Is “fiduciary” level of care “old school”?

I would not respect a doctor who would hand me three phone numbers of his/her patients, who just had a recent surgery, as “references”.

While it’s true that highest degree of confidentiality is a fiduciary duty, and WA has statutory vs. fiduciary duties, I just can’t honor the request of people who want me to “use” my past clients as “references”.  Using your client for your own benefit is such an anti-fiduciary concept.

Some time ago I received an email from a total stranger seeking to hire me as his buyer’s agent.  He asked for a complete list of all of my client’s names, addresses, email addresses and phone numbers prior to our meeting. I responded that he should think very hard about hiring anyone to represent him in a client relationship, who would acquiesce to that request. The issue has come up again, and while I fully appreciate a person’s need to “check references”, I still won’t give out personal info of my past or present clients.

Once I connected two of my clients by asking a former client to have lunch with a current client.  The former client was a whiz at hunting down the absolute best loan available. They worked for the same Company.  They were about the same age and neither had extensive local contacts, both having relocated here and away from their family and friends. I was careful to not give out any info of either party until they both agreed to the lunch, which I did not attend so as to be absolutely certain I would not reveal anything about one to the other. Asking one client to help another client is not the same as asking my clients to help me GET new clients.  I just cannot get my brain around that concept.

I turned 55 the other day and Craig Blackmon’s recent remark that I am “an old war horse” is reverberating in my ears at high volume. I became “a fiduciary” for the first time back in 1974. We were constantly warned about never going out to lunch with a colleague and discussing a client by name in a restaurant. It was the blackest of mortal sins to use a client’s last name in public, and if they had an unusual first name like mine, no first names either.  To this day even when my partner Kim and I speak of clients, we never use last names even to one another. Clearly my age is having an impact, as we seem to be treating all of our clients as if they are our children. “Honey, the kids are coming over to sign the papers in an hour!” [I yell up the stairs]

In many ways, people reveal more about their personal lives to me, than they do their doctor or lawyer. Regardless of whether or not the State views me as a “salesperson” or holds me to a fiduciary standard, I’ve just been a fiduciary for way too long to erase that concept from Who I Am.  Fiduciary = “without regard to self interest”.  So while it is perfectly acceptable and understandable for someone to “want references”, it is just not possible for me to accommodate that request. Many agents have argued with me that I am wrong, old school, old fashioned, etc… Well, maybe turning 55 comes with the convenience of being allowed to be “an old war horse”.

5 Reasons Guys Dump(on) Houses They Like

Why Guys Dump Girls They Dig is one of the featured articles on msn homepage this morning. I couldn’t help but notice that the 5 reasons noted in the article had a striking resemblance to how men react when home shopping with their wife or fiance.

For agents who ask “why won’t buyers get off the fence” or “why doesn’t the buyer want to see homes with an agent”, my slight modification of the msn article might offer some insight.

1. The Timing Is Off  – “I ended it because I didn’t want to commit…right then.”

Often agents will scratch their heads saying “if they weren’t ready to buy a house, why are they looking at houses?”  When a single guy or single girl is buying a property on their own, they often don’t start looking until they are ready to buy. BUT when there is a couple involved, often the man is going along…and enjoying the looking process…but not ready to make a commitment.

Generally speaking, a man doesn’t like to say “no” during the day to the woman he plans to sleep with that night. So he says yes…let’s go look at houses, and then he continues to gather information, sometimes for years.  Looking and actually buying are not one in the same, and sometimes not even related one to another, in the man’s thinking and acting process. Just like dating and marrying are clearly NOT part of the same thinking process.

Looking, researching and actually buying one, are not one in the same for a man. Fear of commitment doesn’t enter into the picture until the woman wants to actually BUY one of the properties.  That is why it is important that an agent NOT just fax an offer to the couple for signatures.  Watching how the people react to signing the contract is very important to protecting your client’s best interests.  If the man (or the woman) seems to be signing reluctantly and “going along” to please the spouse or girlfriend/boyfriend, it is the agent’s job to help them take a step back, until they are fully ready to purchase.

2. We’re Not Finished Playing the Field (Looking)- “The moral of the story: Until we mark everything off our checklists, or have too many friends convince us that we can’t do better, the flight risk is real.”

A man is less likely to stop and buy early in the process than a woman.  A woman will often want to make an offer on one of the first properties they like. Women enjoy the buying and getting into it part, more than the “looking at” and “gathering information” part.  At the onset the men and women are evenly excited about looking, but the woman usually gets to “let’s buy this one” earlier.

 If the man is not finished “playing the field”, looking, researching, consulting with friends, etc…he is more likely to find a defect in the property pointing to why he can’t buy it, than admit that he is just not ready to leave the “looking” stage yet.

3. We’re Fixated on the Worst-Case Scenario – “Blame our friends who took the plunge (bought homes) before us, but many guys are hyperaware of what could go wrong down the road.”

Very often, once a potential home to buy is identified, the man comes back many times, emails many questions, calls 4 times a day, and the woman seems to disappear from the equation until the property closes escrow. The woman is often done once the decision to make an offer has been made.  She is thinking about buying towels that match the bathroom.  She is mostly concerned with the seller accepting the offer, so she can start planning the move. 

A man on the other hand is just getting started once the home they want to buy is indentified.  Actually getting it is the least of his concerns (except in #5 below).  The weight of the consequence of actually buying vs. looking is ENORMOUS at this point.  The decision to make an offer is a beginning point of the new “worst case scenario” cycle. What will the payment actually be? (unknown until you can lock the rate AFTER you are in escrow.) What major expenses can I expect that are currently unforseen? (unknown until after in escrow when you do the home inspection.)

The process of buying a home places some of the pertinent facts out of the man’s reach and during the escrow phase.  This is VERY uncomfortable for most men who like all the details to be pinned down before he makes a real commitment. Knowing he has a legal out if he doesn’t like the inspection is little comfort. Knowing he can lock his rate before he loses his legal out on the inspection clause is little comfort.

Panic ensues because the process will automatically back him into a corner of having a near term drop dead date to cancel, or be obligated to buy the house, or lose his Earnest Money. Having only five to ten days to consider all previously unknown factors, and cancel or not during that time, seems absurd to most men. It produces sleepless nights and profuse sweating  in many cases. Rightly so…I say. As an agent, helping him to predict all worst case scenarios prior to offer, makes the client’s life a LOT easier when the actual info comes in better than the anticipated worst case scenarios identified in advance of the offer.

4. We’re in Like, Not in Love – “It’s harsh but true. In fact, it’s probably the most common reason we bolt.”

This one is self explanatory and most men do not want to be in LOVE with a property…EVER!  They want a purchase decision to be free of emotional influence.  They want it to be a sound financial move and not an impulse buy. The problems arise when their woman is in LOVE with the house, and the man is trying to hold on to being unemotional about the purchase and the process.

5. We’re Too into You (it) – “Guys are protective of their emotions. Translation: We’re scared spitless of being hurt. So, if we start to feel like we’re getting into a situation where we’ll be destroyed…we might launch a preemptive strike and yank the plug first.”

Multiple Offers about says it all.  Men rarely like to get involved in an offer if they know there are other offers. They are equally afraid of getting it, as they are of not getting it. They are equally afraid of houses without other offers (why hasn’t anyone else made an offer on this house?)  In many ways men are more likely to get through the process on a property they don’t LOVE, than one they do love.

This last one is very important for agents to understand. When a man really wants the house, you usually don’t know it until about 4 days before it closes.  Sometimes it’s the first time you seem him smile and get excited. He doesn’t emotionally connect with the home until all potential obstacles are behind him.  Sometimes that doesn’t happen until he has the keys in his hand 🙂

Good Faith Estimate – Protecting Your Earnest Money

Protecting your Earnest Money Deposit starts before your offer is written.  I highly suggest you do the following, before going out to look at homes for sale. It’s a little unorthodox, but very effective.

1) Ask your lender to base your pre-approval on the current interest rate PLUS.  I’d say +.50% to +.75% at this time.  Use the higher number if the going rate is 5% or less at the time of the pre-approval.  If the going rate is 5% (rates move in 1/8ths) have the lender qualify you as if the rate is 5.75%.  Give yourself a little breathing room for rates to fluctuate while you are looking at property and making offers.  You don’t want the fact that rates are moving up, to stress you into making bad choices about other things, during the process.

Example: If you have salaried income of $95,000, you qualify for a payment of roughly $2,375 if the rate is 5%.  Take the $375 off for taxes and insurance, and make sure you check that $375 a month against the taxes on the house you make an offer on later in the process, and the amount the lender assumed as the taxes when doing the pre-approval letter.

After deducting RE taxes and Insurance, we are looking at a monthly payment for Principal and Interest of $2,000 which gives you a loan of $372,500 at 5% and a loan of $342,700 at 5.75%.  If you are planning to use an FHA loan, deduct $5,500 for the upfront MIP that you are likely going to finance, and that gives you a loan amount range of $337,200 to $367,000, depending on the interest rate at the time you lock it.  Add the 3.5% downpayment, and you are looking at a sale price of about $355,000 to $385,000.

Remember that your approval is based on a % of your gross income and you qualify for a monthly payment, not for a sale price.  So if you qualified for a house price of $385,000 (and the letter is absolute max within the lender’s assumptions), and they assumed taxes and insurance of $375 and the real taxes and insurance are $500, you no longer qualify for the sale price on your pre-approval letter. Likewise, if they used an interest rate of 4.875% and maxed out the price of home based on that rate, and rates are 5.125% when you lock, you won’t qualify at the sale price noted on your preapproval letter.

By asking the lender to use current rate PLUS  X when issuing the preapproval, you can worry less about rates fluctuating while you are busy trying to find the right house, and making the best deal.

These days, the very best deal OFTEN has RE Taxes higher than the amount assumed when producing your preapproval letter, making this issue of importance moreso now than it has been in the last 10 years. Plus lending guidelines are stricter, so a slight variance out of the assumptions can clearly make the difference between loan approval and denial, moreso now than in the last 3-5 years.

Make sure your pre-approval is based on a higher interest rate than today’s “going rate” and higher annual real estate taxes. The reason this is MORE important today is many people are buying short sales and foreclosures. The better the “deal”, the more likely annual real estate taxes are going to be higher than a lender will estimate as an area average for that purchase price.  So if you are Woo-Hooing about the fabulous price you just negotiated, it’s a good sign you need to check the ACTUAL RE Taxes against the lender’s original assumed monthly tax amount.

2) Get a Good Faith Estimate along with your pre-approval letter.  Before you even begin to look at property, you want to be sure you have the total cash you will need to close escrow.  While a Finance Contingency may protect you if Step 1) is done incorrectly, it will not protect you if you do not have the funds to close escrow.  If your loan is approved, but you can’t close because you don’t have the amount of money escrow tells you to bring to closing, the Finance Contingency will not protect your Earnest Money.

Again, this is a little unorthodox, but I have found this method to be essentially foolproof. So much so, that I have been able to guarantee that there will be no surprises at closing, unless the buyer elects to buy down the interest rate for reasons other than needing to do so to qualify.

Don’t just look at the bottom line monthly payment, interest rate and cash to close on your Good Faith Estimate (GFE).  Turn it into a “working” document by converting the format to the official HUD 1 you will see at closing.  This gives you the added comfort of seeing BEFORE you start looking at homes, exactly the same Closing Statement you will be facing the day you go to sign your closing papers.

Find a blank HUD 1 and print it out. I always do these numbers by hand in blue ink, so I can clearly differentiate it from the forms that come later in the process. I have seen many and varied formats for Good Faith Estimates over the last 20 years, but the final closing statement, the HUD 1, has been virtually the same from year to year and even from State ot State.

I just printed one out directly from the HUD website.   Always round the numbers up, and get the numbers directly from the source as much as possible.  I expect lenders to be absolutely accurate when “estimating” their own charges, so the lender fees on the Good Faith Estimate should be accurate. BUT when they are estimating 3rd party costs on the Good Faith Estimate, such as Title and Escrow charges and even County recording fees, I often find those numbers to be underestimated.  Remember to add the Home Inspection fee, which is almost never on a GFE.

Every time a sale closes, I double check the actual costs against my own original estimates. By getting your numbers directly from the source, and rounding up, you will not likely have any surprises at closing, in fact most often, the amount you need to bring should be less than you originally anticipated.

Always use worst case scenario when calculating your monthly payment and your Cash needed to Close BEFORE you go out looking for homes. This will insure that your real case scenario will always be brighter by comparison.

VERY IMPORTANT: If you do not have enough cash to close, that often means the agent needs to include a credit toward closing from seller to buyer IN THE OFFER.  So doing this after you are in escrow…is too late.

Often there will be changes DURING the process that can throw these numbers off. By doing the numbers yourself, by hand, as I do, the little red flags will pop up as changes are proposed during the process.

EXAMPLE 1:  Closing date is the 25th of the month, so the cash to close on your Good Faith Estimate has 6 days of interest at $55 a day = $330.00.

Two days before closing the seller asks you to extend close to the 11th of the next month instead.  These discussions happen all the time WITHOUT the buyer knowing that the $330 for 6 days interest will increase to 20 days at $55 a day or $660. In reality it costs you less, but for practical purposes it costs you more with regard to “cash needed to close”.  ALSO, often the lender doesn’t know the date was extended until they are sent the addedum changing the close date AFTER both the buyer and seller have signed agreeing to that change.  If they only locked the rate to the day of closing or until the 3rd or 5th of the next month, you could end up with a different interest rate by signing the close date extension, and in this period of volatile rates they will likely hold you to the HIGHER of the two rates.

Again, if you are buying a short sale or bank owned property, the extension of close date may not be something within your control. You can’t MAKE the seller close on a given day, regardless of contract provisions.  So being qualified from the beginning at a higher rate becomes a necessity vs. a preference, if you plan to close escrow.

EXAMPLE 2:  You receive your Good Faith Estimate and it says you qualify for a sale price of $300,000. It says your total costs will be $13,000 of which $5,000 is up front MIP, which will be financed.  Total cash needed to close is $18,500 and you have $15,000.

Two months later you make an offer on a property and it is accepted.  No one told the agent that the approval assumed the seller would be paying $3,500 toward the closing costs, and it is now too late to rework the agreement with the seller. Escrow fails for insufficient funds to close, and seller keeps the Earnest Money which is more than the $3,500 you needed to complete the transaction.  You don’t get the house AND you lose $5,000.

It is very important that you turn your Good Faith Estimate into a working document, and not just file it away as another piece of paper.  THE AGENT WRITING YOUR OFFER DOES NOT GET THE GOOD FAITH ESTIMATE, unless you personally give it to them, or instruct your lender to send it to them.  There are many assumptions made by the lender when producing a pre-approval letter.  If the real facts don’t match those assumptions at time of offer and acceptance, it will likely be too late to turn back the clock, and that can put your Earnest Money at risk.

Pointless Pricing Tricks

A few weeks ago, a home buyer shared some pricing scenarios a fellow mortgage originator was offering to them.   


Scenario 1 looks like the mortgage originator wants the borrower to believe they’re only making a half point in loan fees and the borrower is paying an additional 0.625% to buy down the rate further.   How the borrower should look at this is that if they select Scenario 1, they are paying 1.125% to have 4.50% for a rate.  (This was provided to me in mid-March and does not reflect current pricing).

On most current Good Faith Estimates have the following lines designated for “points”

  • Line 801 = Loan Origination
  • Line 802 = Loan Discount
  • Line 808 = Loan Origination if you’re a Mortgage Broker

In all my years (9 as of April Fools) of mortgage originating, I’ve never seen an estimate with 0.5% origination and 0.625% discount points.   It just seems silly to me.   This really illustrates why a consumer should just add up the points paid regardless of if they are entered as discount or origination–if you’ve paid either, you’re paying points.   In fact, as I’m sure I’ve mentioned before (but it’s worth repeating) you should add up all closing costs disclosed in Section 800 of your Good Faith Estimate to see what you are paying for interest rate.   Some lenders may have additional fees, such as processing, underwriting, funding…etc.    Unfortunately, APR is not a fool proof way to compare interest rates.

While I’m dishing out advice, selecting a Mortgage Professional by interest rates–when we are currently receiving a new rate sheet ever 5 hours is crazy.   Odds are, you’re not comparing apples to apples and rate quotes don’t mean anything unless you’re locking in at that moment.

In this current market, make sure:

  • Your loan is locked for enough time to accomodate your closing.  A 30 day quote on a 35 day closing isn’t going to cut it.
  • Will your Mortgage Originator honor the closing costs shown in Section 800 of the Good Faith Estimate? 
  • Will your lender be able to provide loan documents to the escrow company earlier enough to accomodate the escrow company so they can provide you with an estimate HUD to review prior to signing?  (You need to request this, if you want to have your estimated HUD-1 Settlement prior to your signing appointment–it’s generally not requested by borrowers).

Where is that elusive “bottom”?

Dow breaks 8,000 April 2, 2009

Dow breaks 8,000 April 2, 2009

Whether you are talking about the stock market or the housing market or the economy in general, it is very interesting to watch the discussions of “bottom” and “a recovery”. Today the Dow is peeking into the 8s, with headlines of “Dow Crosses 8,000 in Broad Rally”.  I was surprised by this sentence in that article:

“We have more and more evidence that the economy is heading for some stabilization, and we see some leading indicators that show that the bottom could be near,” …

I admit I am confused by that statement.  If the market does stabilize from here out, wouldn’t that make “the bottom” behind us vs “near”? If we never get there again, wouldn’t March 9th when the Dow closed at 6,547 be “bottom” vs some date in the near future? Does “bottom could be near” mean we will shortly be under 6,547?  I’m pretty sure that is not what they mean. I think they mean bottom isn’t bottom, until “they” choose to declare it as bottom at some point in the near future. 

I expect some will see stabilizing as “a recovery” while others won’t view the market as “in recovery” until it is up past it’s historic high point. I clearly don’t expect home prices in the Seattle Area  to be significantly higher in May of 2010, than they are in May of 2009.  I expect to be “at bottom” for at least 3 years.

So what does “at bottom” mean to you?  What does “a recovery” look like to you?  I find it very interesting to study the various differences in people’s perspectives on these two concepts.

Robert Shiller Coming to SPU

Yale Economist Robert Shiller of the Case Shiller Home Price Index will be speaking at Seattle Pacific University on Monday, April 27, 2009 at 1:00 PM.  Details are on the SPU website; hat tip Tim Ellis.  I missed Paul Krugman when he came to the UW a few months ago and I’ll miss this one, too.  But Tim said he’d take notes for us and post them on Seattle Bubble. Thanks Tim.  BTW, the latest Case Shiller reports are out and the analysis on the Seattle market can be found here which shows the Seattle area off 20% from our peak.

Sunday Night Stats – Snapshot of “bottom”

Revisiting my “bottom call” of February 7th.  At the time, even those who potentially agreed with me, wanted more “proofs”.

But in the instant that I “called it”, it was more like watching the horse at Steel Pier diving into the ocean.  You knew the horse was going to land UNDER the surface of the water, even while you were watching it in mid-air.  Basically, the market was taking a high dive off of the beginnings of “spring bounce”. It was like standing on a train platform and watching a bunch of people jump in front of the train.

For those who don’t like to believe that the Housing Market Stimulus Package is going to improve the market, you may take some consolation in the fact that the same stimulus package contributed to “the bottom” call.  The mere hope of thousands of dollars coming, created the instantaneous and abupt change in the marketplace that caused “the bottom” to happen. So you can both credit the Obama Administration for the “recovery” and also blame them for “the bottom”. That should satisfy just about everyone.

Here’s the final snapshot of what I believe is “bottom” and the forces that created it.















The green line is the percentage variance between asking and sold prices.

The shift down from 3.1% to 1% signalled the typical beginning of “spring bounce” in January of 2009. At the time of my bottom call, this percentage shifted from a low point of 1% to a high point of 5.5% almost overnight. You can see the historical data from just before peak to present, with some commentary in this post. The only other time the % variance of asking to sold prices exceeded this 5.5% mark was in February of 2008, BUT that was at a time of high asking prices

This brings us to the blue line.  What you are seeing in December, which is often the lowest point for prices in an given year, is a median asking price of $451,000 (for this market segment) being pulled by a 4.2% variance down to a sold price of  $432,000 and an adjusted median price per square foot down from $256 to $222. Then you see the normal seasonal ascent as asking prices increase (blue line) and the % variance decreases (green line).

Note the yellow dots. Even though asking prices stayed level from 1/1 to 2/1, the prices (yellow dot) increased because the % variance from asking price to sold price decreased (green line).  Watching asking prices rising and dropping does not give you the same perspective of watching that in conjuction with:

Median changes in Days on Market of homes sold

One of the most startling indicators that “bottom” was “in the room” was the insane shift in % variance of homes sold in less than 30 days.

% sold in 30 days or less

As you can see in the above link, the % sold in 30 days or less just prior to peak was 70%.  So it would seem to follow that the extreme low of 13% at the time I called “the bottom” would be “just prior to” bottom. While we don’t yet have all of the sold data for the month of March, the shift upward from 13% to 23% and March to date at 33% is a big sign sign that February 7th or so was and is likely “the bottom”. I find it very hard to believe that number will ever get lower than the 13% it was when I made that “bottom call”.

In writing posts in preparation for this “snapshot of bottom” post, I did visit the volume of sales statistics. But to a large extent I have stopped relying on this data and consider it very old news. The drop from peak as shown in the graph in that link from 181 in June of 2007 to 86 in the short period to September of 2007 was a huge signal that prices would follow. But today I rely less on volume statistics as a sign of anything, because with squeezed equity positions you find more and more sales happening outside of the mls system.  YOY volume is not only “old news” it is also mostly only relevant to agents vs. buyers and sellers of homes these days. Still I provide it for those who like all of the data.

Last but not least, let’s visit the plunge of sold prices in the chart below.















The chart above is where you get the fine tuned visual of watching prices take a nose dive off of Spring Bounce. Perhaps if you didn’t “get” my reference to the Diving Horse in the opening of this post, you can feel it now as you examine the variance in this graph from December of 2008 to March of 2009.  You can almost see the horse slowly climbing up the ramp (from $432,000 to $469,000), and then you gasp out loud as the platform falls out from under the horse as he plummets head on into the ocean ($405,000). My post of February 7th was me “gasping out loud”.

How I chose the market sampling bears some explanation. In my bottom call as detailed by Aubrey Cohen in his article in the PI:

“DellaLoggia said… buyers are consistently calling the bottom at 20 percent under peak pricing” (not including houses that are not in foreclosure or being sold as part of an agreement to avoid foreclosure)…she’s focusing on the North Seattle and East Side areas where she works. She said distressed sales were going for about 37 percent below peak, and areas with a large share of distressed sales would see those dragging down prices across the board.”

So to determine price specific to a subject property, one you choose to buy or one you need to sell, you need to calculate what peak price would have been for that property.  Then you need to calculate the % of distressed sales affecting value.

Since the drop in premium pricing for view property is dramatic in a down market (just as it is accelerated in a hot market), I excluded lake and mountain view property from this sampling. Since very large homes (mostly new or newer) are experiencing a different market influence which is not “at bottom”, I also capped the square footage in this sample to not more than 3,000 square feet.

Making those two initial adjustments, I used the zip codes of 98004, 98005, 98007, 98008, 98033, 98034 and 98052. This gives us both Downtown Bellevue and Finn Hill.  It gives us close to Microsoft and North Juanita.  It gives us an approximate mix of 10% distressed property to 90% not distressed property and it gives us a combined drop from peak to bottom of approximately 30%.

That 30% is a combination of the 20% and 37% quoted in Aubrey’s article,  an extreme reaction by sellers to jump in front of the train with deeply discounted asking prices and the buyers going after that deeply discounted group with a sickle chopping 5.5% off those lowered asking prices.

I did a final adjustment in the red line of this post to equalize the slight variance in median square footage of the homes in the monthly samplings, to be sure the results weren’t skewed by minor sold home size differences from month to month. This is noted as AMPPSF – Adjusted Median Price Per Square Foot.

One thing I know for sure.  It was a whole lot easier to write this original post, than it is to explain it. 🙂

Related posts:

RCG – The Bottom CallRCG Sunday Night Stats – At Bottom , “Agent Predicts Housing Slump’s Demise” – Aubrey Cohen, Seattle PI, My thoughts on Aubrey’s article, Snapshot of Front Page “above the fold”

Don’t Forget 8:30 – 9:30 today – Earth Hour

From the Seattle Times article:

Lights illuminating the Space Needle, downtown high-rises and neighborhood homes could largely go dark from 8:30 to 9:30 p.m. on Saturday, March 28, as part of Earth Hour, an international campaign against global warming. Cities around the globe are expected to take part, and landmarks such as the Empire State Building and the Golden Gate Bridge will go dark.

Naughty Mortgage Fraud Mom Gets Life Sentence Instead of a Time Out

From North Texas:

A Henderson County woman was today sentenced to 99 years in prison for her role in a mortgage fraud scheme. On Tuesday, a Navarro County jury found the defendant, Kandace Yancy Marriott, 52, of Gun Barrel City, guilty of engaging in organized criminal activity. According to prosecutors, evidence presented at the punishment stage showed Marriott received monthly mortgage payments from her clients, failed to remit those payments to the mortgage lender, embezzled the homeowners’ funds, and therefore caused her clients to default on their home loans. Marriott’s conviction stems from her involvement in a complex mortgage fraud scheme that defrauded the federal government. The scheme’s principal operators were the defendant and her husband, Darrell L. Marriott, 54, who sold manufactured homes through their company, One Way Home & Land. However, the defendants’ daughter, Kally Marriott, and Kandace Marriott’s sister, Karen Hayes, have also been indicted for their role in the scheme. All four defendants face separate charges for related criminal conduct in Kaufman County.

According to state investigators, the defendants illegally forged home buyers’ signatures, inaccurately completed loan applications, and falsified supporting documents, including the buyers’ rent payment verification statements, proof of employment, and Social Security Administration benefits data, among other items. Court documents filed by the state indicate that the defendants conduct was intended to ensure that unqualified home buyers loans were approved by mortgage lenders. The scheme involved predominantly low-income purchasers whose residential loans were guaranteed by the U.S. Department of Housing and Urban Development. As a result, when the unqualified buyers defaulted on their home loans, their mortgage lenders did not suffer financial losses. Instead, HUD – and therefore the taxpayers – had to cover the default costs. Investigators believe the defendants’ scheme cost the taxpayers more than $3 million.

Is 99 years too tough? Some argue about the unfairness of the folks from Enron receiving a lighter sentence for stealing billions while this mom gets 99 years for stealing 3 million. Well, some of those Enron defendants decided to become a witness against others in order to receive a lighter sentence. But we can’t quite compare Mortgage Fraud Mom with Andrew Fastow because I believe a person cannot testify against a relative. Perhaps the horrifying lesson is to always commit fraud with a non-relative.

There will be no public sympathy for what this family has done as long as the economy resembles a slow moving train wreck.  It may take years for some humans to ever begin to trust mortgage lenders (banker, broker, or consumer loan company) again. 

This is just one case of a mortgage fraud family. How many more are out there that we haven’t even begun to prosecute or may never find? 

On the bright side, perhaps she will still be able to see her sister and daughter when they join her in the same prison. 

Even better, maybe 99 year sentences would have the effect of actually deterring mortgage fraud.  The existing set of consequences were clearly not enough.