Sometimes people are receiving government assistance for whatever reason. ECOA (Equal Credit Opportunity Act) says a lender cannot discriminate based on income from public assistance…If the homebuyer qualifies to repay the mortgage, we make the loan. I’ve done loans for people from wealthy families who had no job but DID receive a monthly check from the family estate. I’ve done loans for people with just investment income and no job.

BUT I do understand where you’re coming from. There was a time of insanity back during the bubble run up.

Your comment is cracking me up.

I had an agent approach me once with this question: “Can you tell me what my buyer can afford, because I don’t want to help him get in over his head”. I said what did the lender say? she said, he said he can do it, no problem, but I want to make sure the buyer isn’t getting in over his head because he is a friend of mine.

I said OK, and took out my mortgage calculator. I said, “What does your friend make?”

Her answer: “Nothing, he has no job.”

I swear we were living in a comedy routine

http://www.michaelmoore.com/

Look to the left, under “Mike’s Letter.”

As a loan originator from that era, I can tell you I had many people just like her who would contact me. I knew that if I didn’t do the loan, someone else would and you know what they could have it! I always had an issue with lying about income on a loan application–I just couldn’t understand how this was acceptable. With that said, consumers could opt for “no income” on an application with a slightly higher rate if they had better credit. When it made sense, if that’s what the consumer was after, I would suggest that product… at least they weren’t lying and then it was up to the underwriter to determine whether or not it was an acceptable loan. I probably did a small handful of NIV loans. Even if you were going full doc, Fannie or Freddie may have provided an “automated response” stating only a VOE was necessary…maybe a paytub and maybe an appraisal.

By that underwriter not speaking up during those times, she enabled the process to continue…and she’s just one of many.

I’m probably a bit niave about this because in my 9 years of mortgage origination, I’ve only worked for one company–and so “correspondent lending” is all I know and we probably lean towards the conservative side.

I would have loved to seen Chris Hansen contact Account Executives from the various banks who “pushed” the “toxic” loan programs to mortgage brokers and correspondent lenders.

Now she plays the “it’s not my fault….I’m not to blame” card.

I would have liked to have seen Chris interview the LO who gave her each mortgage, and each Realtor.

What did you think about her?

It’s all so foreign to me. Our underwriters would be the first to say “are you nuts, a xyz making $20k a month?”

I watched the show being thankful for all the loans I never did.

The potential borrower will see the payment several times on many documents during the transaction; including the loan application and good faith estimate in preliminary stages and then it’s reviewed again at escrow.

Assuming the LO is a bad actor and has committed total fraud on the preliminary documents, the borrower would have a chance to review the actual docs at escrow (unless they’re dealing w/a Lisa Baustica–sp… who had escrow companies involved w/fraud too).

Your “average” consumer is not going to double check math and amoritiztion schedules to make sure things are adding up… but you’d think they would smell somthing stinky somewhere.

Borrowers sign the final 1003 (loan application stating income and other assets) right in front of me which states their income. Today, because of the blatant fraud, some lenders have borrowers sign income affidavits, IRS Form 4506 allowing the review of tax returns, and some even have them sign their recent 1040’s. At signing they are told explicitly what the terms are (sometimes I call them prior to making an signing appointment to make sure the terms are what they expect so as not not waste escrow’s time or their’s if the loan docs are wrong—which they are over half the time for one reason or another).

Borrowers know. They may not know if they obtained the very lowest interest rate and fees or favorable loan program (as we all know, many were shoehorned into programs that were not ideal), but they know if they can afford the payments.

What did you think about the interview with the underwriter who, when bringing the problems to the attention of management was told to approve the loans anyways and faced workplace retaliation if she blew the whistle.