Reckless loans ruled Wa-Mu, ex-worker says

Appraisal Police at 05:38 2008-11-03 said:

Vetting a loan one day, Cooper says she became suspicious when a photograph of the house being bought showed one street address while documents deeper in the file showed a different address. She contacted the appraiser, and recalls that he said that he must have erred and that he would send her the correct documents.

"So then he sent me an appraisal with a picture of the same house but this time with the right number on it," Cooper recalls.

"I looked the address up in our system and could not find it. I called the appraiser and said, 'Please investigate.' "

The appraiser came back, reporting a visit to the California property had found everything in order and in agreement with the original appraisal. "I was so for sure that it was fraud I wanted to get on an airplane," Cooper says.

The $800,000 loan was approved, but not by Cooper. Six months later, it defaulted, she says.

I hope the appraiser hangs for this. Permalink

VaAppraiser at 09:40 2008-11-03 said:

My contention has been that the underwriters are at the most fault with fraudulent loans. I wish more would come forward and tell their stories. Than I wish that lenders, brokers, real estate agents and appraisers would both lose their license and be sued or prosecuted. But unfortunately that is in another time of long ago when honesty was rewarded. Now we just send them Billions of dollars to keep the lies going. Permalink

Dinochick at 11:21 2008-11-03 said:

Her story is not unusual.. This was commonplace for almost every operations personnel. Funders, Processors, and Underwriters.

Being written up, fired etc was normal.... I underwrote for Long Beach, a WAMU company... That was their subprime, I left after 5 months.. I could not keep my sanity much longer.

Glad to know people want to hear from the underwriters. The stories we can tell. Permalink

StephenF at 11:31 2008-11-03 said:

Underwriters should tell more stories...we as Originators are always telling of "bad borrowers" There should be an outlet for the U/W who had to deal with the 'bad borrower" as well as the "bad originator"

Please tell away! Permalink

Dinochick at 23:18 2008-11-03 said:

Ok, this happened recently, Summer 2007, I was working inhouse for an MI company. This was a stated income submission.

The submission from the borrower stated self employed two years. I look up on the "business listing" it has only been established two months ago. I call the agent, and explain that I can't show him self employed. Then I find out it is 1099 income, and the borrower just figured out an elaborate way to create more income for himself by establishing a "business" to bill for his 1099 income. So I ask for a letter from the company he works for establishing a two year relationship. (and any others if less than two years) And a LOE from borrower, after all his application stated self employed, and that meant the application was not documented correctly.

I get a call from the lender AE, yelling at me stating she can submit a CPA letter. I told her that he is not SELF EMPLOYED, as he generates 1099 income, the quick QC check we do for self employed did not pass the test.. Any idiot can look that up, and if this loan went into a QC mode, I would have been on the carpet for not pursuing the path I was doing. In essence, the borrower lied on his application. He should have disclosed 1099 income, and stated that the business license was for accounting purposes. There are usually some underwriting specifics for 1099 vs Self employed, which changes part of the picture, which is why they lied.

What happens is when these people get caught, especially the lender AE who was a total witch, they blame you, not themselves. They don't take the responsibility for their own actions. My manager (this is an MI company) concurred with me, thank goodness, but it did create a bad incident. Permalink

StephenF at 07:56 2008-11-04 said:

Ok, this happened recently, Summer 2007, I was working inhouse for an MI company. This was a stated income submission.

The submission from the borrower stated self employed two years. I look up on the "business listing" it has only been established two months ago. I call the agent, and explain that I can't show him self employed. Then I find out it is 1099 income, and the borrower just figured out an elaborate way to create more income for himself by establishing a "business" to bill for his 1099 income. So I ask for a letter from the company he works for establishing a two year relationship. (and any others if less than two years) And a LOE from borrower, after all his application stated self employed, and that meant the application was not documented correctly.

I get a call from the lender AE, yelling at me stating she can submit a CPA letter. I told her that he is not SELF EMPLOYED, as he generates 1099 income, the quick QC check we do for self employed did not pass the test.. Any idiot can look that up, and if this loan went into a QC mode, I would have been on the carpet for not pursuing the path I was doing. In essence, the borrower lied on his application. He should have disclosed 1099 income, and stated that the business license was for accounting purposes. There are usually some underwriting specifics for 1099 vs Self employed, which changes part of the picture, which is why they lied.

What happens is when these people get caught, especially the lender AE who was a total witch, they blame you, not themselves. They don't take the responsibility for their own actions. My manager (this is an MI company) concurred with me, thank goodness, but it did create a bad incident.

Kudos to you for standing your ground...Don't get me wrong, I have done my share of complaining, but have always adhered to U/W law. I have lost several deals in my day because I would not BREAK the rules.

If more U/W's showed your moxie and were supported by their respective managers this mess would have been curtailed...I for one believe that the industry needs more like you and your manager...now is the time to rid ourselves of the vermin in this business. Permalink

Dinochick at 21:52 2008-11-04 said:

Thank you StephenF.

Unfortunately, this was a common story. The stated self employed was a major issue, as it is difficult to ascertain what their service really generates as actual income. The infamous one is the self employed yard services. As you know CPA letters are not worth a penny, even if you verify that it is a valid CPA. However, if at least you verify it is a valid CPA, then the fraud statement is on them.

When an underwriter detects misrepresentation, the loan should be immediately declined. I was being nice by asking for the documentation I did and still considering the loan. However, I had discussed with my manager before pursuing because of the misrepresentation. Permalink