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Blame laid on broker as couple convicted of fraud gets new trial

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Mortgage Professional America | 17 Sep 2013, 06:08 AM Agree 0
A Wisconsin couple convicted in 2011 of mortgage fraud will get a new trial after seeing their conviction overturned in a federal court, which pointed the finger of blame squarely at their broker
  • Edward | | 17 Sep 2013, 09:21 AM Agree 0
    It is hard to believe that borrowers were not aware of what the broker was doing!! The borrowers are as guilty and responsible for the fraud and should have the same liability. Once the borrowers knew they could not be approved with their income they should have walked away from purchasing the property.

  • Eric | | 17 Sep 2013, 09:47 AM Agree 0
    Edward, are you kdding? Most borrowers dont read the application, they just sign and hope everything goes through smoothly. And by the sound of it, 100% of the time it di with this bank. The balme is squarely on the Broker and I hope he gets more time added on to his sentence.
  • Cookie | | 17 Sep 2013, 09:48 AM Agree 0
    I agree but it is easier to blame the broker.
  • Matt | | 17 Sep 2013, 09:49 AM Agree 0
    Home buying education is key for anyone looking to become a homeowner. Sales persons can be very misleading & if one doesn't inquire or educate themselves to know which questions they should be asking, then you have incidents similar to this. Shame on the organization & the individuals involved with falsifying documents & giving people something as special as homeownership leading to inevitable loss-
  • Brad | | 17 Sep 2013, 09:54 AM Agree 0
    Every closing package includes a final 1003 application which the borrower must sign. It should have been obvious to the applicant that her occupation and income were severely misstated and once in the know she should not have signed.
  • CC | | 17 Sep 2013, 10:08 AM Agree 0
    I agree with Edward! We have a real problem in this society with not having or expecting people to accept responsibility for their actions and choices. Both the mortgage originator and the borrower are 100% responsible for the information on that application. By removing that responsibility from the borrower it truly sends the wrong message to all potential homebuyers. It is 100% the homebuyers responsibility to provide and prove accurate information. Simply not "reading" the application that they SIGNED is not acceptable. It is embarrassing that our judicial system would even consider that viable.
  • Al | | 17 Sep 2013, 10:12 AM Agree 0
    It was impossible to obtain mortgage without signing mortgage application. If signatures were forged - than the only person who should be liable is notary
  • jack of all | | 17 Sep 2013, 10:14 AM Agree 0
    Maybe the bank should of thought about verifying income, making a phone call and\or asking for some documentation to back up funding this mortgage. Was the Wholesale AE or the underwriter for the bank questioned in this case? After all they stated Fremont bank didn't even lose any money on this deal, so in the end, the borrowers lives are ruined and the brokers career done, but who actually lost out on this deal?

    It doesn't matter now, these stupid barbers were sold the American dream and signed there name on the application and now they are screwed with a felony conviction for the rest of these lives.
    Guess they should of read the Acknowledgment and agreement section on page 4 of the 1003. I mean its not like is in TINY print and filled with legal terms. These guys cut hair for a living, how could they not understand this stuff????
  • Patti | | 17 Sep 2013, 10:16 AM Agree 0
    It is ridiculous to hold ONLY the Broker accountable. Sure , they all need to go to jail! The 1003 clearly states that to lie on this application is fraud. They signed it. And as far as them not thing is for sure, they knew they couldn't make the payments. AND anybody knows better than to sign a document without reading it. They just had the house fever, and the broker made it happen. They are all guilty!
  • Wm Matz | | 17 Sep 2013, 10:26 AM Agree 0
    The problem with these stories is that they often lack critical details known only to those familiar with industry practices. For instance some wholesale reps would essentially write up applications for brokers in a manner sure to be approved, assuring naïve brokers and borrowers that, "This is how it's done.".

    Another example [actual, from a case we tried] was that brokers would tell borrowers that they [brokers] reviewed the closing package and that borrowers could just sign where indicated. The final documents often were sharply different than earlier disclosures and representations to borrowers, In CA [and many other states] a mortgage broker is a fiduciary of the borrower; the borrower is legally entitled to rely on such representations and sign without reading. It may not be wise, but borrowers are entitled to rely, if they wish.

    Finally, there have been thousands of mortgages where all negotiations were conducted in another language but documents were in English. The non-English-speaking borrowers then relied on "translations" by mortgage officers or brokers. Such practice, while illegal in CA, was commonplace.
  • Joe | | 17 Sep 2013, 10:43 AM Agree 0
    I think to point blame correctly, you have to follow the money and who benefits the most from the fraud. Obviously, the borrowers are in cash businesses and probably don't report all of their income to the IRS, so they benefit in that they can buy a place without paying income tax (more than likely). The REALTOR had to also know exactly what was going on here as well as the Mortgage Broker. I'm guessing that the Realtor's 3% to 6% is MORE THAN what the Mortgage Broker made as well, so the BOTH benefited. Fremont did as well. So who benefits the most? I don't understand why throwing the mortgage broker under the bus SOLELY makes sense in these cases. Clearly, there's more than just one player on the team.
  • Matt | | 17 Sep 2013, 10:44 AM Agree 0
    I would also say this wasn't a straw buyer situation. These were folks looking to buy a home to live in, most likely with their family.
    Keep in mind it's the broker/bankers job to explain any & all documentation they are signing for the purposes of qualifying for a mortgage.
  • Charles Stidham | | 17 Sep 2013, 11:22 AM Agree 0
    Why is something done by a "BROKER" from 2006 still being reported as news? This kind of reporting is borderling sensationalism.
  • Steve | | 17 Sep 2013, 12:04 PM Agree 0
    I think everyone is missing the big picture. The only way this mortgage got booked was as a stated income mortgage. We all know documents my be provided and verified. So either the customers lied or the broker lied as far as stating their income. The underwriter would back up a stated mortgage such as this one buy determining what the median income was for that type of job. Also they must have had good credit to even qualify for this type of mortgage. Anyone who says the applicants were unaware of the income reported is a complete idiot. How many times were the customers turned down prior to going to this broker who helped bogue up their mortgage? Customers sign a 1003, underwriter reviews a 1003 and title company has the borrower sign 1003 at closing. Yes the borrowers knew what was going on along with the broker and underwriter.
  • BGM | | 17 Sep 2013, 12:13 PM Agree 0
    I love the way people spin this type of stuff and blame the bank for not calling to verify income. It was a no income no asset mortgage, banks didn't verify the income they verified the job type only. Attorneys have little knowledge of how the system worked and it is easy to brand a bank as unethical for making these types of mortgages when freddie and Fannie took part in it also! And the best part is no one blames Wallstreet who got the biggest handout and had the biggest role in the subprime meltdown!!!
  • Ben | | 17 Sep 2013, 01:23 PM Agree 0
    I have always said that borrowers should be tested to see if they are smart enough to purchase a home. Buyers sign a 1003 at closing. They knew what their payment was and what their true income was ( after screwing the IRS ).
  • H.G. Rudh | | 17 Sep 2013, 01:50 PM Agree 0
    This is the reason brokers are being blamed for everything! Make the banks have licensed mortgage officers AND NMLS instead of being exempt as they are now! Things like this do not address the current problems and puts the focus on brokers instead of banks!
  • Alette | | 17 Sep 2013, 03:44 PM Agree 0
    They are ALL responsible. Wall Street for creating the product with all the excess cash they needed income on, the mortgage bankers and banks for not bothering to pull a 4506 from the IRS which would have told them in an instant there was a problem, the underwriter who obviously could tell these borrowers given their level of savings in the bank and previous housing expense didn't make $90,000, the realtor for being willing to do anything for a commission and sell his client down the river when he knew they did not qualify, the mortgage broker who made up the number and position AND the borrowers who if they didn't have the common sense to know they couldn't afford that payment should have and also should have read their documents.

    Being a broker for 27 years I did not do stated income mortgages and many times was laughed at and cajoled and pushed by underwriters and account executives to make up the position and income to fit the mortgage. They could not even understand when I said: "I don't do that". When they asked why my response was "So I could sleep at night." They would just laugh and deny my mortgage.

    When I would turn a borrower down that just plain did not qualify he would just go down the street to the next broker who would get him a mortgage in a heart beat. When a realtor referred someone for a prequalification and I told them they did not qualify I would never get another referral again after that. They came close to putting me out of business then because of my unwillingness to do stated aka liar mortgages.

    Now after surviving what all the crooks did my income gets cut by 50% minimum because of the downturn in the real estate market and THEN I have to do three times as much work as it used to take for one file because of the extreme over regulation. Not all brokers were crooked by far. The ones who were not are now made to pay for the crimes of all those that did. Something is deeply wrong about that.
  • jak | | 17 Sep 2013, 04:45 PM Agree 0
    this is great...the govt is in bed w/ the large institutions who have former and future govt. reps (congressmen, senators, treasury secretaries, etc.) on their staff/payroll/lobbying bribery mechanisms. none of the people/companies who stole and then got billions from everybody's pocket and bought $100k toilets with this money were penalized..even if their companies went bankrupt, they looted enough that they are enjoying a gluttonous life right now as we waste our time on the internet writing this stuff back and forth.. and then everyone gets on the high horse w/ these little shrimps. so it goes to prove that if you mess up w/ a dollar, you go to jail...but if you steal billions and trillions, you are a hero...meanwhile suckers on these types of posts are left to argue w/ each other.
  • Dan | | 17 Sep 2013, 05:10 PM Agree 0
    By the comments I sense a lot of hostility out there. People get over it. The professionals that knew and loved this business are gone. Who can love over regulation and a cut in pay for more work? If you're still in the business you must be desperate because the good old days of being a pro are demeaning now because no one trust you for your ability.
  • Terry | | 25 Sep 2013, 10:47 AM Agree 0
    About 2 months after home purchase, I was looking through my paperwork and noticed that my age, income, years on the job and previous employment were incorrect on the 1003 that I signed at closing. I had filled out an online application and the "typed" final version was in with the HUGE stack of mortgage docs. I signed my name 50 times that day and was more concerned that I didn't forget the middle initial or the date. Should I have known better? YES!! Especially since I have been a realtor for 30 years. I have attended hundreds of closings throughout the years. I might vote reasonable doubt for the buyer since by the time they are done with the docs they are cross-eyed.
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