and refers obliquely to loan originators as the culprits of these scams. This is misleading; I contend that many people reading this article assumed Mr. Brooks was working for a mortgage brokerage, as did two loan originators to whom I showed the article.

The mere connection of the words 'mortgage' and 'fraud' conjure up powerful emotions blaming greedy sleazy brokers working under cover to defraud the innocent. This kind of half-reporting is a disservice to honest mortgage brokers and loan originators who must 1. only hire legally licensed staff who have passed national background and criminal checks. and 2. adhere to much stricter lending and disclosure standards that unlicensed loan officers in banks.

Why are banks allowed to have unlicensed staff (and not disclose as fully as brokers do) you ask? Because it's 'their money' for the millisecond the paper is on their books, before it is sold to another bank or Government Owned Enterprise such as Fannie Mae.  

I have respectfully requested a fuller reportage of the facts with an apology for the writer's unfair slant against mortgage brokers. Really we are done to death with the tar and feathers. Please go after the real criminals.

Many Blessings!

     Loannetter

 

 

susan templeton
mortgage planner
www.loannetter.com

 
 
510-LO-31434   

510-MB-24707-50145    An approved Conventional, FHA/VA/USRDA and Reverse Mortgage Broker

   © Copyright 2009  Loannetter 

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SUSAN TEMPLETON IS A LICENSED LOAN ADVISER IN WASHINGTON

NMLS# 94045

                 

 

Interest rates and products are subject to change without notice and may or may not be available at the time of loan commitment or lock-in. Borrowers must qualify at closing for all benefits. Loannetter is a private brand owned and copyrighted by Susan Templeton.

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Christine Farkas 03/06/2009 02:12 PM
Topic:
Mortgage / Finance
Location:
Washington King County Seattle
Groups:
Construction
Investors
It's all about them (ThemThem)
Mortgages
Posts to Localism
Tags:
mortgage brokers
loan originators
mortgage fraud
press bias

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Show All Comments
Rainer
12,723
Kristina Yorke
www.LowestHomeLoanRatesinFL.com ~ FL FHA Mortgage Expert - Saint Petersburg, FL

Very interesting article, post and comments.  I agree with the quote Jeff used above by the FBI agent, it usually takes everyone to get those sneaky loans to pass.  Thanks for your passion!

Mar 05, 2009 12:20 AM #3
Ambassador
698,008
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

Susan: I'm a mortgage banker who is licensed. I assume this happened before licensing was necessary. In fact, all bankers have to be licensed by this summer. You were probably aware of this. I've been telling everyone that if they're not a banker they better get with it. Brokers originated 19% of the loans in this nation recently. I saw this statistic somewhere. This is down from a high of 70%. With banks getting out of wholesale lending, it's only a matter of time before the percentage goes to 0 and brokers are extinct for now. Thanks for the post. It's always sad when we hear about crooks like this guy. The only saving grace is they usually pay a very heavy penalty and may never work in our industry again! Have a great day!

Mar 05, 2009 12:35 AM #4
Rainmaker
549,965
Tom Burris
NMLS# 335055 - Baton Rouge, LA
Texas/Louisiana Mortgage Pro - 13 YRS Experience

The media has no business commenting on stuff like this.... It is over their heads. LOL

 

Mar 05, 2009 01:12 AM #5
Rainmaker
275,687
Ken Cook
Content, coding, marketing, host. - Marietta, GA
Content Marketer/Creator

I like your article Susan. I think the point of your article is your disgust at the way mortgage brokers are portrayed. Lenn and I had a short discussion about that many months ago when she commented it's not the media's fault because they don't know the difference between a broker and a banker just like everyone thinks all real estate agents are Realtor (or real-a-tors as they also say). Paul is partly right in that loan officers for non-chartered banks will need to participate in the licensing system but even the regulators are struggling with how that is all going to go down. That regulation also leaves chartered banks exempt, however, and their loan officers will not be required to be licensed. I have ALWAYS been for licensing of loan officers - ALL loan officers. Even the perception that not requiring chartered banks to have licensed loan officers gives a dunning notice on mortgage bankers and mortgage brokers alike. I also am a mortgage banker who is licensed but also act as a broker.

Mar 05, 2009 02:37 AM #6
Rainer
38,744
Kevin & Maryellen Garasky
KMG Mortgage Group - Kevin & Maryellen, Idaho & Washington - Coeur d'Alene, ID
KMG Mortgage Group - ID & WA

Susan,

As a LICENSED Mortgage Broker in the state of Washington, I am infuriated with your article!!!!!  Everything you say is spot on!  I have worked for banks and brokers until I opened my own office as a broker.

I had to submit fingerprints for an FBI background check (AND go through an intense PRE-licensing exam) when I became a LICENSED Mortgage Broker in Washington - NEVER had to do that when I worked at a bank.

Please let me know who you wrote your letter to.  I will join in your protest!!!!!!!!!

Great job here!

Maryellen

p.s. And, if I may address the concerns of the other commentors re: Bankers being licensed in the state of Washington.  They aren't yet (and so FEW are), and all Mortgage Brokers and their Loan Originators are required to be licensed - have been for a while.

Shame on the media for not defining the difference.  It only serves to perpetuate the problem.  But, then again, that's their job.

Mar 05, 2009 02:53 AM #7
Rainer
30,772
Doug Aaserude
Inactive until May. 2009 - Beaverton, OR
Broker

NO they just think they have more fun. Loan Officers are a necessary evil in the prestige world of real estate sales. Hee Hee!

Mar 05, 2009 04:04 AM #8
Rainer
8,666
Ken Offidani
Coldwell Banker Select Professionals - Lancaster, PA

This is a great article.  im glad they are all required to get their licenses now.

Mar 05, 2009 04:29 AM #9
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Thanks to you all for your generous and honest comments. I do feel the article was slanted by the use of term 'loan orginator' on their graphic chart because that is the correct term (on our licenses) that applies to those of us in the brokering world...so it's use was miselading. NAMB president Marc Savitt was also very concerned and I sent a letter to the editor of the Seattle Times requesting a retraction and clarification. We need all the help we can get to clean up our ranks and help the honest among us survive!

Regards, Susan

Mar 05, 2009 07:08 AM #10
Rainer
1,155
Albert Byrd
Albert Byrd RE Investment Ft Lauderdale, FL Great Condos Inc - Fort Lauderdale, FL

Albert Byrd, Broker, Investor, Partner for RE InvestmentBanking news seems to be quite popular right now, doesn't it? Anyone know any good banking news out there?????

Mar 05, 2009 08:32 AM #11
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Good news, Albert, Mortgage RATES dropped today! And the 'bad banks' getting TARP money are using it to save themselves so your desposits are also safe. Cheers, Susan

Mar 05, 2009 10:46 AM #12
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hi Maryellen, Thanks for your support! Sorry I didn't see you to respond to you directly since these comments have been changed lately.

I sent my letter (more direct editing) to NAMB president, Marc Savitt, his CEO, Roy DeLoach and the Executive Editor of the Seattle Times dboardman@seattletimes.com , as well as the author of the Article sbhatt@seattletimes.com. I will will follow up with the Times on a request for clarity. I'm sure the editors of the Seattle Times are unaware of how much their 'infoarticles' can cast more oil on the fire...feel free to inform them! Susan

 

Mar 05, 2009 11:08 AM #13
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Paul, Congratulations on licensing your mortgage bank prior to the regulations demanding that banks be licensed. If more brokers and bankers had voluntarily followed the existing state and federal laws--many of these 'incidents' would never have happened and our economy would be in so much better shape. I appreciate your support with pushing licensing for ALL loan officers and those in our industry who have privvy to so much private information. 

Let's level the field and make it safe again! Regards, Susan

Mar 05, 2009 12:03 PM #14
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Jeff, I politely disagree.

If the word mortgage broker was used once out of context that confusion alone has cast the aspersion our way. (I'm a licensed loan originator). The fact that the FBI quote was extremely credible suggests to me the author should have pointed out if in fact the convicted person was associated with a broker or a bank and the legal licensed (or unlicensed) atmosphere in which he worked. 

Futhermore, is unclear if the FBI quote was taken in context or just as an aside. The facts are also blurred by their labeling their huge half page chart with "loan originator/mortgage broker" as the 'bad guy'. Charts and visuals portraying a story are even more powerful than words --so this front page article has effectively linked the bad dudes of our world with the relatively new title of loan originator. What consumer even knew that term before they read that article?

We now have several hundred thousand readers in Seattle who have been given this unfortunate association.

Mar 05, 2009 01:00 PM #15
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hi Ken, I am just catching up after a long day so I hope you see this. Thanks for your support and thoughtful observations. I agree that:

"Paul is partly right in that loan officers for non-chartered banks will need to participate in the licensing system but even the regulators are struggling with how that is all going to go down."

Unfortunately in Washington State, where I practice, we also have a new confusion between Banks, Mortgage Brokers and Consumer Loan Affiliates, ie those mortgage banks or brokers (which is it really?) who have a correspondent relationship with an investor. At the present moment they do not fall under the same jurisdiction so do not require a license to operate...something of a loophole in the National Mortgage Licensing scheme to say the least. While many good firms operate in this arena, I have chosen to stay on the broker side for one reason: honest people are not afraid of licensing. Hopefully that word gets out and ALL people who sit across the table from a loan applicant will become licensed. We figure 2 years out.  How's May-retta? Cheers, Susan

Mar 05, 2009 01:06 PM #16
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Lenn, Thank you for distilling this vexing matter down to the essential question:

"Why does the investigation focus on the ones at the bottom of the ladder???"  

The answer lies in just whom is being bailed out right now with whose money! Susan

Mar 05, 2009 01:41 PM #17
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hey Ken O! Surprise surprise we still have a huge category of BANKS that are not required to train or license their loan officers. Smarter ones do of course. Cheers, Susan

Mar 05, 2009 03:13 PM #18
Rainer
38,744
Kevin & Maryellen Garasky
KMG Mortgage Group - Kevin & Maryellen, Idaho & Washington - Coeur d'Alene, ID
KMG Mortgage Group - ID & WA

Susan,

Whoa!  You're hanging with some heavy hitters!!!

p.s. Don't worry about missing me the first time, I knew you'd see me eventually

Have a great day!

Maryellen

Mar 06, 2009 02:07 AM #19
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Marc, Welcome to Active Rain! It behooves us all to engage our professional oragnizations in this debate and this community is ready for real news.

I am looking for your reference to Kristina, the commenter about broker bailouts and I don't see that person in this comment thread. Was there another comment in Mortgages? I'll look.

Thanks for your support!  Susan

 

Mar 06, 2009 12:12 PM #20
Rainer
38,744
Kevin & Maryellen Garasky
KMG Mortgage Group - Kevin & Maryellen, Idaho & Washington - Coeur d'Alene, ID
KMG Mortgage Group - ID & WA

Susan,

In regard to your comment to Marc above, Kristina must have edited her comment (she is comment #3 above without a photo).  I saw what he was referring to, as well.  She said something like (and I paraphrase):

"I keep telling people to get with banks, brokers are on their way out.  Only about 17% of loans are originated through brokers."

...or something like that.  She did admit, to her credit, that she wasn't sure where she saw the quote or even if it was true.

Maryellen

Mar 06, 2009 12:43 PM #21
Rainmaker
66,965
Susan Templeton
Bellingham, WA

Hi Maryellen, See what happens when you spend a day with clients...you miss all the fun on Active Rain!

I've heard a few die hard conservative realtors suggest such opinions but most are clued in enough to read all the great information available. Nice of Marc to step in--eh! One rather elderly realtor told me the first time we met she only worked with 'local underwriters'. Oh really? She thought Washington Mutual was underwriting locally because they had local offices...ha ha! That what's so great about this community...we can set the record straight!

Mar 06, 2009 12:51 PM #22
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