Let’s discover what “Lending with Expertise” means to Paramount Equity

Paramount Equity has settled their case with the Washington State Department of Financial Institutions. Read the Consent Order here.  The Statement of Charges outlined many, many violations of state and federal law:

  • Using the term “mortgage bank
About Jillayne Schlicke

Educator in the field of mortgage lending and real estate. Follow me on Google+

Comments

  1. Jillayne:

    I’d wondered where you’d been! Nicely written, I will go read the SOC.

    WAMP (Washington Association of Mortgage Professionals) should also chime in.

    And, though we may disagree on this point, I believe none of the illegal advertising will stop until the media that profit grossly from it are held partially liable. They are completely sheilded from liablity at present, for illegally advertising consumer credit.

    A reasonable penalty for airing illegal advertising should be 3X the revenue. That will ensure that ALL media at least screen clearly illegal ads, and keep the punishment porportional to the revenue and scale of operations.

  2. Hi Roger,

    I’ve been teaching a LOT of Realtor classes this spring and writing some new Realtor classes, preparing some new classes at Bellevue College, and getting ready for the new requirements for course providers under the SAFE Act!

    Well I did not search the WAMB/WAMP member database to see if PE is a member but I can do that now.

    For those interested, the Wash Assoc of Mortgage Brokers voted to change their name to the Wash Assoc of Mortgage Professionals for various reasons.

    The WAMB database returned no results for PE.

    http://wamb.org/displaycommon.cfm?an=1&subarticlenbr=43

  3. Another great post, Jillayne.

  4. OK, now I’ve read it both documents…

    The original order proposed fines of $500K, the revocation of licensing for the principals, and restitution to the borrowers.

    Paramount settled for fines of $225,000, a restitution of $139,075 to borrowers, and other fees of about $30K.

    Roughly a total of $400K.

    And they get to continue operations in Washington State.

    They closed 1,700 loans in 2007, no doubt not their best year.

    Paramount probably earned at least $1,000 per loan, on average, after expenses (including advertising, operation and employee costs), for a net operating profit of roughly $1.7 million. Subtract the $400K, and you still have a cool $1.3 million.

    So yeah, it was a coldly calculated business risk, that resulted in a profitable outcome for Hayes Barnard.

    And the phones are ringing there today…

    People, stop supporting crime, stop responding to illegal advertising, please.

    And, all of you radio stations that accepted Barnard’s money, will you please give it back to your duped listeners? Maybe an apology for abetting crime?

    So, I’m dreaming too. It’s a free country.

    • Roger, I don’t know how media outlets can know that ads are deceptive ahead of time. (They’re deceptive, after all.)

      But maybe they should be made to run retractions, and to publicize the infractions. The retractions would have to be equivalent to the deceptive ads in impact — same audience size, same day parts, etc.

      That would give the media an incentive to discourage deceptive ads, and serve as punishment for the offender. It would serve as some kind of restitution for the competing businesses (in this case, honest mortgage lenders).

      I bet it would be one of the most popular features on radio station, in a newspaper or on TV. It might even restore some trust in the media.

      It could also involve some funding from the guilt party.

      Win for consumers. Win for cheated competitors. Win for the media.

  5. From Google search..

    Sponsored sitesParamount Equity Mortgage- http://www.paramountequity.com
    Home Loan Pre-Approval in Minutes. No Upfront Costs & Free Appraisals

    and the phones keep ringing…

  6. Unfortunately, it is easy for companies like this to fool the general populace that is so into finding the best deal they set themselves up as nothing but marks…

  7. I must agree. Very well written. I know the jingle, but did not follow their problems. You also exposed that other company in your blog a month ago.

    I have played Poker for 24 years before it became popular. On a table there tends to be a “cop” that keeps everyone honest and calls people on their bets/bluffs when someone is getting out of line and raking in too many pots. Eventually they get exposed.

    Jillayne are you becoming the table cop? It appears so.

    With the jingle and your article I now am suspect of Paramount Equity. Will they go the way of the Shane Company with an even worse jingle? We shall see….

    Great reporting though.

  8. I just heard their ad today – referenced “mortgage banker” again!

  9. Jillayne:

    After reading the SOC and Final Consent one more time (I know, get a life!), actually Paramount DOES admit wrongdoing.

    From page 2, E. Admissions

    Respondent Paramount ADMITS that during the relevant time period, Paramount did not maintain books and records, processed 56 loans originated by unlicensed originators, and were in violation in some aspects of its advertising.

    Evidently, they did not all agree that ALL of the charges were valid. I was kind of hoping they would have charged Hayes with excessive use of hyped-adjectives, and improper use of oily vocal tones. Those would have stuck.

    Makes one kind of wonder what is happening with Countrywide’s case, which makes Paramount’s seem like small potatoes…,

    http://www.dfi.wa.gov/CS%20Orders/C-08-030-08-SC01.pdf

    The state budget is shy a few billion…the $6-7M in proposed charges could restore a few teachers’ positions, or pay for some poor kids health care… , and it would barely create a blip in Mozillo (or Lewis’) retirement portfolio…

  10. Update: An eagle eyed anon reader along with Roger Ingalls spotted this correction from the Consent Order:

    “Respondent Paramount admits that during the relevant time period, Paramount did not maintain books and records…processed 56 loans originated by unlicensed loan originator…and, in some aspects of its advertising, were in violation of RCW 19.146.0201(2), (7), (10), and (11). With these exceptions, Respondents neither admit nor deny the Factual Allegations of the Statement of Charges.”

    Thank you Roger and Anon!

  11. redmondjp says:

    Hi Jillayne,

    Thanks so much for your in-depth analysis of this slimy operator whose flat-out lying in their advertisements has left me steaming as I am driving to or from work. I’m just disappointed that we live in such a permissive society that they are still allowed to do business in our state. I’m pretty sure that if they had run these same ads 15-20 years ago, the outcome would have been significantly different.

    I appreciate your restrained and factual reporting on this issue. I couldn’t do it myself as I am just too darn mad at them!

  12. Jillayne:

    Here is another slimy CA lender (Win Financial) that got caught by DFI for deceptive ads.

    http://www.dfi.wa.gov/CS%20Orders/C-08-114-08-SC01.pdf

    This time, it was those predatory mailings that are made to look like they are from your own mortgage servicer, warning of a pending adjustable rate increase.

    The original fine was $500,000 and revocation of license, but in the consent order it was bargained down to probationary suspension of license and a $10,000 fine.

    I should know a lawyer so good!

    In the statement of charges, you will see that they mailed 14,500 solicitations, received 390 calls, and took 95 applications.

    So, let’s see if crime really does pay, even if you are caught red-handed. I’ll have to make a few admittedly speculative assumptions.

    14,500 mailings, cost of $1 ea= $14,500

    Generates 390 calls (2.69%, unusually high for direct mail, but then, if you are allowed to cheat and lie, maybe not much),

    Leading to 95 applications, with a fallout of 50% (?), results in 47 loans. Each loan should have generated conservatively $3,000 gross revenue, for a total revenue of $141,000.

    For a cost of only $14,500, plus the $10,000 fine, net profit (before any additional expenses… office rent, phone, etc.)

    =$116,500

    Yup, any reasonable businessman (lacking any moral compass) would conclude that crime does pay in WA state, and pays handsomely.

    Of course, I wan’t there in the hearing, maybe WIN had a sick mom to support or something to make his crimes appear to be excusable.

    Or, maybe, Win Mortgage was able to successfully plead “Everyone Does It!”

    I know I have received at least two mailed solicitations in the past 3 months that were similar to the ones sent by Win, so that MAY be a reasonable excuse.

    But, until we start to reject the excuse that “Everyone Does It”, these crimes will continue, as it appears to be entirely rational to commit the crime, for profit, despite the risks.

    I’d complain more often, if I had nothing else to do in life. As it is, I complain enough.

    Maybe if more people complained, AND sent these deceptive ads to DFI, this abuse would end.

    Here’s where you can start.

    http://www.dfi.wa.gov/cs/complaint.htm

    C’mon folks, it’s a little bit like picking up litter in your neighborhood. If we all do a little, the results will be spectacular. If we all walk past it, the neighborhood will soon be a dump, and the task of cleaning it will be daunting.

  13. So is the answer harsher penalties/larger fines or is there another way out of this deceptive advertising mess?

  14. There are several ways out of the mess. Which is optimal, I’m not sure.

    1. Hold the media accountable for deceptive advertising, and fine them in proportion to their revenues derived from the deceptive advertising (include the Post Office and internet in this, since they are media carriers for profit).

    2. Make the fines/costs to the lenders large enough to wipe out the profitability of illegal advertising.

    3. Make it socially unacceptable among your peer group. Increase professionalism in the industry.

    4. Have lenders police other lenders, with the assistance of regulator’s stringent enforcements.

    Frankly, I have found only little interest and effort among lenders (and others) to do anything about deceptive advertising. There are notable exceptions that I could name, but I do not know that they would wish to be “outed”.

    Certainly, it has not benefitted me in any way financially to crusade against this, so others in the industry have probably concluded it is not in their best interest to devote time and energy to the cause.

    Whether for good or bad, it seems I have a strong Quixote-complex that compels me to battle windmills. That kind of idealism is not encouraged in this industry; pragmatism rules the day.

    It is from these observations that I conclude that options 1 and 2 are more likely to produce short term results, while options 3 and 4 are more like glacial movements. I predict it will happen, and is worthy of encouragement, but it will be a slow change in societal norms that will hopefully prevail.

    The pragmatist always bets on the basest of human natures (greed, lust, envy), while the idealist bets on the best of human natures.

    The pragmatist ends up with most of the money, and probably more friends. The idealist, if lucky, gets a song.

    Sigh…..

  15. HI guys;

    We have not one, but TWO ugly loans which are breaking us from good ol’ Paramount Equity Mortgage. JUST YESTERDAY I filed a formal complaint with the State of Washington and intend to follow it with a formal lawsuit. I spent a lot of time on the phone with Matt Dawson a few months ago after reaching out to him for help, and listened to him tell me that “He has never been sued for a mortgage in his life.” I am going to assume that is because he takes care of disgruntled borrowers before they make it to court-as he has done in Washington State this past May.

    Washington is acting like a cheap call girl, I must say. They want that money, so they let them continue business, that is my opinion. They got a slap on the wrist. The citizens who signed these toxic documents are suffering EVERY DAY and losing their homes because Matt and Hayes need to make their yacht payment. Our financial lives, that took 30 years to build, have been crushed because of the decpeption that occurred in their office (where no employee appeared to be over 40 years of age) I remember asking at the closing table, “Does anyone have gray hair in this building??!!” It was unnerving. The parking lot looked like a BMW Sales Lot.

    I have been strongly encouraged to pursue my case by a VERY knowledgeable attorney (it’s unbelievable what they did with our loans, and unfortunately for them, my attorney delighted in the POSTMARKED envelopes I still have in my possession packed full of documents with evidence of their deception in my counsels capable hands).

    Soon, I intend to stop crying about our mortgages, as I have been doing over the last THREE YEARS… Cheers to you Jillayne for hanging with this. They are slimy snakes who prey on every person who closes a loan with them without the benefit of legal counsel at their side to cry foul.

    And Washington State Department of Financial Institutions: SHAME ON YOU. Shame on you.

    I hope you hear more.

  16. Hayes Barnard and Paramount Equity Mortgage are back on the air here in Spokane. And as irritating as ever. He’s committed to saving his customers money, he says. Does anyone really believe that? More here: http://wp.me/pf2Z9-kp

  17. Radio advertising is one way to make the phones ring. It’s also VERYexpensive. This means the people answering the phones are probably not making all that much money because theydon’t have to procur their own clients. They just have to answer the phone and take the loan application….and close the customer.

    Anyone working with P.E. ought make sure the P.E. loan originator is actually licensed. Here’s how you can check:

    http://www.nmlsconsumeraccess.org/

  18. Well, here it is almost two years later, and Hayes Barnard and Paramount Equity Mortgage are back on the airwaves in Spokane, offering savings to their “neighbors.” Got news for you Hayes, you are not my neighbor.

    I posted about this in my blog:
    http://barrettsbook.wordpress.com/2011/02/14/hayes-barnard-paramount-equity-mortgage-and-advertising-lies/

    The long URL serves a couple of purposes. One, by linking the URLs on these posts about Hayes Barnard and Paramount Equity Mortgage, it’s more likely that these posts will eventually reach the top of Google searches for terms like: “Hayes Barnard” and “Paramount Equity”. By actually having the names of the cheater and his cheating company in the URL, it also helps Google find the article.

    I URGE anyone who reads these posts to: Add their links to your Facebook page, your Tweets (ok, for Twitter, shorten the links!), your blogs. Comment on my blog and others.

    Even though Hayes Barnard and Paramount Equity Mortgage seem to have a “break the law and pay a small fine” strategy, they are very smart about search engine marketing. They do everything they can to push their embarrassing news downward.

    Help do your part by pushing these posts up the Google rankings. Tweet. Post. Link.

  19. Eric Vander Werff says:

    Hi Jillayne, I took your prep course for the National test back in May of 2010, you did it at our company office in Renton. Good course, thanks, I got a 92% on the test so I guess it did its job!

    I wanted to comment on a few of the above replies as it now directly pertains to my life and my ability to feed my children.

    In March 2011, I opened the Paramount Equity Mortgage Spokane – branch CL 440296. My family and I were re locating to Spokane / Coeur d’Alene and after several interviews and visits to the corporate office in California, I decided that Paramount Equity was the right fit for me and my family and our future goals.

    Yes, there is bad press about this company from several years ago. This was one of the biggest concerns I had prior to coming on board. I was coming from a well known and well respected Seattle based mortgage company and I certainly wasn’t joining one that was unethical. I would not have joined Paramount Equity if I didn’t feel 100% that the ownership’s values were in line with my personal values and ethics. Bottom line, there were some bad apples working here back in 2007 & 2008. None of them are here any longer. The company paid their fines and did the things that were needed internally to get the ship moving the right direction.

    I can personally confirm that both Seattle and Spokane are under New Managment and almost every single employee has been on the job less than a year. We are going through a rebuilding stage and I know it will take some time to get away from the past but I am going to ask those who post negatively here, give us a break ok?

    I intend to do here exactly what I have done previously in my mortgage career. I will compete vigorously and fairly. I will not badmouth my competition to my clients and I expect the same respect in return. I will treat my clients fairly, I will tell them the truth, and I will follow through with the promises I make.

    Thanks again for the course and thanks for posting my reply.

  20. Jillayne,

    I wanted to let you know that I recently re-joined Paramount Equity as an Area Manager and I’m in the midst of rebuilding the team and improving the brand or image here in Washington. I brought Jeff Amira (TILA’s top LO for the past 3 years) and Eric VanderWerff (Solid Producer – Who will lead a Spokane, WA /Coeur D’Alene, ID Branch) with me because of the fantastic banking platform, great pricing and fast turnaround time. This past year we struggled funding loans at TILA which often resulted in less than satisfactory customer service and frustration for all involved.

    Part of my action plan is to change the public perception of Paramount Equity and show it for the truly good company it is. The ownership is committed to honesty and integrity and it is unfortunate that the actions by previous loan originators resulted in fines from the DFI and such a negative perception. In fact, not a single loan originator from 2006 is here today. Paramount has paid dearly, both in dollars and in image for the actions of those that were employed here in the past.

    We are building a new team and I’m happy to report they all approach their business with the same honest and ethical approach we instilled in our employees at TILA but with superior banking , pricing and professional customer service.

    Please share the good news for me! It would be great to see something positive on the Web.

    Thank you Jillayne!

  21. Hi John!
    Thanks for stopping by RCG.

    I’m teaching a class right now with a group of loan originators and we’re at the section of the WA State Law where we talk about advertising rates and APRs, deceptive advertising, and bait-and-switch lending practices.

    We decided to show one of the new loan originators how rates are quoted online and I did a google keyword search on the terms “mortgage kirkland.”

    Paramount Equity’s google ad popped up and I clicked through to this page:

    http://www.paramountequity.com/mortgage/why-refinance?gclid=CJjlhav0g6gCFecbQgod-U9zrg

    The rate quoted on the google ad was 4.75% with an APR of 4.9%.

    Can you show us where on this page the loan advertised is decribed please?

    Thank you!

  22. John and Eric, you may be able to make a living at Paramount. But change their image?

    Remember what Emerson said: “Your actions speak so loudly that I cannot hear what you say.”

    Paramount’s image is BETTER than it deserves. The radio stations that benefit from Paramount’s wall-to-wall advertising did a piss-poor job of covering Paramount Equity Mortgages unethical practices and the state’s action against it. So most people only know Paramount Equity as the company with with obnoxious commercials. They don’t know about the deceptive lending practices and the deceptive advertising.

    Lying in ads has nothing to do with “some bad apples.” It’s choice made by company management. They choose deliberately to deceive the public and compete unfairly against the thousands of mortgage professionals who don’t have such moral flexibility.

    Paramount offers no apology and takes no responsibility for its unethical activities. They are, in fact, unapologetic. “We appreciate the support of the Washington Department of Financial Institutions and look forward to a long lasting partnership,

  23. Leslie Barton says:

    Jillyne, Eric Vander Werff and John Whalen continue the facade of an unethical mortgage company. I read today that Paramount continues to sell mortgages with unlicensed personnel. Also, I find it interesting that Eric states “I can personally confirm that both Seattle and Spokane are under New Managment and almost every single employee has been on the job less than a year that Paramount is under all new management.” That in and of itself is a lie. John Whalen was part of the original Bellevue office management that opened Paramount’s Bellevue office and now he is back working the same “hide the fees” that Paramount is so good at.

    Don’t believe a word of what they say – nothing has changed at Paramount.

  24. Hi Leslie,

    “I read today that Paramount continues to sell mortgages with unlicensed personnel”

    Pls post that link. Thanks!

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