Tuesday, May 29, 2007

Loan Fraud, Foreclosures, Personal Responsibility Rant

I came across this post on a community forum I read and thought I'd share it with you. It's from a local Elk Grove realtor...

Ok, 1st this is my Opinion and not the opinion of the company I work for or any organizations I belong to.....

While I believe the Media is focusing on the impact of the foreclosure market in Elk Grove and the region, they need to look at a different view of it:

Here's the rant portion:

1. California needs to seperate the real estate licenses and mortgage broker licenses and not allow an agent to do both unless they have experience and/or training outside of a mail order program. I am tired of seeing these companies that change their names every 6 months damage our property values because of the quick buck. They are creating such a huge amount of loss both in the life's they are affecting and the neighbors of that house that is being purchased and then foreclosed on. This is not a popular position but I believe has weakened our market more than any Subprime general label being thrown around. Who do you think originated those Subprime loans? Mostly the brand new licensee who before they even learned how to sell a house, were doing loans and selling tommorrow's foreclosures.

2. Buyers: You are signing the loan papers. Stop complaining about your screwy loan officer creating jobs for you on your application or lying about your income etc. The minute you signed that application or documents, you became just as liable as that fly by night loan officer who you will not see again after they get their commission. Take some self responsibility. Don't buy that house. The neighbors around that house will be thankful because you won't destroy their values. If you bought 5 houses on a fast food income and lied on your application, you belong in jail for fraud. Why show your face on TV? FBI: Why didnt you step up and investigate that buyer for fraud? I bet you lied about living in the house as your primary residence as well.

3. Sellers: Stop blaming the market on Realtors "lowering the prices". You should not have refinanced 4 times to pay for that Harley, the trip to Hawaii or the Implants. If you were conservative, you would not be a short sale situation right now. The market is where it is and will continue to get worse before it hints at getting better. Even then, please be realistic, its not going up 40%, be conservative in your planning and protect your investment and your neighbors. Rent your house out, turn your paperwork into the FBI if you were defrauded and insist on an investigation. If you were involved in getting money outside of escrow that wasnt reported to the IRS or your end lender who is now going to eat it, ask for an agreement for your testimony, it will come out eventually.

4. Sellers/Buyers: Start interviewing the companies you are looking to hire. Ask them about their history in Elk Grove, have they changed their names 4 times in 4 years, what is their reputation in the local Realtor community, are they involved in their association (ie code of ethics).

5. *Realtors* - When you get an offer from a company that has a bad reputation or the lender letter is misspelled etc. , ask that that buyer be preqaulified through a name brand lender locally for your clients sake. Use someone who is reputable and won't try to steal that agents business from the buyer but someone who will tell you whether their credit report or income won't qualify for anything on the market. This will prevent an unreputable loan officer from padding that buyers income or jobs on the application and lead to a more honest transaction which the neighborhood they are moving into will appreciate because the house won't be on the market in 6 months with the lawn overgrown because they defaulted.

6. Media - Find the real story. There is sensationalism out there but your not looking close enough. Investigate the companies that are changing their names every few months but staying in the same location with the same ownership, investigate why. Investigate the impact of the agents who are also doing loans for thier clients and follow those transactions through the foreclosure process. There are agents who can do both with great results but they are an exception to the rule. Investigate the companies that are still sending offers asking for 50K+ to be given to the buyer from the seller "outside" of escrow. Investigate the HUD 1 statements that have 6 points being charged to the B paper client who doesnt speak english and doesnt know better but is relying on their "loan officer" to protect them. You owe it to the consumer to get it right. You need to also realize the difference between a REALTOR and a real estate agent, they are not the same.

7. FBI: Open an office in Sacramento devoted to Real Estate Fraud. Lower the focus on Senior Fraud (this is being handled locally by Law Enforcement). Have a streamlines process for complaints. Follow the paper trails. Look at the MLS when the house was listed for 525K for 6 months and then sold for $625K and the agent also did the loan. Go back and grab the records for these transactions. Make an example of these companies. Get the IRS involved. Until you make an example, it will continue to happen and you are creating a drain on the economy with the increase of foreclosures due to loan fraud and artificial price inflation.

I see some negative things coming to Elk Grove soon in terms of these shady loan operations trickling down and resulting in foreclosed home affecting the good people who bought their homes in the correct way and process. Everyone needs to take a stand whether it is the REALTORS, the City Council, Our Governor (make DRE an enforcement agency NOT just a licensing agency), our congressmen and women and above all the buyers and sellers. Insist on professionalism even if you have to force it to happen. We need to take the focus of "Passion for Professsionalism" to a new level and make change happen.

A note on the Governor remark: Department of Real Estate in CA is a licensing department and does not have enforcement ability unless it can be tied back to the license basically. We need to redraft the DRE to be along the lines of Alchohol and Tabacco department etc and adapt enforcement actions so these offers asking for money outside of escrow illegally are prosecuted.

Again all of this is my opinion and I am just frustrated with the impact untrained and greedy real estate licensees ( not always REALTORS) are having not only on our profession but on our local economy and citizens.

I will not apologize if I have offended anyone, if you are an exception to the rule, I applaud you but I don't think it is the norm.

After all of that, Have a Great Day!



patient renter said...

Wow, good commentary.

Gwynster said...

I can't find anything wrong with the rant... give'em hell

Anonymous said...

Well,the man can't spell worth a damn,but his points are valid.as someone who works as a loan broker,i completely agree that it should be a separate license from real estate sales/brokerage.and god knows i'd like to see the laws enforced.they would need a couple of hundred investigators or more.OREA (appraisers) has 8 investigators statewide and the appraisers i hang with are utterly disgusted with OREA.I refer them to MortgageFraudWatchlist.com,which tracks by address and sells info to lenders.at least that triggers an appraisal review and sometimes more.and REALTORS are no more competent or honest,on the whole than nonmember licensees in my opinion,here in sonoma county you have to join the REALTORS association to gain access to the MLS...and the code of ethics...oh yeah,that.when was the last time anyone got disciplned for unethical conduct? was it before or after their conviction in superior court?

Chris said...

Bruce is right. There is a difference between a real estate agent and a REALTOR.

A real estate agent doesn't belong to the NAR, and therefore doesn't have an association that can check for ethics violations.

A REALTOR belongs to the NAR, but commits ethical violations on almost a daily basis while the NAR looks the other way.

Anonymous said...

All good points. I've watched from a mortgage underwriter's seat and agree whole heartedly!