Beat the Economic Blues by Walking Your TALK!

I understand many people are tired of bad news about our economy. Unfortunately a lot of the news we read is only telling half the story. After so much bad press about the real estate industry (my field), many of us stopped going to cocktail parties last fall. I was asked at Christmas Dinner how many toxic mortgages I had stuck my unsuspecting clients with. However personally I feel about the global recession, it is unfair to label one group as being responsible. Our news media could be more constructive in this regard. It does not pay to hide in response to inaccurate information coming at us from all sides. It is up to individuals to participate in a more honest and open discussion of what can be done. We can't imagine or wish the circumstances away. All the positive thinking in the world still requires someone actually take positive action to create change. BAD EXAMPLE: Here's a sensational depiction of a huge mortgage fraud scheme in Western Washington that hurt many people. We can assume seven years in the slammer for his trouble will be no fun whatsoever for Mr. Brooks. ARTICLE LINK: <a href="http://seattletimes.nwsource.com/html/localnews/2008793819_webbrooks27m.html" title="http://seattletimes.nwsource.com/html/localnews/2008793819_webbrooks27m.html">http://seattletimes.nwsource.com/html/localnews/2008793819_webbrooks27m.html</a>    The only problem with this article on the front page of the Seattle Times is that it leaves some doubt as to just who this crook represented (besides himself). The story about a former loan officer at America Mortgage of Bellevue paints the suggestion that he was working as mortgage broker. While the actions portrayed are truly dispicable, this person is misrepresented as my colleague. What really bugs me is the author's use of the term 'loan originator' on their graphic expose as the bad dudes who originate fraudulent loans. 'Loan Originator' is the legal term the National Mortgage Licensing System has applied to trained, licensed mortgage loan originators who work in the wholesale lending world or may be employed by a mortgage bank that may also broker or resell loans but whose primary function is to represent a broad range of options to home buyers and investors. Loan originators are by nature, contracted staff working in a highly regulated mortgage lending environment. In fact, our world is in some ways more regulated than banks in that we MUST be trained and licensed and Loan Officers in Banks are not required to be trained or licensed. Take a closer look at this story and how it is told: This graphic illustration occupied half the front page: <a href="http://seattletimes.nwsource.com/ABPub/2009/02/27/2008792274.pdf">http://seattletimes.nwsource.com/ABPub/2009/02/27/2008792274.pdf</a> "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). Incongruent Truth: For Starters, Mr. Brooks was operating as a Loan Officer, not a Loan Originator. 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.   Another interesting point: The illustration depiciting this crime wave has a handy list of CONSPIRATORS including: Insiders in the form of: Real Estate Investors or Developers, Appraisers, Loan Originators/Mortgage Brokers, Straw Borrowers, Sellers and Lenders and Escrow Agent.  Nowhere does their graphic reference: Bank Loan Officers or Realtors/Real Estate Brokers or Banks. Why? Could it be that news organizations are sensitive to the feelings of some major advertisers who might fall into these categories?   Surely the Loan Officer's employer in this story 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.   So Who is to BLAME? 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?  Unfortunately, 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. Emotions are High: 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 when a bank funds a loan, 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 Propose A National Global Campaign: 1. Letters, Blogs, Articles: I wrote the Times requesting 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. I also wrote to my congress persons. I have asked a few friends in the business if they cared to comment and realized that the very fact that we are fragmented into separate groups is what makes us an easy target. I blogged on Active Rain and attracted some Realtors. Mortgage Brokers and Bankers  alike who agreed that we as an industry have come under undue fire. I also contacted our Industry Magazine editor of the Scotsman Guide who is very supportive of publishing an article on this hot topic. 2. Joining Forces: I have enlisted the support of my President of the National Association of Mortgage Brokers, Marc Savitt, who agreed to contact the Seattle Times editor. Mind you, our local, state and national professional organizations are funded by independents like ourselves who are having a pretty tough year or two in the face of so much negatige sentiment. The time is ripe to band together. I would like to engage other professional organizations and individuals who have separte areas of influence to join our voices in protest of both bad practices, but also the real facts that those of us still standing are working hard to support higher professional standards and care for home buyers, sellers and investors. 3. Speaking Up and OUT! I think it's time that those of us who are committed to best practices in the Mortgage Industry Professionals: Appraisers, Escrow and Title Officers, Realtors and Real Estate Brokers, Home Builders, Developers, Investors and Lenders speak up on this subject and clear the record. 4. Doing the Right Thing: By setting clearer better professional examples, telling our stories and supporting each other we can walk our talk and improve the conditions in our local and global spheres. Our actions will speak louder than our words...but sometimes you've just got to set the record straight! Who will join me? 2009-03-10T04:01:02Z

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beat-the-economic-blues-by-walking-your-talk

2009-03-13T05:49:19Z

The press has negatively portrayed real estate and finance industries as being the 'cause' of the global economic crisis. This is a call to my co-professionals to join voices and forces to better inform our spheres of influence with TRUTH.

Beat the Economic Blues by Walking Your TALK!

2009-03-13T05:49:20Z